A new report by the Stimson Center says Morocco has evolved from a migration buffer for Europe into an active regional power and a key pillar of stability between Europe and Africa.
The Washington-based think tank describes Morocco as a “seasoned middle power” with a unique strategic position at the meeting point of the Atlantic, the Mediterranean and Africa’s coastal space.
The report says Morocco has used its geography under King Mohammed VI to boost trade, investment and security cooperation across continents. Analysts call the country’s approach “strategic transactionalism”, meaning a foreign policy based on aligning interests and offering cooperation on shared priorities.
It says Morocco has shifted from a low-cost manufacturing base to a high-tech industrial exporter, a renewable energy leader and an emerging hub for battery materials.
However, the report warns the country faces “strong headwinds” including historic water scarcity, entrenched youth unemployment and a large informal economy.
The study identifies three key dynamics shaping Morocco’s current path:
- Economic transformation through export clusters in automotive, aerospace and critical minerals.
- Social cohesion driven by a major social protection reform launched in 2021.
- Diplomatic repositioning, including normalisation with Israel and UN Security Council Resolution 2797 in 2025 backing Morocco’s autonomy proposal for Western Sahara.
Reforms and social protection
The report focuses on Morocco’s New Development Model, launched in 2021, as a roadmap for inclusive growth until 2035. It aims to boost private sector competitiveness, reduce inequality, improve education and healthcare, strengthen regional governance and create jobs for young people.
It describes the social protection reform as “the most ambitious domestic project in a generation”. The programme aims to expand health insurance to all citizens, widen pension coverage to self-employed and informal workers, and introduce family benefits for all households.
By 2024, 88% of Moroccans had basic health coverage, the report says.
Trade powerhouse and logistics hub
The report points to the rise of Tangier Med port as a major global shipping hub. Around 100,000 ships pass through the port each year, carrying more than 10% of global maritime trade. In 2024, it handled 10.2 million containers, more than Spain’s Algeciras port.
Trade accounts for about 95% of Morocco’s GDP in 2025. The European Union remains the country’s largest partner, taking 59% of trade, with Spain and France the top destinations for exports.
Morocco has free trade agreements with the EU since 2000 and the United States since 2006. It has also deepened ties with sub-Saharan Africa, China under the Belt and Road Initiative, and Gulf countries including the UAE, Qatar and Saudi Arabia.
Europe remains top partner
The EU absorbs about 68% of Moroccan exports and remains the largest investor and donor. Recent initiatives include a 2022 green partnership on energy and climate and a Mediterranean pact launched in November 2025. European support reached 2.48bn dirhams in 2025.
The report says Morocco’s return to the African Union in 2017 marked a strategic shift towards Africa, with Moroccan companies expanding across the continent.
US, China and Middle East ties
Normalisation with Israel in December 2020 opened new areas of cooperation in trade, tourism, defence, cybersecurity and water technology.
US recognition of Morocco’s sovereignty over Western Sahara in 2020 strengthened the strategic partnership. Morocco now receives about $30m a year in US military aid and hosts joint exercises such as African Lion.
China has also become a key partner, with projects including Mohammed VI Tangier Tech City and the Nador West Med port.
Tensions with Algeria
The report describes relations with Algeria as “tense”. Algeria cut diplomatic ties and closed its airspace to Moroccan flights in 2021 amid the Western Sahara dispute.
Defence spending reflects the rivalry. Morocco allocated $13bn to defence in 2025, compared with Algeria’s $25bn.
After UN Resolution 2797, King Mohammed VI invited Algeria’s president to dialogue “with sincerity and fraternity”. The report notes that US envoy Steve Witkoff said the Trump administration is working to reach a Moroccan-Algerian agreement.
Analysts say a deal could integrate the Maghreb economy, reduce irregular migration to Europe and strengthen counter-terrorism in the Sahel.
Outlook to 2035
The report concludes Morocco has seen strong stability and progress over the past two decades through economic liberalisation and trade agreements. Expansion of renewable energy has strengthened its climate leadership, while social indicators have improved with wider health coverage and rising literacy.
It says Morocco’s progress towards its 2035 goals will depend on sustaining growth, creating jobs and managing climate and water challenges.
