How the Abraham Accords May Help Fulfil Morocco’s Ambitious Vision
by Keith Boyfield*
*Keith Boyfield is Senior Fellow of the Euro Gulf Information Centre.
Morocco is one of the five key partners to the Abraham Accords. As one of the leading economies in North Africa – gross domestic product (GDP) on a purchasing power parity (PPP) basis is $274 billion – it is an important and integral part of this initiative which promises to deliver both peace and prosperity (1). Several business-oriented institutions have already been created by the Accords, notably the Moroccan-Israeli Business Council and the Moroccan-Israeli Chamber of Industry. Such bodies are designed to enable Moroccans and Israelis to meet and get to know one another: a necessary pre-requisite to striking profitable business deals. The strategy appears to be working. In 2021, trade shot up by 84 percent compared with 2020 and prospects over the next few years are equally encouraging (see table below).
Table: The Boom in Trade among Member Countries of The Abraham Accords
Source: Israel Central Bureau of Statistics
Dr Liam Fox MP, Chair of the UK Abraham Accords Group, points out in an exclusive interview for EGIC that:
‘It is not only its potential in trade that makes Morocco a key player. Its unique geopolitical position gives it influence that goes beyond its simple economic importance. It is a gateway to the EU, North Africa and the developing nations of the continent.’(2)
Commenting on Morocco’s improved relation with Israel, Mohamed Chtatou, an eminent academic at the International University of Rabat, remarks, ‘People are happy [the relationship] is coming out of the closet(3).’ He judges relations will continue to grow and improve.
Morocco’s Stop-Go Economy
Morocco, with its population totalling 36.9 million, is a significant player in the region, ranked sixth among 14 countries in the Middle East and North Africa region in the Economic Freedom Index(4). The country’s economy is bouncing back from a recession triggered by the Covid pandemic. According to the calculations of the International Monetary Fund (IMF), Morocco’s GDP shrank by 6.3 percent in 2020, yet it managed to grow by 6.3 percent in 2021. This year the economy is forecast to grow by a less spectacular 3 percent as countries across the region wrestle with the impact of the pandemic coupled with the dire consequences of the conflict in Ukraine. The latter has seriously damaged growth prospects, pushing up commodity prices, especially food. Despite these challenges consumer price inflation is expected to remain reasonably well managed. The IMF estimates the retail price index will climb by 4.4 percent in 2022. Unemployment, however, remains relatively high at 11.8 percent.
Morocco has managed to develop a broad range of exports spanning motor vehicles (amounting to $3.79 billion), mixed minerals and chemical fertilisers ($3.42 billion), insulated wire ($3.41 billion), phosphoric acid ($1.25 billion), and calcium phosphates ($1.17 billion). These are mainly exported to neighbouring Spain ($6.97 billion) along with France ($6.12 billion) and Italy ($1.6 billion). India ($1.39 billion), and Germany ($1.18 billion) are also important export markets.
The 84 percent year-on-year growth of Morocco’s trade with Israel to $41.6 million is just the beginning of a valuable new trading relationship.
Tourism has traditionally been an important source of revenue for Morocco, directly contributing around seven percent of GDP, leaving aside the many indirect positive benefits, for example, in the field of transport. However, the Covid pandemic hit this sector hard. Tourism receipts were down 67 percent in the year to April 2021. Looking ahead, tourism is likely to be one of the main beneficiaries of the Abraham Accords. Over the last 18 months, hundreds of thousands of Israeli tourists have booked hotels in Morocco(5). Henri Abikzer, who owns the tour agency Fast Voyages, based in Rabat, reckons we are likely to see at least 200,000 Israelis visit Morocco in 2022. This boom in tourism is underpinned by new air links, such as a scheduled weekly service between Casablanca and Tel Aviv launched by Royal Air Maroc on 13 March 2021. Several other airlines have also begun servicing the two countries, including El Al and Israir.
Ali Bouzerda, a former Reuters correspondent and now an Affiliate Professor at HSPJS College, International University of Rabat, points out ‘the first Moroccan Jews from Israel were seen in the Medina of Rabat and Marrakesh in the holy month of Ramadan’ this year. As Ali stresses, ‘That’s a good sign for Moroccan tourism in these hard times.’(6).
Ambitious Reform Programme Needs Funding
Morocco has very ambitious plans for the future, particularly with regard to extending social welfare programmes across society. This will prove expensive to implement. Latest projections suggest that the new measures will require a broadening of the tax base. All told, the programme is estimated to account for 4 percent of GDP ($274 billion) annually over the next five years, rising to 10 percent of GDP per year by 2030.
If Morocco is to fulfil this ambitious social welfare programme, it will need to boost economic growth. This is where the Abraham Accords may prove so crucial since Israeli entrepreneurial know-how and technical ingenuity may well add a decisive edge.
The social reform plans, detailed in a report known as the New Development Model (NMD), aim to double Morocco’s GDP per capita by 2035. The blueprint also seeks to reduce the share of informal jobs from around a staggering 70 percent today to 20 percent in 12 years’ time. The NMD report further aims to double women’s labour participation rate in the economy to 45 percent.
Key to this structural reform agenda is the development of Moroccan private sector. This will require slashing onerous red tape, stemming from a cumbersome regulatory regime. At the same time, the country needs to strengthen independent regulators, lower business costs and raise the quality of both human and physical capital, notably by increasing broadband access across Morocco. More than anything else, Morocco must prioritise incentives in order to channel scarce resources into those sectors with high value-added and job multipliers. This can best be implemented through tax incentives and a programme of transferring state owned enterprises (SOEs) to the private entrepreneurial sector. Although the privatisation programme was relaunched in the 2019 budget, the government still had a direct stake in 225 SOEs.
In this context, international investors are set to play an important role. Morocco is creating new special economic zones to attract these international investors. By way of an initial capital base, the Mohammed VI Investment Fund will invest seed finance in key sectors of the Moroccan economy by providing equity or quasi-equity to local firms. This strategy is aimed at providing an appropriate catalyst for investment from domestic and, above all, international investors. Currently, private investment represents a third of the funding going into the New Investment Plan – a crucial part of the NMD – but the King, Mohammed VI, and his ministerial team, aim to raise this share to two-thirds by 2035 (7).
This is where the Abraham Accords may prove so relevant as Israeli investors are likely to find some of these investment opportunities attractive. Particularly, there appears to be substantial potential in the renewable energy sector. In this regard, the UAE is likely to play an important role as an investment partner. The Abu Dhabi Fund for Development has already financed 82 developments projects in Morocco with a total value close to $2.45 billion (8).
Renewable Power: A New Dawn
Morocco has a real opportunity to make green investment a key driver of growth and jobs. Drawing on its favourable climate for wind and solar power, Morocco could become a significant renewable energy exporter to meet Europe’s growing demand, particularly in the light of the uncertainty created by the Ukraine crisis. EU nations need to find new supplies of electricity, and fast. A promising scheme that is already being taken forward is a project to supply power via a 3,800 km undersea cable linking Moroccan solar and wind producers with 7 million homes in the UK.
Israeli technical know-how combined with capital from the Abraham Accord partners, Bahrain and the UAE, could turbo-charge moves to diversify away from fossil fuels – coal contributes almost a third of Morocco’s current energy needs – and towards renewable sources. While Morocco has increased the share of renewables to a third of installed capacity in 2019, renewables today represent only 20 percent of production and 7 percent of energy consumption. The NMD blueprint report aims to increase renewable energy’s share from less than 10 percent to 40 percent of energy consumption by 2035.
A Growing List of New Initiatives
Israel has already shown how it can contribute to strengthening the Moroccan economy. Over the last 18 months in a flurry of initiatives Morocco and Israel have agreed:
In March 2021, Morocco’s Employers’ Union (Conféderation Générale des Entreprises du Maroc/CGEM) and the Israeli Employers and Business Organisations (IEBO), signed a strategic partnership to enhance dialogue and contacts between the two countries’ business communities focusing on import and export, research and development, innovation and technology (9).
In August 2021, Israel’s Foreign Minister, Yair Lapid, visited Morocco where he inaugurated the Israeli liaison office in Rabat and signed numerous MOUs, including an agreement establishing a political consultation mechanism to strengthen relations between the respective Foreign Ministries (10).
On 10 August 2021, the Hebrew University of Jerusalem and Morocco’s Mohammed VI Polytechnic University signed an MOU to promote academic collaboration, focusing on student and academic staff exchanges as well as joint research and collaborative degrees (11).
On 11 August 2021, the Foreign Ministers of Israel and Morocco signed an MOU centred on culture, youth, and sports (12).
On 14 September 2021, Ben-Gurion University of the Negev (BGU) signed an MOU with Morocco’s Université Internationale de Rabat to collaborate on the study of Moroccan Jewry. The BGU also agreed earlier in the year with Morocco’s Mohammed VI Polytechnic University to cooperate on sustainability research (13).
On 13 October 2021, Morocco’s OCP Group and Israel’s ICL Group signed an MOU to offer scholarships to promote research through the funding of sustainability programmes at Mohammed VI Polytechnic University and Ben-Gurion University of the Negev (14).
On 9 November 2021, the Aharon and Dahan Center for Sephardic Culture, Society, and Heritage Education at Bar-Ilan University in Ramat Gan and the Center for Studies and Research on Hebraic Law in Essouiara signed an MOU on a wide-ranging cooperation and promotion of research, notably regarding Morocco’s Jewish-Islamic legal and cultural heritage (15).
The UAE’s Abu Dhabi Future Energy Company (Masdar) in tandem with Morocco’s National Office of Electricity and Drinking Water, launched a Solar Home Systems project to demonstrate how renewable power can supply nearly 20,000 homes in more than a thousand rural towns across Morocco. This has the potential to serve as a replicable model for local renewable heat and power schemes. Dr Al Jaber, the UAE’s Minister of Industry and Advanced Technology, highlighted the fact that this could prove to be a landmark initiative in a keynote address to the 15th Energy Conference held in Rabat on 14 March 2022 (16).
On 23 March 2022, Morocco's Ministry of Industry and Trade and the state-owned Israel Aerospace Industries signed a Memorandum of Understanding (MOU) on aerospace cooperation (17).
In February 2022, The Abraham Accords Peace Institute signed an MOU with the ISRAEL-is organisation to work on building constructive ties between the younger generation of leaders in Bahrain, Israel, Morocco and the UAE. The primary objectives are to develop new forms of cooperation in entrepreneurship, culture and sports, academia and the environment. ‘The key to ensuring that the Abraham Accords continue to flourish for generations,’ observes Robert Greenway, President and Executive Director of the Abraham Accords Peace Institute, ‘is through deepening people-to-people cooperation' (18).
The Way Ahead
There are significant commercial and cultural benefits to be reaped for both Morocco and Israel from the Abraham Accords. Greater trade between the two countries and investment by Israeli financiers in burgeoning sectors such as renewable energy, broadband technology infrastructure and tourism, have the potential to exert a transformative change across the whole of Morocco. What is more, as Ali Bouzerda points out, ‘Morocco eyes Israeli military technology to protect itself from threats from neighbouring Algeria.(19)’ This centres on the long running dispute over the future of the former Western Sahara. Ali adds, ‘The Israeli-Moroccan normalisation angered Algeria’s authorities who denounced the Accords and considered it as a move ‘aimed at destabilising Algeria. But later on, this year in fact,’ Ali notes, ‘during the visit of US Foreign Secretary Blinken to Algiers, there was a shift in the discourse when President Tebboune said:we have nothing against Israel…we just wanted a two-state solution to the Palestinian issue.(20)'
Perhaps this can be seen as a reflection of the healing impact of The Abraham Accords and one that is a good omen for further cooperation in the years ahead.
As Dr Liam Fox MP notes in his interview with EGIC, ‘The interaction between Israel and Morocco is indicative of a growing trend where countries will deepen economic and political ties with partners who have a similar outlook rather than simply sharing borders. Functional similarity may trump regional blocs in the years ahead (21)'.
10 May 2022
(1) 2022 Index of Economic Freedom, Heritage Foundation, https://www.heritage.org/index/country/morocco.
(2) Dr Liam Fox MP, the former UK International Trade Minister, is Chair of the UK Abraham Accords Group, tasked with promoting the Accords and the wider cause of peace across the region. Exclusive interview with the author for EGIC, 5 May 2022.
(3) Ben Lynfield, ‘Israel’s Rewarding Road to Normalization,’ Foreign Policy, 31 January 2022, https://foreignpolicy.com/2022/01/31/israel-abraham-accords-normalization-middle-east/.
(4) 2022 Index of Economic Freedom, Heritage Foundation.
(5) Jerusalem Post, 12 December 2021
(6) Exclusive interview with the author for EGIC, 3 May 2022.
(7) See Margarita Arredondas, ‘The King Mohammed VI unveils new economic project to increase private investment,’ Atalayar, 17 February 2022, https://atalayar.com/en/content/king-mohammed-vi-unveils-new-economic-project-increase-private-investment for further details.
(8) Emirates New Agency, ‘UAE guest of honour at 15th Energy Conference in Rabat,’ 14 March 2022, http://wam.ae/en/details/1395303029639.
(9) Safaa Kasraoui, ’Morocco’s Confederation of Enterprises, Israel’s IEBO Sign Trade Agreement,’ Morocco World News, 23 March 2021, https://www.moroccoworldnews.com/2021/03/337967/moroccos-confederation-of-enterprises-israels-iebo-sign-trade-agreement.
(10) Safaa Kasraoui, ‘Morocco, Israel Sign Agreements Strengthen Political, Air, Cultural Cooperation,’ Morocco World News, 12 August 2021, https://www.moroccoworldnews.com/2021/08/343873/morocco-israel-sign-agreements-strengthen-political-air-cultural-cooperationDefense.
(11) Ministry of Foreign Affairs of Israel, ‘Hebrew University and Morocco’s Mohammed VI Polytechnic University sign historic MOU,’ 18 August 2021, Gov.il, https://www.gov.il/en/departments/general/hu-and-um6p-sign-historic-mou-18-august-2021.
(12) Ministry of Foreign Affairs African Cooperation and Moroccan Expatriates, ‘Morocco, Israel Sign Three Cooperation Agreements,’ 11 August 2021, https://www.diplomatie.ma/en/morocco-israel-sign-three-cooperation-agreements.
(13) Ben-Gurion University of the Negev, ‘BGU and UIR in Morocco Embark on Historic Academic Collaboration,’ 14 September 2021, https://in.bgu.ac.il/en/pages/news/BGU_UIR.aspx.
(14) Bloomberg, ‘OCP Group and ICL Join Forces to Support Sustainability Programs at UM6P and BGU,’ 13 October 2021, https://www.bloomberg.com/press-releases/2021-10-13/ocp-group-and-icl-join-forces-to-support-sustainability-programs-at-um6p-and-bgu.
(15) i24NEWS, ‘Moroccan and Israeli research centers sign a cooperation agreement,’ 9 November 2021, https://www.i24news.tv/en/news/international/1636453851-moroccan-and-israeli-research-centers-sign-a-cooperation-agreement.
(16) Emirates New Agency, ‘UAE guest of honour.’
(17) IAI, ‘IAI and Morocco sign Aeronautics MOU in the Aviation Industry Sector,’ 23 March 2022, https://www.iai.co.il/morocco-israel
(18) The Abraham Accords Peace Institute, ‘AAPI AND ISRAEL-IS to cooperate on building ties between young leaders from Israel, Morocco, the UAE and Bahrain,’ 1 March 2022, https://www.aapeaceinstitute.org/latest/aapi-and-israel-is-to-cooperate-on-building-ties-between-young-leaders-from-israel-morocco-the-uae-and-bahrain.
(19) Exclusive interview for EGIC, 3 May 2022.
(21) Exclusive interview for EGIC, 5 May 2022.