Iraqi Businesses Feel Pinch Of Iran's Economic Woes

Najaf in southern Iraq is beginning to feel the pain of neighboring Iran's economic woes. Business around Shiite sites, which usually draw scores of Iranians for the holy days of Ashura, is way down.

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We've heard about how U.S. and European sanctions on Iran have caused that country's currency to plummet and how Iran is now buying up gold and trying to dump its own currency outside its borders. Well, Iran is part of a regional economy and the falling currency is starting to hurt at least one of Iran's neighbors. NPR's Kelly McEvers sent this report from southern Iraq.

UNIDENTIFIED MAN: (Foreign language spoken)

KELLY MCEVERS, BYLINE: We're standing in the holy city of Najaf. These are big days for Shiite Muslims. It's the holiday that marks the Battle of Karbala, which is just up the road here. Right now the sounds you hear are prayers, the stories of the Battle of Karbala being told over loudspeakers.

Every year millions of Iraqis come down here for these holidays. But also millions of Iranians usually come to visit these holy sites. Lately though, those Iranians aren't coming in nearly as many numbers as they were before. And the Iraqi economy is really taking a hit.

Everywhere in Najaf you see the signs of the dwindling numbers. Where once there were long lines of massive tour buses crowded with Iranian pilgrims are now nearly empty streets. On one street that approaches a holy shrine, about a third of the shops are closed.

The street used to be thronged with pilgrims buying any kind of trinket that carries the extra blessing of being bought near the shrine, even if that trinket is made in China. Now, though, shop-owner Ahmed Na'amen says merchants are barely hanging on.

AHMED NA'AMEN: (Through translator) See these two shops, they closed. And even see my next neighbor, since the morning until now he has not sold anything.

MCEVERS: Na'amen says even if they do see a few Iranian pilgrims, they usually aren't buying. Or when they do buy, it's very little.

NA'AMEN: (Through translator) Before, they would buy, for instance, 10 pieces. But right now they buy only one piece. So this is the difference. We've got nine pieces difference.

MCEVERS: Iraq's economy is dominated by the oil sector, which is back up to what it was just before the U.S. invaded nearly ten years ago. Increased security is bringing some needed foreign investment, analysts say. And it's encouraging Iraqis to pull the money out from under their mattresses and start projects again.

So up until very recently over the last several years, owning a hotel was an extremely good investment here in Najaf. You could sort of guarantee that, you know, religious pilgrims were going to come to this place. But now, all these hotels are either closed, advertising big discounts, or just going out of business completely. Here in front of this hotel is a totally defunct generator. And the hotel itself is just - inside the glass and brass doors, it's just dark.

Not far from this row of failing hotels is one we visited more than two years ago. Back then it was a shabby place that still did brisk enough business. Lately it was remodeled by a Turkish company.

You have modern furniture here in the lobby. There's a tiger-print table with kind of a shag rug and you've got elaborate light fixtures everywhere. How many people are staying in the hotel right now? How many pilgrims from Iran are staying in the hotel right now?

SA'EB ABU GHONEM: How many? No one.

MCEVERS: No one.

GHONEM: No one.

MCEVERS: That's hotel owner Sa'eb Abu Ghonem, who also heads the hotel association in Najaf.

GHONEM: (Foreign language spoken)

MCEVERS: He says the lobby used to be a hive of buzzing workers and guests coming and going. But now he's started calling himself a failure for investing in religious tourism when he could've invested in a mall.

One of the only other people in the lobby is a man named Adnan Nimr Al Sultan. We find him sitting on a couch, looking out at the empty street. He used to manage the staff here at the hotel. He was laid off two months ago. Now he comes to the hotel a few times a week, hoping someone might have a lead on a job.

ADNAN NIMR AL SULTAN: (Foreign language spoken)

MCEVERS: Sultan says he used to make about $500 a month. Now he's had to borrow money to pay rent and expenses. He's already $6,000 in debt. He drives a taxi at night to make a few bucks to feed his three kids. We ask him who's to blame for the drop in currency and the drop in tourism here in Najaf.

Do people blame the Americans or do they blame the Iraqi government for this situation?

SULTAN: (Foreign language spoken)

MCEVERS: I blame the Iraqi government, he says.

SULTAN: And you ask why? Because, because.

MCEVERS: We had a socialist system and now we're moving to a capitalist system. But it's too fast. We can have a boom in the religious tourism business and then a bust. There's no safety net, he says. No one cares about us workers.

Kelly McEvers, NPR News.

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