Spain, Morocco seek reset of testy relationship at Rabat summit

  • Spain, Morocco hold first summit in eight years
  • Relations long strained by illegal migration issue
  • Expected to sign up to 20 accords on trade, investment

RABAT, Feb 2 (Reuters) - Spain and Morocco have agreed to set aside their differences, Spanish Prime Minister Pedro Sanchez said on Thursday, as they seek to repair a relationship marked by frequent disputes over migration and territory.

Sanchez was speaking at a summit in Rabat where the two countries signed as many as 20 agreements to boost trade and investment, including credit lines of up to 800 million euros ($873 million).

"We have agreed on a commitment to mutual respect, whereby in our discourse and in our political practice we will avoid everything that we know offends the other party, especially regarding our respective spheres of sovereignty," Sanchez said.

There have been regular diplomatic crises over Spain's enclaves in Africa, Morocco's dispute with rebels over the Western Sahara, and the arrival of thousands of illegal migrants in Spain each year through Morocco.

Morocco refuses to recognise Spanish sovereignty over Ceuta and Melilla, but last year the two countries agreed to open the first customs control point at Ceuta.

Madrid says that reflects Rabat's recognition of the enclaves as foreign territory, but Morocco has made no public statement indicating that its long-held stance that the enclaves should be part of its territory has changed.

Sanchez restored cordial relations with Rabat in March 2022 after he reversed former colonial master Spain's four-decade policy on the Western Sahara by backing Morocco's proposal to create an autonomous region.

Forging peace between the neighbours has forced Sanchez's Socialists into some uncomfortable positions.

Last month, its MEPs voted against a resolution in the European Parliament to call on Morocco to improve its record on press freedom. MEP Juan Fernando Lopez said this week that maintaining cordial neighbourly relations sometimes involved "swallowing a toad".

Spain's about-turn on Western Sahara drew the ire of Algeria, a Polisario Front ally, which suspended trade with Spain and warned it could cut the flow of natural gas even as it forges closer gas ties with Italy.

Spanish exports to Algeria fell 41% to 1 billion euros ($1.09 billion) in the January-November 2022 period compared with a year earlier, according to the Ministry of Industry. Its exports to Morocco rose 27% to 10.8 billion euros in the same period.

Spain expects to get a significant chunk of the 45 billion euros that Morocco is expected to invest by 2050 in improving infrastructure, a Spanish government source said.

Spanish companies are well positioned to win concessions in key sectors of Rabat's development plan, such as in water sanitation and renewable energy, the person said.

State-owned railway operators Renfe and Adif are working with their Moroccan counterpart to develop new train lines, which could mean 6 billion euros of business.

Spain is discussing how to remove Morocco from a grey list of money laundering countries, another government source said. A delegation from Financial Action Task Force, a Paris-based global money laundering and terrorist financing watchdog, visited Morocco last month and is expected to announce later this month its decision on whether Morocco can be removed from the list.

In Rabat on Thursday, Moroccan Prime Minister Aziz Akhannouch expressed satisfaction at Spain's support for Morocco's autonomy plan as the "most credible solution" to resolve the Western Sahara dispute, but did not reference an agreement to set aside all sovereignty disputes.

A joint declaration made no mention of Spain's enclaves in Morocco although it reiterated Spain's new position on Western Sahara. Morocco said it expected Spain's upcoming presidency of the European Union would mean it could act as a conduit for better relations with the bloc.

Both countries agreed to cooperate on repatriations of illegal migrants.

($1 = 0.9168 euro)

Reporting by Belén Carreño and Ahmed Eljechtimi; Writing by Charlie Devereux; Editing by Gareth Jones, Aislinn Laing, Nick Macfie and Jonathan Oatis

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Reports on politics and economics in Spain. She is also an editor of Reuters Next. Has been finance reporter and business editor with several outlets over the past 20 years.