Editor’s note: This article was featured in Ventures Africa magazine’s August/September issue

In February 2007, there was great rejoicing in Morocco. Salma Bennani, the wife of King Mohammed VI, had given birth to a baby girl – a first daughter and sister to Crown Prince Moulay Hassan, born in 2003. Such was his happiness at the news that Mohammed VI immediately pardoned 9,000 prisoners, including 14 on death row. It is a story that seems to come from the 18th century rather than the 21st.

Yet in this century just as in the 18th, Morocco is a monarchy: a country ruled (at times) by decree, where a huge proportion of the nation’s wealth lies in the hands of one man. King Mohammed’s colossal fortune, estimated at some $2.5 billion, made him the world’s 11th richest royal in 2011, ahead of the rulers of Qatar and Kuwait, and even Britain’s Queen Elizabeth.

Six years on, King Mohammed now 49 years old, remains on the throne, his popular wife and two children by his side. But Morocco is no longer the unquestioningly obedient kingdom it once was. Aftershocks from the Arab Spring, the prolonged European downturn and an increasingly fierce Moroccan anti-monarchy movement have shattered the domestic harmony of his court, forcing the king to sell major parts of his commercial empire, even as he cedes several areas of control to the democratically elected government.

Morocco’s largest company, Société Nationale d’Investissement (SNI), in which the king’s family holds a 60-percent stake, has sold off a number of large holdings in recent months. France’s Danone took over its 38-percent share in dairy firm, Centrale Laitiere, while foreign buyers acquired edible oils producer, Lesieur Cristal, for $900 million. The monarchy’s 51-percent stake in biscuit-maker Bimo was sold to US food giant, Kraft. SNI is currently looking for buyers for its shares in Morocco’s largest publicly traded bank, AttijariWafa Bank. According to Karim Chbani, SNI’s spokesman and Investment Manager, the company is moving from “a conglomerate owning and operating its businesses to an investment fund incubating, developing and then floating its businesses.”

By selling large chunks of Moroccan businesses to overseas investors, the king is actively encouraging foreign direct investment and gradually opening up the Moroccan economy to the brisk winds of globalisation. “Morocco has been able to attract growing foreign investment in the last 10 years,” says Chbani. “It is currently considered to be the second most important platform in Africa behind South Africa.” The move to shrink his holdings should also protect the king from accusations of conflict of interest. Foreign investors have questioned how they can compete in the Moroccan market when the most powerful businessman also controls much of the government.

In 2010, the king delisted SNI’s shares from the Casablanca Stock Market, shielding him from public scrutiny of his wealth, income and assets. Similarly, SNI’s exit from the food sector was designed to forestall criticism. Moroccan economist Najib Akesbi believes that the presence of the king in this heavily exposed sector had become a weighty burden to bear politically. SNI now concentrates on strategically important high-growth sectors such as renewable energy, telecommunications and real estate.

But the rumbles of discontent continue, some commentators arguing that the king’s commercial role is a stimulant to inward investment – and a vital source of funding for Moroccan industry – and others maintaining that his remaining interests are still too monopolistic and will deter foreign investors.

Liberal but Not Too Liberal

Through its French colonial history and its geographical proximity – Spain lies just 14 kilometres to the north, over the Straits of Gibraltar – this country of 32 million predominantly Muslim people has strong links with Europe. Despite recent dips in Europe’s economy, this connection has stood the country in good stead, its influence extending far beyond investment. King Mohammed VI recieved a PhD in law from Nice-Sophia Antipolis University in France and admires the European style of government. On assuming the monarchy in 1999, after the death of his father King Hassan II, Mohammed VI introduced legislation to strengthen human rights, as well as the position of women in his country. Moroccan women now have the greatest political representation of any country in the Arab world, with a guaranteed share of parliamentary seats and rights to divorce and to own property. He also established an “equity and reconciliation” commission, based on the experiences of South Africa following Apartheid, to deal with the abuses of his father, widely held responsible for the torture and imprisonment of thousands of Moroccans in the 1960s and 1970s. Mohammed VI has spoken out on Morocco’s need to democratise, saying, “Our country has clearly opted for political pluralism in a democratic society. This choice implies the setting up of a system and institutions which must be governed by the roles of democracy.”

For a while it looked as though democratising was causing instability. Indeed there have already been some signs of unrest. While Morocco has not endured the sort of violent battles between protestors and security forces that have left so many dead in Egypt since 2011, the country does have a vocal reform movement. Known as the February 20 Movement, after its initial day of protest in 2011, it won immediate concessions from the king, who announced a package of political reforms in March 2011. The changes were followed by a referendum in July and elections on 25 November of the same year. By the end of 2011, the Parti de la Justice et du Développement (Party of Justice and Development) was in power.

Quite how much control King Mohammed has given to the new government is a hotly debated issue. He remains head of Foreign Affairs, of Defence and of certain domestic policies and departments, and still owns the majority of SNI shares. According to a US cable publicised in the WikiLeaks scandal, he has a commercial interest in “virtually every real estate project” in Morocco. A former US ambassador to Morocco described the “appalling greed” of King Mohammed’s close associates, who have gained a firm grip on the most profitable areas of Moroccan commerce. A common slogan of the February 20 protestors was “wealth or power!” – a demand that the king choose one or the other. It is a variation on the old adage “no taxation without representation.

Despite all of this, Moroccans feel a deep-seated reverence for their king, whose family’s Alaouite Dynasty has ruled their country for more than 350 years. “The monarchy in power is very much in tune with society,” comments one Oxford University PhD student, currently studying the Moroccan economic and political situation and speaking on condition of anonymity for fear his research funding may be withdrawn if he is seen as critical of the king. Describing how the monarch “came down hard” on the February 20 activists, he says, “Protestors backed off when they realised how far the government would go to stop protests.” The speed of the government’s response to the protests, which culminated in the 2011 elections, prevented the situation from getting out of hand. “There’s still vocal dissidence but as long as the government doesn’t clamp down further, the situation shouldn’t evolve violently as it has in other countries,” the student says. Perhaps King Mohammed VI has realised that he is treading a fine line.

A Guiding Hand for the Economy

Back in 2007, the king welcomed a high-level delegation of economists from around the world to a congress of the International Economic Association. Addressing the meeting, the king said, “In this new environment, such concepts as those of development and wealth generation and distribution often take on different meanings and connotations as a result of the dramatic changes which have taken place in the fields of science and technology. These developments also put a severe strain on traditional institutions and conventional methods of regulation, control and governance.” Analyzing what he called “the development process underway in Morocco,” he spoke about reconsidering the “distribution of public policies in a way which allows closer proximity to the citizens.” Sustainable human development, he said, will never be possible while “an entire segment of the nation’s human potential remains on the fringes of social life and excluded from wealth generating activities”.

This sounds more like the “King of the Poor” Mohammed VI promised on his accession that he would be. Indeed, the Moroccan authorities have been notably unwilling to expose the general population to the potentially harsh reality of a full market economy. According to economists, Morocco’s economy is blighted by an unsustainable level of subsidy for food and fuel – commodities the prices of which have risen sharply in recent years as the general economy has struggled. (Tourism receipts have dropped and the Arab Spring, though it did not profoundly touch Morocco, did still dent foreign direct investment. The rate of investment bounced back in spring 2013, according to Karim Chbani.) Food and fuel subsidies rose from $500,000 in 2004 to $6.5 billion in 2012 – equal to around 8 percent of GDP. This was due to policies the incoming government enacted in 2011 in response to the Arab Spring – generous state provisions such as food and fuel subsidies helped to assuage public opinion. Public debt has reached $67 billion, or 60 percent of GDP, rising from 48 percent in 2008.

Public sector salaries are also high, but to correct public spending by firing employees or slashing subsidies could lead to public outcry and possible rebellion. Already there is dissatisfaction and resentment because of corruption in public office, the continuing dominance of the king’s interests, and the presence of those old friends of his who have grown rich on unearned wealth.

The King’s own riches persist despite regional turmoil. Far from losing millions of dollars in the Arab Spring, as happened to many wealthy Egyptians and Tunisians, Mohammed VI actually increased his assets by acquiring companies at discounted prices as they struggled to survive, so earning himself the moniker “the Predator King”.

The King Hangs On

Politically, King Mohammed VI appears secure. The current ruling party is happy to swear allegiance to him, just as many countries, such as the UK, have parliaments with plenty of power, yet who are content to pledge their loyalty to the crown. He has increasingly warm relations with Middle Eastern rulers, visiting the Gulf in 2011 to compare notes on the Arab Spring with sheikhs and emirs. Qatar and Kuwait have made significant investments in Moroccan infrastructure projects, while Saudi Arabia and the United Arab Emirates are also seeking to form stronger economic ties with the country. For their part, the Gulf rulers would like to learn how the king has managed to avoid the worst effects of the North African protests.

To maintain his country’s political and social stability, the king needs to replace the billions of foreign investment that had previously come from Europe. “A vote is a very nice thing but it hardly puts bread on the table,” says David Roberts, a research fellow at the Royal United Services Institute. “He will need economic stimulus if he is to improve his position.” If Mohammed agrees, he isn’t the only one. In 2011, a group of Gulf monarchs launched a $5 billion development fund to support various projects in Morocco and Jordan, helping to protect the two countries against popular rebellion.

It is not only the Gulf rulers who have watched King Mohammed VI’s developing reign with keen interest. Monarchs from across Europe, Sweden, Norway, the kingdoms of Thailand and Bhutan, and kingdoms across Africa recognise the increasingly fine line between monarchy and republic in a constitutional monarchy. Some analysts argue that monarchs, with the last vestiges of absolute power, will fare better in the current political climate than civilian rulers, as the latter have less claim on a nation’s affections and loyalty. A monarch is born to serve his or her country – even anointed by God, according to many ancient traditions. Dictators have far shallower roots in a society and are more easily deposed. “Monarchies have shown greater staying power compared to other kinds of regimes challenged by the Arab Spring,” says Dr Paul Anderson from the Centre of Islamic Studies. “The Moroccan monarchy still enjoys a degree of legitimacy.”

Certainly Mohammed VI has displayed financial dexterity and political astuteness as his country has progressed from one era to another: from the rule of his unpopular and brutal father to a period of openness, transparency and democracy; from monopolistic control of his country’s economy to increasing competition and globalisation. “The king is very popular,” says Lahcen Haddad, a Management Professor at Mohammed V University in Rabat. “A lot of people are saying they want to reform the regime rather than get rid of it. In that sense, there is some sort of Moroccan exception [to the Arab Spring].” Still, the king will have to be careful: “The winds of revolution are blowing, they are very hot, and Morocco will not be immune.”

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