Moroccan police have arrested a Muslim prayer leader who is suspected of recruiting young men to be suicide bombers in the insurgency in Iraq, a newspaper reported Wednesday.

The imam, identified by police simply as Abdelilah according to Aujourd'hui Le Maroc newspaper, was arrested Monday in Tetouan, a city in northern Morocco near the Strait of Gibraltar.

Abdelilah preached at a mosque in Mezouak, a vast slum on the city's outskirts, exhorting Moroccans to "fight the American-Zionist occupation in Iraq," the newspaper quoted police as saying.

Two young men who attended the mosque carried out suicide bombings in Baquba, Iraq, last month, and a further five Moroccans linked to the mosque are believed to have joined the Iraq insurgency, the daily said.

Local media have reported that CIA agents arrived in Morocco last week from Baghdad to help in investigations. The U.S. Embassy declined to comment on the reports.

Click here for more coverage of the War on Terror.

Abdelilah's arrest accompanies mounting fears in Morocco that Tetouan is becoming a new seedbed of violent jihadism in the North African kingdom, and an entryway into shadowy people-smuggling networks that spirit fighters to the battlefields of Iraq.

Some say focusing on a specific location oversimplifies things.

"I doubt there's something about a particular neighborhood that will turn it into a mass-production line for jihadis," said a Western diplomat who asked not to be identified because of the subject's sensitivity. "The reality is that the threat is more diffuse."

Morocco, a top U.S. ally, has struggled to contain Islamist tendencies since suicide bombings killed 45 people — including 12 bombers — in Casablanca, the commercial capital, in 2003.

The government has faced criticism from human rights groups who say police have arrested and tortured thousands of innocents in anti-terror sweeps. Moroccan officials have denied all but nine individual cases of torture, and those remain under investigation.

Human rights groups also accuse the government of having participated in the CIA's widely condemned program of extraordinary rendition, in which terror suspects were abducted and whisked to secret jails across the European Union and elsewhere. Moroccan officials have denied the claim.

Click here for more coverage of the War on Terror.