120. Memorandum of Conversation1
SUBJECT
- Economic Aid
PARTICIPANTS
- The Secretary
- Mr. J. Wayne Fredericks, Deputy Assistant Secretary
- Ambassador William C. Trimble, Deputy Assistant Secretary
- Mr. Alec Toumayan, Interpreter
- His Royal Highness Prince Moulay Abdullah
- His Excellency Ahmed Laraki, Moroccan Ambassador
- His Excellency Driss M’Hammedi, Director General, Royal Cabinet
- His Excellency Ali Bengelloun, Director General, Moroccan Phosphate Office
The Secretary asked the Prince whether he thought his mission to interest American business in Morocco had been successful.2
The Prince said he thought some useful contacts had been established. An agreement between Occidental Petroleum and the Phosphate Office had been worked out, and they had talked with International General Electric about an electric iron smelter for a proposed steel mill near Nador. The Prince pointed out that Morocco and Tunisia had hoped to [Page 178] get agreement from Algeria for an integrated steel mill within the concept of Maghrebian economic cooperation. However, the Algerians were going ahead with plans for a Soviet-financed mill of 800,000 tons annual capacity. Morocco feels if there is not to be a Maghreb mill, Morocco should have one of its own.
The Secretary stated that private investment has an important role in economic development. It was his observation, during his years with the Rockefeller Foundation, that one of the most important factors in getting US businessmen interested was in the word of mouth exchange of information which went on informally at clubs and at luncheons, where business leaders might be discussing the investment climate and possibilities. It would be to Morocco’s advantage to build personal contacts with these leaders, even as Ambassador Bengelloun and Ambassador Laraki have been able to on a limited scale here in Washington. The Secretary further noted that the great international bankers play a vital part in this process and asked what banks the GOM used.
Mr. M’Hammedi named the Bank of America, National City, and Bankers’ Trust. Also, he added, the ExIm Bank.
The Secretary said the latter was, of course, of a different type. The private banks were the important ones, because what they had to say regarding a country, businessmen would listen to. They would not be as impressed by a government bank. He asked how the domestic situation looked in Morocco.
Mr. M’Hammedi said that the Moroccan leaders saw the role of the state as a coordinator of the various cadres in the country. Unfortunately, Moroccans are poor businessmen and have few cadres. They do have a liberal investment code, however, which should encourage foreign businessmen to play a role. The GOM has close contact with the IBRD, and is following their advice. But Morocco needs US aid and private investment. It needs guidance and orientation from the US and similar countries, and advice on which companies to deal with and which schemes contribute most to the country’s development.
The Secretary agreed that some development projects contributed more than others, so priorities should be established. He suggested that it would be useful to have some talks together to establish priorities for investment and development. He asked whether some system of priorities was now in effect.
Mr. M’Hammedi noted that the King and Parliament had set agriculture as a first priority, both in the modern and traditional sectors, since almost 80 per cent of the country lived off agriculture. He cited the example of the King’s recent talk to the nation in which he asked the people to express their opinion as to whether reduced sugar prices on the current world market should be passed on to the consumer (Morocco has a very high per capita sugar consumption) or whether the savings Morocco [Page 179] expected to realize in the next year should be put into a special fund to build a flood control and irrigation dam benefitting the people and economy of the Tafilalet region where a disastrous flood had recently occurred. The King had just telephoned the Prince to tell him that the people had indicated by an overwhelming majority their wish to invest the savings in the dam project. The second priority is the formation of cadres; teachers, technicians, administrators, engineers. The third priority is tourism, which not only brings in foreign exchange but permits foreign people and the Moroccans to get to know each other.
In establishing these priorities, the King had not overlooked education, industry, and public health. It is his belief, shared by his government, that the best defense against foreign subversion is prosperity. Better jobs, wages, education, and health form the basis.
Mr. M’Hammedi welcomed the idea of bilateral discussions on priorities. He was sure the Prince would pass the suggestion on to his brother, the King, and he, M’Hammedi, would do the same. The King will undoubtedly instruct the Ambassador to pursue this matter.
The Secretary said this would be fine, but pointed out that priorities should be established in the use of private investment, because there, too, some projects help a great deal more than others. He mentioned tourism which earns foreign exchange. He asked what numbers of tour-ists Morocco was getting.
M’Hammedi said that last year there were 500,000 and that they expected the number to reach 800,000 in a few years. The main limitation at this time was insufficient hotels.
The Secretary observed the trend is to visit countries and areas never seen before. Statistics show that the average visitor to France now spends only three days there. Spain, however, is up to 15,000,000 visitors a year. One third of those might go on to Morocco if the facilities were there. It would be a great boon to Morocco.
- Source: Department of State, Central Files, AID (US) 8 MOR. Confidential. Drafted by Trimble, Chase, and Toumayan and approved in S on January 10, 1966. The source text is labeled “Part IV of VIII.” The conversation was held in the Secretary’s Dining Room.↩
- King Hassan’s brother, Prince Moulay Abdullah, and the Director General of the Royal Cabinet, Driss M’Hammedi, were on a private visit to New York and Washington December 10–18 with the stated purpose of making contact with U.S. business leaders and encouraging them to invest in Morocco.↩