Sunny, Modern, Morocco

His son Mohammed VI, a popular 43-year-old who once interned at the European Commission, has reversed that course. Since he took power in 1999--a popularly elected government followed in 2002--Morocco and Europe have grown increasingly close. This year has seen a breakthrough. The EU's open-skies agreement with Morocco, Europe's first ever outside its borders, came into force this summer. Europe and Morocco recently announced plans to extend their Free Trade Agreement to cover not only goods, as it does now, but also all agriculture and services by 2010, giving the country almost the same deal with Europe as member states have with each other. Foreign direct investment into Morocco doubled last year to €1.7 billion (not including capital investment in property), with the majority coming from Europeans. Trade between the two was up 35 percent last year, and the value of Moroccan exports to Europe--including more high-value manufactured items like automobile parts, electrical cables and software than ever before--doubled to €16 billion.

To be sure, Morocco in many respects remains an awkward neighbor. For all its progress on human rights, the country's secret police continue to operate as a power unto themselves, especially when dealing with terrorists. The arrest over the past month of 56 suspected members of one Al Qaeda offshoot, the Moroccan Islamic Combatant Group, confirms that the country is still a hotbed for Islamic extremism. This network also provided the prime suspects in the 2004 Madrid train bombings, which killed 192 people, and was responsible for the bombings in Casablanca less than a year earlier that killed 45. According to a recent study by the Moroccan newspaper L'Economiste, 44 percent of Moroccans 16 to 29 do not consider Al Qaeda to be a terrorist organization.

Another complication is illegal immigration. Morocco is beginning to shed its reputation as the doorway into Europe for illegal immigrants from Africa, with border police now working closely alongside Spanish authorities and EU money pouring in. But the problem is already so endemic that the Dutch, for example, call all their unwanted immigrants "Moroccans"--even those that aren't. Indeed, an estimated 8 percent of the Moroccan population lives abroad, many illegally. Eradicating the problem will require improving living standards for Moroccans--who on average earn just $1,677 per capita a year.

That prospect might seem distant, especially to those still accustomed to thinking of Morocco as a poor developing country. But in fact, it's beginning to happen. Consider the numbers. School enrollment is up from just over half of Moroccan children in 1990 to 93 percent last year. Literacy has jumped from 55 percent to three quarters of the adult population during the same period. Morocco is currently passing business-friendly reforms faster than any other country in the Arab world. Economic growth will be roughly 7 percent this year, up from 4 percent last year. Inflation is just over 1 percent; unemployment has dropped to a record low of 11 percent, with rural unemployment rates more than halving.

Just as u.s. and British companies outsource their back-office operations to India and China, where English is a standard second language, France and Belgium are opening scores of call centers and bank back offices in Morocco, where most citizens speak French. The government sees such developments as key to shifting the burden for economic growth from Morocco's fickle agricultural sector to business and industry. Officials have thus earmarked 34 percent of this year's budget to education and training--computer technicians, engineers, business administrators and call-center operators--all with a view toward drawing more private business investment from Europe. The government is also pumping more than $1 billion into providing such basic services as healthcare and clean water to more than 5 million of Morocco's poor by 2010. Peter Dyer, a British expat who has been living in Marrakech's ancient Kasbah district for 12 years, says the changes are most obvious in what he doesn't see anymore. "When I first came here it was common to see very young Berber [country] girls as bonded household slaves," he says. "That's disappeared."

Tourism is booming. Morocco's sparkling coasts are fast being remade in the image of Mediterranean Greece, Spain and France. This year, 6 million Europeans visited, up from 2.5 million five years ago. By 2010, the figure is projected to reach 10 million. Construction along this new Costa del Sol is in overdrive. Over the next four years, 17 developments, comprising some 10,000 new homes and creating 600,000 new jobs, are set to come onto the market. Six new coastal resort towns, known as the "Plan Azur," are also being built, complete with luxury hotels and golf courses.