Western Sahara - Economy

Economy

Aside from its rich fishing waters, Western Sahara has few natural resources and lacks sufficient rainfall and fresh water resources for most agricultural activities. The territory has some phosphate deposits but their small quantities prevent further exploitation from being economically viable. There is speculation that there may be off-shore oil and natural gas fields, but the debate persists as to whether these resources can be profitably exploited, and if this would be legally permitted due to the Non-Self-Governing status of Western Sahara (see below).

Western Sahara's economy is based almost entirely on fishing which employs two thirds of its work force. Some phosphate mining and to a lesser extent agriculture and tourism also contribute to the territory's economy. Most food for the urban population comes from Morocco. All trade and other economic activities are controlled by the Moroccan government.(as its defacto southern province) The government has encouraged citizens to relocate to the territory by giving subsidies and price controls on basic goods. These heavy subsidies have created a state-dominated economy in the Moroccan-controlled parts of Western Sahara.

Recently leaked United States diplomatic cables reveal that the territory is somewhat an economic burden for Morocco; the Moroccan 800 million US$ subsidy program to Western Sahara was said to be one of the largest per-capita aid programs in history. Supporting life in a territory with scarce fresh water resources is extremely costly. For example, the entire drinking water for the city of Laayoune comes from desalinization facilities and costs 3 U.S. dollars per cubic meter but is sold at the national price of 0.0275 U.S. dollars, the difference is paid for by the government of Morocco. Fuel is sold at half the price and basic goods are heavily subsidized; businesses operating in the territory do not pay taxes. All of this is done to keep the balance of Western Sahara's finances. The territory is otherwise thought to be economically unviable and unable to support its population without the Moroccan subsidies. The cable concluded that the territory is unlikely to ever be of any economic benefit for Morocco even if offshore oil fields were to be discovered and exploited.

Due to the disputed nature of Moroccan sovereignty over the territory, the application of international accords to Western Sahara is highly ambiguous. Political leadership of trade agreement signatories such as the United States (US-Morocco Free Trade Agreement) and Norway (European Free Trade Association trade accord) have made statements as to these agreements' non-applicability—although practical policy application is ambiguous.