Morocco’s Strategic Position in a Fragmenting Global Economy: An Interview with Fathallah Oualalou

In a context of fragmentation of globalization, renewed American protectionism and Chinese industrial domination, the former Minister of Finance, Fathallah Oualalou, explains how Morocco can take advantage of its geography to further anchor itself in global value chains.

In this interview given to Médias24 on the occasion of the Atlantic Dialogues 2025, Fathallah Oualaalou, former Minister of Economy and Finance (1998-2007) and Senior Fellow at the Policy Center for the New South, gives his reading of the recompositions of the global economy and their implications for Morocco, in terms of trade relations and positioning in global value chains.

In a context where Europe,the main trading partner,is experiencing low growth,fathallah Oualaalou recommends that Morocco consolidate its European and Mediterranean roots while activating the Atlantic lever to become a relay between regions,particularly in the energy transition.

He also calls for a two-stage economic diplomacy, near (Europe, Africa) and far (Americas, asia), by making trade a springboard towards investment, and with the objective of strengthening the national industrial fabric and moving up the value chains.

Médias24: Since Trump’s first presidency and the covid health crisis,experts have been talking about a phenomenon of fragmentation of the international economy. Is this trend confirmed and do you think it will continue in the long term?

• Today globalization, even if it is fragmented, is still there. The rise of Asia, and particularly China, in international value chains has meant that international economic relations have changed. Today, countries are engaged in real competition to capture a place in these value chains, at different levels.

This positioning depends, among other things, on the level of salaries. Where they are very weak, countries mainly manage to attract segments located at the bottom of the chain. Conversely,others focus on the top of the chain and intend to maintain this advantage,in particular by keeping design within their territory.

I believe that Morocco is a rather captivating case to take into account. We are not an oil-producing country, and that is perhaps blessed for us.Simultaneously occurring, as our independence, we have developed special relations with Europe.

Initially, we mainly exported agricultural and mining raw materials, but also labor. The rise in wage levels in Europe has changed things. This has gradually allowed us to attract what we call “global professions”, those in the automobile, aeronautics… In terms of automobiles,we today have two major manufacturers. But beyond that, what is more significant is the ability to attract equipment manufacturers, to seek to improve the integration rate.

Today, automobiles and aeronautics can be considered classic professions. New global value chains are developing around professions linked to digital and artificial intelligence without forgetting the renewable energies which are driven by the challenge of the energy transition. We coudl also find our place there.

– Since its arrival, the Trump management has added a dose of protectionism with the policy of customs tariffs. What is the impact for Morocco in particular, and the world in general?

• The American economy suffers from a large trade deficit, particularly with China and, to a lesser extent, with Europe and Latin America. Faced with this challenge, a new policy of protectionism is beginning to be put in place. But it is indeed not absolute, as in any case, there are negotiations. For example with Europe, there was agreement on a rate of 15%. Which is a much lesser evil than what was initially planned.

Even if there is a lull in tensions with China, this will certainly have consequences, particularly in the Asian region. B

Morocco’s Economic Strategy and Public Finances

We must not forget that Morocco is the leading producer of phosphate, producing three times more than its competitors.

– But for an internal need, I think…

– No, even for external demand! And it’s a mistake on their part, from my personal perspective, as they only have reserves for forty years.We have reserves for several centuries.This is why it woudl be interesting to develop a specific partnership on the food issue with China. Not only to share the global market, but also to work together in Africa. Because Africa is the continent experiencing the most significant demographic growth and, consequently, it will be the continent with the greatest demand for fertilizers and food products.

We must also remember that China has a trade balance with us that is very favorable to them, but this is also the case with all countries. So it is important for us to find a place in the Chinese market, even if it is far away. These two strategies of proximity and distance must go hand in hand in Morocco’s commercial policy.

– You were minister of Economy and Finance in the El Youssoufi and Jettou governments. What difference do you see between the current period and when you were in government, particularly in terms of public finances?

– What I can say is that during the period I was responsible, Moroccan culture in terms of mastering the macroeconomic framework has progressed a lot.

I believe that Morocco has as learned a lesson,especially from the 1980s when it was obliged to practice the policy of structural adjustment. 2007 was the only year the budget was in surplus.

So I believe that on this level, all governments, in one way or another, seek to move away from excesses, particularly in terms of deficit. Even though our deficit has increased in recent years, it is indeed controllable. The same is true for debt. I believe that it is indeed essentially due to this culture that Morocco developed between 2000 and 2007. I think that it is a good inheritance.

– We feel that Morocco is very enterprising in terms of projects that are put on the table, but do we have the means for all these ambitions? The public finance equation is not easy to solve, what do you think?

– it is important to be ambitious, but, at the same time, it is important to be realistic. This is normal; we must take our limits into account. If we stay on the li