IV.  POLITICAL ENVIRONMENT

Morocco's bilateral ties with the United States date to 1787 when
the Sultan of Morocco and the fledgling American republic signed a
treaty of peace and friendship and established diplomatic relations
(placing Morocco among the first nations to recognize the
independence of the United States).  Since the end of the French
protectorate in 1956, Rabat and Washington have enjoyed close ties.
Morocco's early, statesmanlike activism in the search for peace in
the middle east, its role in the Gulf war, in Somalia peacekeeping
efforts, and in other peacekeeping activities on the African
continent make of the Kingdom a valuable ally on the international
stage.  King Hassan II, who ascended the throne in March 1961, has
enjoyed a warm personal relationship with a succession of U.S.
presidents.

Among the major political issues that could affect the business
climate figures the unresolved Western Sahara problem.  An armed
Polisario force of approximately 6,000, based in Algeria, has
clashed with Moroccan armed forces in the past and could do so
again.  Additionally, relations with Morocco's geostrategic rival
Algeria undergo periodic strains, currently exacerbated by Algeria's
support of the Polisario.  There is an Islamic movement in Morocco,
but it has not gained widespread support nor has it engaged in overt
violence.  Drug production in the northern Rif region is a major
source of local income and of concern to the EU because much of the
drugs are exported to Europe.  Democratization is progressing in
Morocco, albeit slowly.  The Moroccan government has made efforts to
curtail graft and corruption.

Morocco is a monarchy under the strong leadership of King Hassan,
who has ruled the country for more than thirty years.  Morocco's
parliament has 333 seats, two-thirds of which are elected directly.
The remainder are chosen by professional and trade organizations,
labor councils, and chambers of commerce.  The King selects the
Prime Minister, who then chooses the remaining cabinet members.
Morocco currently is governed by a non-partisan cabinet, or council
of ministers, since neither of the two opposing party coalitions
could form a clear majority in parliament.

Morocco is divided into provinces and prefectures, each of which is
headed by a non-elected governor who works for the Ministry of
Interior.  The cities and countryside have also divided publicly
elected communal councils with limited administrative authority.
The government is gradually implementing a decentralization program
which would grant greater responsibility to the communal councils.