KEY POINTS:
Beyond the palm trees, dawn lightens the peaks of the snow-dusted Atlas mountains and an ancient city stirs.
The call to prayer echoes down narrow alleyways that will soon bustle with traders selling spices, silks, food and ornaments, where dark-eyed children will laugh and squabble their way to school amid veiled women, beggars and placid old men sipping mint tea.
You don't have to look far in Marrakesh to get the sights, the smells and the sounds promised in tourist brochures.
Nestling below the mighty chain of the Atlas, its red clay fortress walls enclosing a kasbah, a palace of the sultans and a labyrinth of unnamed alleys, Marrakesh is a PR man's dream.
A smooth-running tourism industry and direct flights of three to four hours from cities across Europe have turned the city into a playground. The formula is exotic but safe - just how Morocco likes to pitch itself to the West.
It goes like this: under the firm but benign hand of a staunchly pro-Western monarchy, the country is a model for the Islamic world, an island of calm, tolerance and progressiveness in a sea of instability and extremism. But some experts warn this soothing PR message - fundamentally the same used by the ill-fated Shah of Iran 30 years ago - masks a seething pit of tension and contradiction.
"Morocco is undeniably a major problem," an Arabist expert with a European intelligence agency told the Herald. "But no one likes to bring it up."
Entrenched poverty, inequality and corruption, and the monarchy's perilous ploy of encouraging modernity while appeasing religious fundamentalism, make Morocco a pole of instability and a recruitment bed for terrorism, he said. "The situation is not yet catastrophic, but it is serious enough for the world to warrant taking a close look rather than turn away and wait for things to erupt."
Morocco is already the biggest beneficiary of funds under the European Union's "neighbourhood" policy of supporting poor countries on the EU rim. It is scheduled to receive 654 million ($1545 million) under this programme from 2007-2010.
In October, the EU gave the green light to eventually according Morocco so-called "advanced status" in the neighbourhood strategy. Under this, Morocco and the EU would establish a "common economic space," a free-trade arena similar to that forged by EU with Norway, Iceland, and Switzerland, and the country could also join an array of European institutions, such as the European police agency Europol.
The United States promoted Morocco to a frontline ally in its war on terrorism after the September 11, 2001 attacks and showered it with aid. According to the non-partisan US monitoring group the Arms Control Association, Morocco sought F-16 warplanes, howitzers and other weaponry worth US$2.89 billion ($4.92 billion) in 2007, the fifth highest request of any country.
It also receives a five-year grant of US$697 million in development aid, the highest of any beneficiary under the US Millennium Challenge Account.
In exchange, say Moroccan and international human-rights watchdogs, is the use of Morocco as a "black site" for transferring or interrogating international terror suspects.
Of Morocco's 33.7 million people, 48 per cent are aged under 21. Nearly one in four of the population is illiterate. Poverty is chronic in parts of the countryside and the inequality of wealth is glaring.
In a luxury resort on the outskirts of Marrakesh is the New Feeling nightclub, where the children of Morocco's wealthy, Westernised elite flaunt their wealth. A few kilometres away, in the dark streets of the medina, a poor man would have to work for two days just to earn the club's entrance fee of 150 dirhams ($30). While foreigners have bought and restored more than 1000 riads in the medina turning them into boutique hotels, rental prices for locals in the area have increased five-fold in the last 10 years.
In the medina's maze of tanneries, clothing sweatshops and metalwork shops, men toil in dim light and heat and toxic fumes. Women with babies beg at the entrance to the mosque. Children do menial jobs in exchange for a dirham or two.
Like its neighbour Algeria, Morocco is filled with alienated, unemployed youths. Poorly educated, yet cruelly aware of the world's iniquities thanks to the Internet, they become fodder for extremists, trained to manipulate guns and bombs or indoctrinated into suicide attacks, at home or abroad.
"And this is not a localised threat. Every place and every country is exposed to the risk of the violence," notes Khadija Mohsen-Finan of the French Institute of International Relations.
Moroccans played a key role in the September 11 attacks. In May 2003, suicide bombers killed 45 people in attacks on hotels, restaurants and a Jewish community centre in Casablanca. In March 2004, most of the perpetrators of the Madrid train bombings, in which 191 people died, came from Morocco.
There have also been several near misses. They include coordinated attacks on the US consulate and cultural centre in Casablanca in April 2007 and a botched bomb attack on a tourist bus in Meknes in August 2007.
Under mounting pressure to crack down on Islamists, the authorities have carried out several high-profile bouts of arrests. More than 900 suspects are in jail.
The Government is having to balance this with a programme of reforms designed to give religious dissidents a voice in Parliament, eradicate shanty towns and improve the lowly status of women.
Even so, there is no real challenge, in politics, the press, trade unions or elsewhere, to the ultimate authority of King Mohammed VI.
The dynasty claims direct descendance from the Prophet Muhammad, a device it has used in the past to deflect religious criticism and stoke nationalism. On the road east out of Marrakesh, chalk stones spell out a giant message in Arabic: "God - King - Country."
After years as a favourite of the West, Morocco faces a difficult time as it contemplates the global economic crisis. "Morocco's been built on a sham," said the Western intelligence source. "You can't call it a reliable, sustainable economy. All it has done is to create a class of arrogant, mouthy newly-rich."
Apart from hashish, the country's only significant export is phosphate. The economy stays afloat thanks to income from overseas workers and tourism. Both sectors seem sure to be badly affected by the crisis in Europe, driving even more young men out of employment and towards the siren voices of the fundamentalists.
COUNTRY FACTS
Population: 31.2 million
Area: 710,850sq km. It is one of the North African countries known as the Maghreb.
Cities: Rabat is the capital but Casablanca is the largest city.
Society: Arabic is the official language but Berber, French and Spanish are also spoken. The major religion is Islam. Life expectancy is about 70 years.
History: Morocco was a French protectorate from 1912 to 1956. King Mohammed VI has ruled since 1999.
Politics: Morocco is bidding for membership of the European Union and has been given the status of non-Nato ally.
Exports: Minerals, seafood products, citrus fruit.
