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We all know that some very clever people work at _______ but are they the brightest people on Wall Street?

Bank deleveraging has barely started

Bank deleveraging has barely started

Banks lending money to governments to help fund bank bailouts looks horribly circular

February 2004

The price of Europe getting high




Moroccan negotiators tried to exclude wheat from the proposed free trade pact with the US – and failed – but one flourishing export from Morocco was not discussed at all, even though the country is the world's largest producer.

Not far from Europe's southern shore, and close to the point where the proposed tunnel linking Africa to Europe would exit, are the world's largest fields of marijuana. Cannabis has been grown in the mountains around Rif for centuries, but its production is on the increase. Two-thirds of Europe's supply of the drug is said to originate here.

A comparison of prices explains why farmers prefer cannabis to other crops. "We receive only around Dr250 ($25) for 100kg of wheat," says a farmer who wants to be identified only as Abdullah. "A hundred kilos of cannabis will bring in more like Dr15,000 dirhams, and the crop is no harder to grow."

It is not just the farmers who are exercised about the price of wheat and wheat products. Moroccan bakers launched a 48-hour strike in January in an attempt to pressure the government to allow them to raise bread prices. A similar move in 1981 triggered bloody riots.

The price of bread is such a sensitive issue in Morocco that it has not changed in 15 years. In 1981, a government-ruled increase in bread prices sparked popular unrest that was violently suppressed. According to official figures, 29 civilians were killed by the security forces. Human rights groups say up to 500 were killed and buried in mass graves.

In theory, nothing prevents bakers from going ahead with the increase because the government in 2001 relinquished control over bread prices. But bakers say the government, with the 1981 riots in mind, asked them last October to cancel a planned 10% increase.

"They told us to wait a month, arguing that the issue is too sensitive. But then they did not get back to us with either an answer or a proposal," says a spokesman for the bakers' trade union.

Economic restructuring minister Abderazzak El Mossadeq, who oversees the issue, declines to comment.

The bakers union wants a gradual rise of 30% over nine months. A loaf of bread in Morocco costs Dr1.10, about nine times less than its equivalent in France. Bakers say costs have risen sharply since 1989, when the price of bread last went up.

It is not surprising that farmers are so keen on cannabis. According to a UN-sponsored report, it is now grown on more than 150,000 hectares in Rif. Until other crops become a viable alternative means of income, it looks like the best value cash crop to grow.






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