x Abu Dhabi, UAESunday 23 July 2017

Morocco's visit to the GCC furthers its strategic shift

Political reform is essential in Morocco if social stability is to be maintained.

Morocco's King Mohammed VI's tour of Jordan and the Arab Gulf countries crystallised the implications of the so-called Arab Spring for those states. While turmoil in the Arab world has changed the political landscape of the region, it has in fact strengthened economic and political ties between Morocco and the GCC.

Since 2011, this relationship has moved beyond economic ties and aid to include further political and security cooperation. However, the Moroccan foreign mission last week appeared to be aimed mostly at economic objectives.

The Gulf states, as sources of investment in many countries, use their wealth to strengthen relations with Arab and non-Arab countries. Morocco's ties with the Gulf states stem from historical, religious and linguistic bonds, although Rabat also has strong historical ties to Europe, particularly Spain and France.

On the Arabian Peninsula, King Mohammed visited four countries - Saudi Arabia, Qatar, Kuwait and the UAE. Moroccan commentators have noted that the tour sought further economic assistance, which might also help to contain political dissent by enabling economic reforms, the creation of jobs and the increasing of salaries.

There is concern within Moroccan political circles about continuing pressure on society because of the economic crisis. The political and economic reforms introduced last year, which defused widespread protests, are believed to have changed little in the long term.

One of the major reforms enacted last year was to allow Islamists a larger political role, and the moderate Islamist Justice and Development Party now dominates parliament. But despite the limited reforms, Morocco still suffers from many of the same symptoms that led to protests across the region: youth unemployment, corruption and poverty. The wealth of the nation, as Morocco's robust media has commented, is concentrated in the hands of a small group of elite families with political connections.

Despite the geographic and economic distance between the GCC states and Morocco, economic assistance has deepened the relationship. Aid from the major Gulf donors has contributed significantly to Morocco's development.

However, European Union financial support to Morocco still exceeds that of the Gulf. In 2009 and 2010, France, Spain, Japan and EU financial institutions were the top four aid donors to Morocco; Kuwait ranked eighth and the UAE 10th. Since 2011, when Morocco was formally invited to join the GCC, financial support from the Gulf states has increased dramatically.

Over the next five years, Morocco is scheduled to receive billions of dollars to finance state investments in economic infrastructure, and social and agricultural development.

Last year, the Qatar Investment Authority signed an agreement with the Moroccan government to set up a $2 billion (Dh7.3 billion), 50/50 investment joint venture to help the latter's economy. The Kuwait Investment Authority's Al Ajial Investment, Qatar Holding and the Abu Dhabi fund Aabar agreed to inject 20.8 billion Moroccan dirhams (8.9 billion UAE dirhams) into a newly created investment vehicle called Wessal Capital.

Most GCC states have also invested substantially in tourism. During King Mohammed's recent trip, Saudi Arabia alone agreed to finance a number of development projects worth $1.25 billion through the Saudi Fund for Development.

To put this in perspective, however, Spain and France invest more in Morocco than all of the GCC countries combined. In 2010, French investment was estimated to be about 60 per cent of total FDI in Morocco, while Spain came second with about 8.3 per cent. France alone provides 38.9 per cent of total foreign aid to Morocco.

But since 2011, the UAE, Qatar, Kuwait and Saudi Arabia have begun to pump more aid into the Moroccan economy and to increase investment. GCC FDI in Morocco increased by 50 per cent in a single year. The motives appear to be both political and economic. The shift from the EU to the Gulf is not coincidental. While investment and aid from the EU are decreasing because of the financial crisis, Morocco has sought to strengthen its relations with the GCC.

There has been criticism of this relationship in some quarters. Morocco is facing serious social issues, mainly poverty and illiteracy. Although the GCC investment has been directed, to some extent, towards poverty alleviation and education, investment has for the most part been for profit.

GCC-Morocco relations now seem to be driven by political objectives. King Mohammed's trip was a clear message that Morocco is politically aligned with GCC initiatives.

The economy remains a priority, but it is certain that all of the monarchies share an interest in stability amid the regional unrest.

But regardless of the strength of the economy, Morocco still needs to pursue political reforms to maintain social stability.

 

Khalid Almezaini is a research fellow at the London School of Economics and Political Science