Even some Iraqi money changers are refusing to accept Iranian banknotes, saying they have little use for a currency that is so volatile.
Tehran's state-run pilgrimage company owes Iraqis about $75 million in unpaid bills that have piled up since last year, according to Mahmoud Abdul-Jabbar al-Zubaidi, the head of the tourist department at Iraq's Ministry of Tourism and Antiquities.
That has prompted some of Iraq's biggest travel agencies and several hotels to stop accepting Iranian pilgrims altogether until the payment dispute gets resolved.
Iman Rasool Nima, who runs the Janat al-Firdous hotel outside the Kazimiyah shrine, said she stopped taking in Iranian pilgrims two months ago after tour groups racked up $50,000 in unpaid bills.She is now focusing on attracting Shiite pilgrims from Arab countries such as Bahrain and Saudi Arabia instead. Iranian pilgrims account for about 95 percent of Iraq's tourist trade. "The Iranians make up the bulk of our business. ... So of course our business is down," she said. The head of one large Iraqi travel agency in Najaf said he is owed $5 million by the Iranians and won't be accepting any more pilgrims from the Islamic Republic for now. The businessman, who declined to be named because he is still in negotiations about the unpaid bills, expects to lay off 35 of his 75 employees by the end of this month because of the lost Iranian customers. Like others in the industry, he is insisting on being paid in dollars rather than rials. "It is like committing suicide for any merchant in Iraq to deal in a fluctuating currency like rials today," he said. Officials at Iran's Hajj and Pilgrimage Organization, which arranges trips to religious sites abroad, refused to comment. But Iranian media quoted several officials earlier this month as saying that the cost of travelling to Iraq has doubled. The acknowledgement came days after Iran's currency lost nearly 50 percent of its value in early October.