Last week’s visit by King Mohammad of Morocco to the disputed Western Sahara was branded by independence activists as provocative, and might cause an escalation in tensions with Morocco’s neighbor, Algeria. Socioeconomic concerns, however, might pose an even greater threat to Morocco, with nearly one-fifth of the population living on less than one dollar per day.
Following the two-day visit, Morocco’s King Mohammad VI announced the creation of an agency to promote economic development in Western Sahara. The Moroccan monarch also reiterated that Morocco would not give up an inch of the region. In response, the Polisario Front, the independence movement for Western Sahara, described the King’s words as “a declaration of war on international legality.” They also accused Morocco of plotting to plunder Western Sahara resources, which include phosphorous, fish stocks, and offshore oil.
The conflict over the disputed Western Sahara region has recently intensified, threatening to aggravate relations between Morocco and Algeria. King Mohammad’s visit came two weeks after a United Nations (UN) report suggested dividing up Western Sahara as one of four conflict resolution options. Morocco has rejected that proposal and accused neighboring Algeria of supporting the UN report in an attempt to partition the area. Following the UN report, Algerian President Abledaziz Bouteflika paid an unanticipated visit to Polisario headquarters; the first such trip by an Algerian President since the beginning of the conflict.
With the country’s foreign policy agenda in the spotlight, it is vital that Morocco not neglect fundamental economic issues. Last month, Moody’s Investors Service changed its outlook on the country’s foreign currency ceiling from stable to negative. The international rating agency cited that “Morocco’s creditworthiness is constrained by its vulnerability to climatic uncertainties and sluggish non-agricultural GDP (Gross Domestic Product) growth.” According to recent Ministry of Treasury predictions, Morocco’s economy will grow by merely 0.5 percent in 2002.
Meanwhile, the country’s external and domestic debt levels are moving in opposite directions. The government’s active debt management strategy has lowered the level of foreign debt to $14.2 billion, but this reduction has been offset by a rise in domestic debt to $15 billion, causing aggregate public debt levels to remain high. Moreover, weak international equity markets will make it difficult for the government to finance the deficit with privatization receipts. As a result, the government will likely rely increasingly on domestic debt financing, which will cause debt levels to expand further.
On the micro level, Morocco’s economic predicament appears even more troublesome. The number of citizens living below the poverty line of one dollar per day has, over the last three year, risen from 4.2 million to 5.5 million, equivalent to 18 percent of the population. Many of these impoverished are employed in the agricultural sector, which has suffered from three consecutive years of drought. Unemployment, which official figures put at 13 percent, is more likely closer to unofficial estimates of 20 percent of the workforce. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
