Tourism is the biggest economic resource for Iraq after oil, but the industry's focus on religion in general and on Iranian pilgrims in particular has made the Iraqi tourism sector dependent on Iran’s political will and economic situation.
Iraqi Tourism and Antiquities Minister Liwa’ Smaisim said that Iraqi religious tourism has rebounded after 2003, and that tourism has become an important source of income for the Iraqi economy, which still largely depends on oil.
Recent years have demonstrated that religious tourism in Iraq is resilient. Despite a lacking security situation and poor services, the sector produces millions of dollars in income annually. The Tourism and Hospitality Association in Karbala reported that 55,000 Arabs and foreigners, as well as more than 3 million Iraqis, visited Karbala during the Shaaban holiday. During the last 40 years, Karbala has had more than 18 million visitors, including 350,000 Arab and foreign visitors from 36 countries.
Although Najaf and Karbala boast about 500 hotels, “They are no longer enough to accommodate the large numbers of visitors, especially the Iranians,” according to Smaisim.
After deposed President Saddam Hussein’s fall, Baghdad and Tehran signed an agreement to receive pilgrims in Najaf, Karbala, Samarra and Baghdad. The number of daily visitors was small at first. But then the agreement allowed for 6,000 visitors a day on a regular basis and 10,000 a day on religious occasions. In March, the governor of the Iranian city of Qasr-e Shirin said that 2,000 Iranian pilgrims cross the Khosravi border terminal to reach Khanaqin, Iraq every day. That is in addition to those who reach Iraq through other border crossings or by air.
Even though such a large volume of Iranian pilgrims helps the Iraqi economy, relying on a single tourist attraction increases the risks of investing in this area. Recently, the drop in the Iranian currency’s value due to economic sanctions has resulted in fewer Iranian pilgrims. Smaisim said, “The problem began when sanctions were imposed on the Islamic Republic of Iran. That caused a decline in the number of visitors, even though Iranian visitors continued to flow into Iraq even when there were bombings, some of which directly targeting [the tourists] ... The sanctions imposed on Iran have significantly reduced the rial’s value relative to the dollar, and that’s been causing the Iranians major difficulties.”