By Aziz El Yaakoubi
RABAT (Reuters) - Morocco's King Mohamed named 19 new ministers on Thursday after the prime minister reached a deal to form a new coalition that weakens the ruling Islamists who are trying to push through unpopular reforms to subsidies and the pensions system.
The center-right National Rally of Independents (RNI), which is close to the palace, will replace ministers from the conservative Istiqlal party, which left the coalition in July in a dispute over the cuts and other issues.
The king increased the number of ministers to 39 from 30 to satisfy the four parties in the coalition, but placed his allies in key ministries such as interior, finance and foreign affairs.
He also replaced General Affairs Minister Najib Boulif, who was in charge of the reforms for Prime Minister Abdelillah Benkirane's Islamist Justice and Development party (PJD), with Mohamed El Ouafa, who was Istiqlal education minister and refused to quit with his colleagues in July.
"It is obvious that the palace is taking the control of sensitive reforms such as the subsidies," Najib Akesbi, an economist from the Argonomy Institute in Rabat said. "I call it the government of His Majesty, not the Islamist government anymore."
The PJD came to power after constitutional reforms and early elections in 2011 that were proposed by the king to stifle Arab Spring-inspired protests that called for a fully elected government.
Although the cuts in subsidies and a hike in energy prices have been recommended by the IMF to help shore up the public finances - suggesting they should be replaced by direct aid to the poorest - the royal elite is worried their implantation could trigger more unrest.
There have been almost daily protests in the capital Rabat by groups of unemployed graduates, but in the past weeks they have gained support from the opposition Islamist Justice and Spirituality group.
While the constitution gives the government more power, the king still retains the ultimate authority in the North African kingdom and the PJD's new partner, the RNI, is allied to a palace ill at ease at sharing power with Islamists.
It was created in the 1970s by the king's father Hassan II to counter leftist opposition. It has the third largest number of seats in parliament, with 52 members in the lower house, and 39 counselors in the second chamber.
While RNI was in negotiations with Benkirane to form the coalition, ending months of deadlock, it criticized the government's decision to raise energy prices and cut subsidies - suggesting it, like Istiqlal, will try to obstruct the reforms.
The PJD, which has 107 seats in parliament, must work with other parties such as RNI, because of the law organizing elections does not allow one party to take full control. It is also sharing power with the Popular movement, and the Socialism and Progress Party that were both in the previous coalition.
Mohamed Hassad, a technocrat and the head of the Tangier Port Authority, was named interior minister, while Salaheddine Mezouar, the RNI leader, became foreign minister.
Mohamed Boussaid, a former RNI minister and governor of Casablanca city, took the Finance Ministry post.
"The alliance with the RNI is another blow for the PJD's credibility and reputation," Maati Monjib, a political historian from Rabat University said.
(This story is corrected to clarify that new interior minister is a technocrat, not from RNI, in third from last paragraph)
(Editing by Patrick Markey and Alison Williams)