Economic crisis in Iraq

Trump's Iran embargo impacts Iraqis

As a result of U.S. sanctions, Iranians can no longer afford the yearly pilgrimage to Iraq's Shia shrines. The holy city of Najaf is bearing the economic brunt. By Judit Neurink

"Not many Iranians can afford to come – not since Trump's decision – and we are losing money as a result." Badr al-Jilawi owns the Qasr al-Assad Hotel, which stands close to one of the world's most holy Shia sites, the Imam Ali Shrine in the Iraqi city of Najaf. Apart from a group of women in black in the lounge, the normally bustling hotel is empty, a direct result of America's embargo on Iran.

But at least this hotel is still open. Over the past year or so, some 500 of Najaf's 700 or so hotels have closed their doors, along with many of its restaurants. The economic fallout from the U.S. sanctions against Iran has been serious.

Most Iranians have had to scrap their yearly pilgrimage to the Iraqi holy sites. As a result Al-Jilawi has lost about 90% of his income. "I have had to move extra beds into the rooms and rent them out for $3 a night per bed. I never thought I would fall so low. Back in the good times, my hotel rooms cost $100 each."

From impoverished town to mass pilgrimage destination

Najaf is almost completely dependent on religious tourism from Iran, thanks, however, to the U.S. embargo, travel has become too expensive for Iranian pilgrims. Najafʹs boom in religious tourism only started in earnest after the fall of the Iraqi dictator Saddam Hussein in 2003. He considered the Iranians the enemy, having fought an eight-year war against them in the 1980s. But when the Shia majority came to power in Baghdad, the restrictions were dropped and Iranians started to pour into Iraq in their thousands.

Badr al-Jilawi, hotel owner in Najaf (photo: DW/Judit Neurink)
Financial disaster for the Iraqi business community in Najaf: most Iranians have had to cancel their annual pilgrimage to Iraqʹs holy sites. Hotel owner Badr al-Jilawi has lost about 90% of his income. "I have had to move extra beds into the rooms and rent them out for $3 a night per bed. I never thought I would fall so low. Back in the good times, my hotel rooms cost $100 each"

For Najaf, the change was enormous. From an impoverished town with some 50 hotels to cater for very restricted religious tourism, it developed into a city with high-rise buildings, shops, hotels and restaurants catering to a huge volume of tourists. Nonetheless, the community soup kitchens were still needed at times to help feed all the pilgrims. Now they mostly feed the many Iraqis who have become victims of the U.S. embargo on Iran.

But the embargo may yet prove more painful. Sixteen years after Saddam's fall, Iraq still cannot produce enough energy to cover its needs and is dependent on gas and electricity imports from Iran. And while Washington is allowing these to continue, for the time being at least, this concession is due to end this month.

Baghdad has already communicated the need to increase the amount of Iranian electricity it imports during the coming summer – a need that also stems from the experience of violent riots in Basra. The southern city often suffers from a lack of electricity during the hot and humid summers.

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