Jean R. AbiNader, MATIC
November 28, 2016

Jean R. AbiNader, Exec. Dir., Moroccan American Trade and Investment Center

The Rafik Hariri Center for the Middle East at the Atlantic Council recently published an issue brief on the “Aftermath of the Arab Spring in North Africa” by Mohsin Khan and Karim Mezran, well-known analysts of the region. They will present the paper at a public event on December 6. They argue that enough time has passed to assess the level of success that Algeria, Libya, Morocco, and Tunisia have achieved in meeting the challenges articulated by the Arab Spring demonstrators.

While I will concentrate my comments on Morocco, I have two general comments that may be helpful. First of all, the brief begins with an economic analysis using 2010 as the baseline. At that time, North Africa was suffering the ill effects of the 2008-2009 recession on its largest trading partner, the EU. Trade, foreign direct investment, and the knock-on impact on labor and domestic markets were all negatively impacted, which should bear some blame for the region’s economic performance.

Secondly, assessing progress in political reforms from 2011 onward overlooks advances in the socio-political environment before that time, so that efforts in Morocco since 1999, when the first opposition prime minister was appointed, is not reflected in the analysis. This is not to say that it would have made Morocco look more progressive, only that the difference was that Morocco was accelerating a process already underway rather than solely responding to public demands.

Beginning with the pre-Arab Spring economic environment, the report points out that Morocco was the most forward leaning in terms of promoting the private sector and encouraging investments. Although the government and palace are major players in the economy, it said, “At the same time, however, in contrast to the other countries, the share of state-owned banks in [the] financial system is relatively low at only 20 percent.” This allows banks to pursue growth through more facilities, such as international transactions and private equity investments that support higher returns for shareholders.

Among continuing economic concerns are the low growth rates (<4%) that feed into the high unemployment (>11% on average), lack of new business development in small and medium enterprises, and the outsized impact of the informal sector, which deprives the government of tax revenues, contributions to welfare programs, and labor stability.

On the political front, King Mohammed VI and Algeria’s President Bouteflika receive recognition that they “appeared to accept the validity of most of these demands [from the demonstrators] and announced far-reaching amendments to the constitutions of their respective countries.” However, the similarities end there, as Morocco’s constitutional reforms “appear to be more inclusive, especially the ones dealing with the political process.” The report mentions the appointment of the head of government from the largest party in the Chamber of Deputies, in this case the moderate Islamic PJD: “The political arrangement between the monarchy and the Islamists seems to be working by maintaining the stability of the system while allowing a progressive, albeit slow, opening.”

The good economic news in the report about Morocco includes the stand-by line of credit negotiated with the IMF, bringing down the “large fiscal deficit by gradually reducing government subsidies, maintaining monetary stability to keep inflation in check, and attracting FDI and foreign capital to improve the balance of payments.” Challenges remains to grow quality jobs, continue to reduce subsidies in energy and foodstuffs, and reduce wealth inequality.

Domestically, the authors note both the positive and “dark spots.” “In fact, the strategy of slow but increasing reforms and incremental political openings undertaken by the monarchy seems to be succeeding.” In addition to the process for appointing the head of government, high marks are given to the maturing role of the parliament, a more effective role for political parties, and the modest efforts to reform the security apparatus.” The latter program to make the police and judiciary more responsive has been plagued by charges of police brutality, corruption, and negligence. Another negative element is that the “arbitrary detentions of journalists have given a perception of rising intolerance on the part of the authorities.” In sum, the report says “While these issues undoubtedly raise an alarm, they are not yet enough to condemn the monarchy’s strategy of progressive liberalization.”

Key recommendations in the Issue Brief include focusing on labor market reforms and “improving the business climate to encourage and promote private sector activity.” This would include reducing the skills mismatch between potential workers and the training they receive through greater collaboration with the private sector. Morocco again is recognized for “setting up simpler and more transparent procedures covering customs, property registration, and establishing businesses. It has also launched a national strategy to fight corruption…”

It is useful to have external metrics by which to judge a country’s progress, otherwise, regional-based comparisons may be distorted by political considerations. This report is helpful both as a look back and a prognosis for how Morocco should strengthen its efforts for political and economic reforms.