Pilgrims visit the Shiite Muslim shrine of Imam Ali in the central city of Najaf, on June 11, 2013
Pilgrims visit the Shiite Muslim shrine of Imam Ali, the son-in-law and cousin of Prophet Mohammed, in the central city of Najaf, on June 11, 2013. Najaf, the spiritual heart of Shiite Islam and a hub for religious tourism in Iraq is being badly hit by sanctions against Iran. © Ali al-Saadi - AFP/File
Pilgrims visit the Shiite Muslim shrine of Imam Ali in the central city of Najaf, on June 11, 2013
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Guillaume Decamme, AFP
Last updated: June 17, 2013

Iraqi holy city hit hard by Iran economic woes

The spiritual heart of Shiite Islam and a hub for religious tourism in Iraq is being badly hit as sanctions against neighbouring Iran have resulted in fewer pilgrims with less money to spend.

Business leaders, shopkeepers and hotel owners in Najaf, site of a shrine to a revered figure in Shiite Islam and home to most of the sect's top clerics, all report declining trade as economic sanctions targeting Iran's controversial nuclear programme have made it harder for visitors from Iraq's eastern neighbour to make the trip.

"Revenues for hotels which host Iranian pilgrims have plunged since the beginning of the year," said Zuheir Sharba, chairman of Najaf's chamber of commerce. "They have fallen by half."

That marks a marked turnaround for a city that had embarked on an ambitious hotel-building programme to accommodate greater numbers of pilgrims, with Sharba himself telling AFP in 2011 that "if there are more rooms, more people will come".

The city houses the shrine to Imam Ali, a seventh century Muslim leader and cousin of the Prophet Mohammed, and is frequented by Shiite pilgrims from around the world, though the biggest chunk of visitors come from Shiite-majority Iran.

Those tourists typically travel in organised nine-day tours, during which they spend three days in Najaf, which lies about 150 kilometres (95 miles) south of Baghdad.

The massive decline in Iranian pilgrims has badly hit the city, which is dependent on tourism-related revenues for 60 percent of its income.

The sharp drop is largely due to the plummeting value of the Iranian rial. In December 2010, $1 bought 11,500 rials but today, it is equivalent to 36,000 rials.

Iran's Economy Minister Shamseddin Hosseini has blamed sanctions tied to Iran's controversial nuclear programme, which Western powers and Israel believe is being used by the Islamic republic to develop an atomic bomb.

Tehran denies the charges and insists the nuclear programme is for peaceful purposes.

According to Hosseini, Iran's oil revenue has dropped by 50 percent in the past year, and he has warned that "the situation will not improve in the near future".

And, as a result of the declining value of their currency, Iranians now have less purchasing power when travelling overseas.

One Iranian pilgrim, who declined to give her name, admitted that while she had long dreamt of visiting Najaf, the trip was "very expensive".

Hotel owners are also facing a crunch as deals with Iranian tour operators have gone sour.

"We -- hotel owners in Najaf -- wanted to raise the nightly rate per person from $20 to $30 because of the rising cost of power generators, but the Iranian embassy in Baghdad refused," said Amir al-Ameri, owner of the Rebal hotel.

"And also, Iranian tour operators have stopped paying us what they owe. So now, many hotels in Najaf are refusing to take Iranian pilgrims."

Najaf, a city with a population of around 500,000, is filled with a wide variety of languages, reflecting the varying backgrounds of Shiites, who make up around 15 percent of Muslims worldwide.

They are the majority population in Iraq, Iran and Bahrain and form significant communities in Afghanistan, Lebanon, Pakistan, India and Saudi Arabia, with travellers often coming to Iraq from as far as the United States and Canada.

So to fill the shortfall caused by the decline in Iranian pilgrims, Iraq's tourism ministry now wants to focus on Shiites visiting from other countries housing major Shiite communities.

"It is necessary that we diversify," admitted Baha al-Maya, an adviser to the minister.

"This is a crucial question, to overcome the fall in the number of Iranian pilgrims."

But for a city heavily dependent on Iranians, bridging that gap will not be easy.

"Before (the decline of the Iranian rial), we sold 90 percent of our stock, but now we are down to 30 percent," said Ahmed al-Essawi, whose stall in the Najaf souk sells the fine black fabric used to make the chador, the full-body robe worn by Iranian women.

His products are made in Iran, and his clients are exclusively Iranian, meaning Essawi has felt the decline more than most.

Elsewhere, adjacent to the market, multiple hotels simply bear a "closed" sign, with no explanation offered, though none is needed.

Other hotels, still under construction, have been abandoned completely by contractors.

"Some hotels were almost finished when their construction was stopped," said chamber of commerce chairman Sharba.

"Other establishments wanted to begin renovations, but work has not even started because they have no idea what the future holds."

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