MOROCCO: AUSTERITY AND THE MILITARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01058R000406020001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 22, 2016
• Document Release Date: April 27, 2010
• Sequence Number: 1
• Publication Date: March 19, 1985
• Content Type: REPORT

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1.0
Central Intelligence Agency
DIRECTORATE OF INTELLIGENCE
19 March 1985
MOROCCO: Austerity and the Military
Summary
Morocco's weak financial situation is making
it hard for the military to maintain its equipment
or to modernize. Reduced foreign exchange
resources have resulted in:
-- Dwindling spare parts inventories,
-- Reduced air force training to cut fuel
costs,
-- Almost a complete halt in equipment
purchases abroad.
In addition, the long war in the rugged desert of
Western Sahara and poor maintenance are rapidly
taking US- and French-made army equipment out of
operation.
Despite the deteriorating economy and tough
austerity measures, Rabat is shopping for new
arms. Efforts to rebuild inventories and purchase
new equipment will be hampered by the need to
reschedule more military debt this year and to
balance urgent social needs against military
modernization.
be directed to Chief, Arab-Israeli Division,
of the Maghreb Branch, Arab-Israeli Division, Office of Near
Eastern and South Asian Analysis. Information as of 15 March
1985 was used in its preparation. Questions and comments should
This memorandum was prepared by,
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The Royal Moroccan Armed Forces have been largely apolitical
since senior officers led two coup attempts against King Hassan
in 1971 and 1972. The King abolished the position of minister of
Defense--both attempts had been led by Defense Ministers--and
assumed direct control of the military. Although the military
was tarnished by the coup attempts, its self-esteem has risen in
recent years as a result of new weaponry--primarily from France
and the US in the late 1970s--and subsequent successes in the
Western Sahara war.
leconomic problems affecting
the flow of materiel, or a reduction in living standards could
cause the military to turn against the King. Hassan is sensitive
to this and has consistantly stated that defense will continue to
receive priority despite severe spending cuts elsewhere under
Morocco's IMF-guided austerity program. Hassan recently
announced that he is looking for $1 billion to spend on arms over
the next five years.
Military Modernization
A critical element in Rabat's continued emphasis on defense
spending is the need for new arms. Equipment losses in the
Sahara war have not been replaced. Furthermore, Moroccan armed
forces have not kept pace with the modernization and increased
capabilities of the Algerian military, which Morocco sees as the
major external threat.
of particular concern
to the military is the rapid decline in operational readiness due
to a lack of spare parts. Unforeseen diversion of maintenance
funds and frequent cannibalization of equipment for a "quick fix"
further lower the readiness posture.
Several recent incidents lead us to believe that the
deteriorating condition of military equipment is beginning to
cause serious problems in western Sahara where 80 percent of the
army is located.
Construction of the defensive berm, completed last
January, was delayed for six weeks while ground forces
undertook a major maintenance program.
The loss of a Mirage Fl, shot down on 12 January by an
SA-6, was caused in part by non-functioning early warning
equipment.
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General Mohamed Kabbaj, head of the Moroccan Air Force and
the new modernization efforts, says that improving air force
capability would serve two major roles:
-- Morocco would have a credible air defense vis-a-vis
Algeria, and
-- A stronger Moroccan military would force Algeria to take
Morocco more seriously in negotiation on Western Sahara.
The US Embassy in Rabat reports that if the present
inventory of Moroccan aircraft were fully operational, they would
not provide adequate air defense against the Algerian air
threat. For example, Morocco has no capability to interdict high
altitude, high speed MIG-25 aircraft such as the two Algerian NIIG
25s which last year overflew southern Morocco to the Atlantic
Ocean and returned across Western Sahara. The addition of F16s
or mirage 2000s would provide some balance to the three to one
Moroccan disadvantage in numbers and begin to close the
technological gap between the two air forces. As for tanks,
Algeria also has a three to one advantage in numbers, and its
armor is more sophisticated than Morocco's.
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Selected Military Comparisons
Fighter Aircraft
Tanks
APCs
Field Artilery
Morocco Algeria
81
328
914
222
The Military and the Economy
217
995
1,836
945
The Defense Budget. Morocco's defense needs have averaged
about 22 percent of the national budget and six percent of GDP
over the past decade. Rabat has allocated this year $640 million
for the armed forces and another $170 million for the national
police. Only education claims a larger. share of national
revenues. Official defense figures, however, probably understate
actual spending; the cost of the Saharan conflict is estimated at
$1 million per day by the US Embassy in Rabat and is in addition
to costs Morocco incurs for equipment, maintenance,
modernization, and military preparedness.
Morocco's financial crunch and inflation have constrained
real growth in defense spending since 1979. Moreover, these
problems have forced fundamental changes in defense spending
priorities. Contracts for new materiel as well as deliveries
have declined and military personnel costs have consumed an
increasing share of available resources.
Foreign Military Purchases. Rabat's deteriorating financial
position has resulted in the reliance on foreign credits and
grants to maintain its military. In addition, France and the US
have been primary sources of material and arms loans. Saudi
Arabia provided as much as $350 million in military aid annually
from 1977 through 1982 before cutting it off because of Morocco's
questionable accounting practices and Riyadh's higher priorities
in the Middle East. The USSR was a primary supplier before
perceived Soviet complicity in the Saharan conflict caused King
Hassan to terminate the military relationship with Moscow.
Morocco's weakened financial position, however, has caused
sizable arrears to mount on Rabat's 51.2 billion military debt,
especially to the French. Rabat also has narrowly avoided
default on US FMS loans on several occasions.
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Morocco: Foreign Military Debta
Million US $
Austria
Belgium
Canada
France
Germany
Italy
Spain
United Kingdom
United States
Outlook
opposition from the armed forces.
We believe that over the next two years Moroccan military
equipment requirements will become acute. The Western Sahara war
is a popular cause in Morocco, and the King has little choice but
to continue his military effort until a solution favorable to
Morocco is found. If the King is perceived as not providing
adequately for military requirements, he is likely to face strong
for the King.
In our opinion, Hassan will give priority to military
modernization at the expense of social and economic
development. While this approach wins him the support of the
military, the costs of the war are being questioned by an
increasing number of Moroccans and could eventually cause trouble
in the past and,
Morocco will be hard pressed to finance its military
modernization program from traditional sources of aid. Saudi
Arabia has questioned the prudence of Rabat's military spending
Riyadh is not likely to
95
73
6
610
12
45
170
4
160
underwrite the total cost of
The Saudis probably will provide 25X1
as $150 million annually for emergency needs, but will
the West to shoulder a greater share of Morocco's defense
purchases.
as much
look to
Hassan's modernization program.
France already has refused to supply new fighter aircraft
until financing is assured, a policy that probably will be
extended to other Moroccan arms requests. The US Embassy in
Rabat estimates that about $17 million in overdue payments is
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subject to Brooke amendment sanctions this year of which
$8 million is due on 30 April. Available US FMS credits for
fiscal year 1985 are barely sufficient to maintain the
operational status of US origin equipment.
Morocco: US Foriegn Military Sales Financing
Fiscal Year Loans Grants IMETa
1980
25.0
0.0
0.9
1981
33.4
0.0
1.0
1982
30.0
0.0
1.1
1983
75.0
25.0
1.3
1984b
26.7
30.0
1.5
1985
10.0
40.0
1.7
a - International Military Education and Training grant
assistance
b - Requested
Closer US-Moroccan ties, initially well received in Morocco,
are being criticized more frequently by senior Moroccan
officials. Morocco may reduce its military cooperation if the
terms or levels of US aid do not meet Rabat's expectations.
Senior military officers,?who believe that US assistance falls-
short of the country's needs, question the value of the US-
Moroccan access, and transit agreement.
If Hassan is unable to obtain arms from Western sources, we
believe he will turn to Qadhafi, his partner in the Moroccan
Libyan union. Libyan military stockpiles, especially Soviet-made
ground force equipment, are more than adequate to fill Morocco's
immediate needs--for example Libya nas about 1,450 tanks in
storage. Poor Algerian-Libyan relations probably would provide
Qadhafi with reason to honor Hassan's request. In addition, the
King may turn to Moscow for arms, as he has repeatly intimated to
US officials. Morocco has used phosphates as barter for Soviet
goods in the past and could use the output from the renewed
Moroccan-Soviet phosphate development project to facilitate
expanded military trade.
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SUBJECT: MOROCCO: Austerity and the Military
External
1 - Ambassador David Zweifel (State NEA/AFN)
1 - Mr. Olaf Otto (State INR/NESA)
1 - Mr. David Wigg (NSC, Intl Economic Affairs)
1 - Ms. Kim Savit (DOD OSD/ISA/NESA)
1 - Cmdr. Hank Carde (DOD OJCS/J5)
Mr. Albert J. Planagan (Commerce)
1 - Mr. Roger F. Pajak (Treasury)
Internal
1 - C/PES
4 - CPAS/IMD/CB
1 - PDB Staff
1 - D/NESA
1 - NESA/PPS
1 - C/AI
3 - C/AI/M
DDI/NESA/MORTMEIER
(19Mar85)
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APPENDIX
Morocco's Economic Prospects
Morocco's financial position is acute. Official non-gold
reserves of about $49 million cover less than a week of
imports. A large debt service burden--$2.5 billion--will force
Rabat to reschedule its foreign debt again this year. Several
drought years and weak markets for Morocco's primary
exports--phosphate and citrus fruit--have frustrated efforts to
redress economic problems. The current account
deficit--$1.2 billion last year--persists despite the sharp
decline in the burdensome oil bill since 1981--84 percent of
energy supplies are imported. Coupled with a burgeoning
population--over 50 percent is.under the age of twenty--the
country's economic ills have produced a serious unemployment
situation. Thirty percent of the urban work force is
unemployed.
Continued austerity will be the rule through the end of the
decade if Morocco is to right the economy. As a result, only
limited economic growth and no improvement in the stanaard of
living is expected over the next several years. With limited
financial reserves and a debt service ratio projected to exceed
60 percent this year on Morocco's $12 billion foreign debt, Rabat
has no alternative but to look for additional debt
relief--including military debt--through 1987. Morocco's
pressing social problems will increasingly consume scarce
financial resources if the regime is to forestall unrest.
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