BRIEFING FOR (SANITIZED) DCI ON MOROCCO

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R000800050001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: May 12, 2010
• Sequence Number: 1
• Publication Date: May 26, 1983
• Content Type: REPORT

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Briefing for DCI
NESA/AI/M
26 May 1983
Domestic Politics
The moderate-pro-Western regime of King Hassan--who is 53
years old--appears secure for the near term but will face growing
domestic challenges. Deteriorating economic conditions coupled
with rising expectations among the burgeoning and youthful
population are sources of popular discontent.
-- There is restiveness among key groups, particularly
students, the labor movement and same religious
fundamentalists, who are searching for issues on which to
challenge the King.
-- There is a potential for renewed civil disorder like the
food-price riots in Casablanca in June 1981, in which some
100 persons died.
-- Organized opposition to the regime remains basically in
disarray and demoralized, however, since the King's
crackdown on leaders and rank-and-file following the
Casablanca riots.
King Hassan has fairly effective security and military
establishments to face these difficulties. The death of General
Ahmed Dlimi, the King's intelligence and security adviser,
earlier this year does not appear to have had a major effect on
these forces. The King also is adept at playing off opponents
against each other.
Moroccan-Algerian Relations
King Hassan and Algerian President Bendjedid met on 26
February to discuss normalization of bilateral relations that
were cut in 1976 over the Western Sahara dispute. Both leaders
recognize that regional stability serves their long term economic
and political interests and that those interests are threatened
by the Sahara dispute and the machinations of Libyan leader
Qadhafi.
-- The deeply held and incompatible views on the Western
Sahara issue, however, are not likely to change easily or
quickly and, until solved, will continue to be a major
constraint on improvement in bilateral relations.
NESA083#10124
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The seven-year old dispute over Moroccan claims of
sovereignty in Western Sahara is still a popular cause but the
seemingly "unwinnable" war could eventually cause more trouble
for the government.
-- There is some growing uneasiness regarding the impact of
the war on the economy.
-- Military.. activity has been relatively low since the major
Polisario Front attack at Guelta Zemmur in October 1981 and
both Morocco and the insurgents remain unable to prevail
militarily.
-- Algeria, the Front's chief supporter, is still committed
to self-determination for the Polisario and insists on
direct Moroccan-Polisario negotiations. Morocco appears
reluctant to enter direct talks with the Front but is
exploring various ways to reach a favorable settlement.
-- Renewed heavy fighting is always a possibility, but a
remote one at this point. Morocco and Algeria, which has
significant control over the Poli.sario, seem to have a tacit
understanding that the status quo--minimal military
activity--is acceptable and that talks may uncover areas for
compromise leading to a political settlement.
Morocco's economy has suffered from slow growth
in
recent
years and a rapid rate of population increase. Double digit
inflation
has eroded the standard of living since 1977. Rabat's
financial
position has been severely weakened by its
heavy
dependence
on foreign petroleum, several poor grain
harvests,. a
depressed
world market for phosphates--the nation's
primary
export--and the continuing conflict in Western Sahara.
-- A near-normal grain harvest last year helped restore the
viability of the important agriculture sector following
several dry years and.a severe drought in 1981. Erratic
rains this spring, however, will likely keep the 1983 cereal
harvest to last year's level prolonging the need for heavy
grain imports.
-- Morocco may not be able to secure all of the required
financing needed to cover its large current account deficit
and debt service obligations this year. Agreement on a new
IMF Standby loan for 1983 may prove difficult. Failure to
address food subsidies--a politically sensitive issue--the
growing budget deficit, and insufficient progress on
reducing the current account deficit have impeded
progress. We believe Morocco will need about $300 million
in IMF funding in 1983.
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-- Outstanding foreign debt reached $10 billion at the end
of 1982, equivalent to two-thirds of GDP and double the 1978
level. Debt service costs reached 39 percent of receipts
from exports of goods and services last year and is expected
to reach 46 percent this year. Some form of debt
rescheduling may be necessary in the next several years.
Reduced access to financial markets will continue to curtail
the Five-Year Plan (1981-1985).
-- Disbursements of Saudi aid--$495 million in 1982--fell
below the levels of the prior two years. Saudi assistance
will probably continue at reduced levels, as Riyadh must
come to terms with reduced oil revenues.
-- Morocco is about $46 million in arrears to the United
States for FMS payments and faces suspension of its $23
million FMS allocation for fiscal year 1983 under the Brooke
Amendment. An additional $18 million in outstanding FMS
loans must be repaid by the end of the fiscal year and about
$50 million in FY 1984.
-- The Moroccan dirham has depreciated by 19 percent against
the dollar since 1 January 1982, aggravating the nation's
balance-of-payments problems. Foreign exchange reserves now
cover less than one week of merchandise imports.
-- Export prices and volumes for phosphates will be down
again in 1983; phosphate export earnings could drop by as
much as $100 million offsetting saving from the $5 per
barrel drop in oil prices.
The economic malaise probably will continue through 1986 as
financial constraints will remain acute, limiting investment and
development.
-- The phosphate market is likely to tighten as the world
economy rebounds, but it will be several years before
Morocco reaps the benefits from its heavy investment in the
domestic phosphate industry. Morocco controls about three-
quarters of proven phosphate reserves.
-- Morocco's oil shale and fisheries resources--among the
world's richest--provide potential for economic recovery in
the late 1980s.
Moroccan-US relations are good, but expanding bilateral
ties, initially well received in Morocco, are beginning to be
questioned by some Moroccans who believe that the country's
material expectations are not being met.
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-- In pursuit of Moroccan interests, King Hassan often
adopts foreign policies that parallel or coincide with US
interests.
-- The King, during his visit to Washington in May, 1982,
approved a Moroccan-US access and transit agreement for US
Rapid Deployment Forces.
-- The US is a major source of military equipment for the
Moroccan armed forces, but Morocco's inability to meet FMS
repayment obligation may disrupt further assistance.
-- King Hassan, Chairman of the Arab League and its Fez
peace committee, welcomed President Reagan's Middle East
initiative and has urged other Arabs to accept it as a
starting point for negotiations.
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Nosh
Atlantic
Ocean
The
Gambia(),,
Banjuly_
Guinea
Bissau
Madeira Islands
(Port.)
/ Guelta
Zemmur?
esters
Mauritania
/ ?Fes
Rabat
MR ?Q?(c(c?
Upper
VoHa
0ua adougou *
Miger
*Niamey
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SUBJECT: Briefing for DDO for DCI on Morocco
Addressee
CPAS/IMD/CB
C/PES
D/NESA'
NESA/PS
NESA/AI/D
NESA/AI/M
DDI/NESA/M
27 May 83)
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