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Iraqi Tourist Sector Hurt By Iran's Currency Pain

About 3,500 to 4,000 Iranian pilgrims had been traveling to Iraq daily before the rial's collapse, according to officials in both countries.

Iraq's tourism ministry has not recorded a drop in pilgrims so far, al-Zubaidi said. But business owners and local officials in pilgrimage centers tell a different story.

Saeeb Abuqneem, who owns the al-Farqadain hotel in Najaf and heads the city's hotel association, estimates that the number of Iranians visiting Iraq has dropped to about 2,500 per day.

He says he's able to fill only about 10 percent of his rooms these days and he has begun laying off employees. Several of the remaining uniformed staffers sat around the lobby looking bored during a recent visit.

"It's really bad. The private sector needs some kind of support from the government. But here in Iraq, we are paralyzed," he said.

Hotel owners and restaurants in nearby Karbala, where two revered Shiite saints are buried, have similar concerns, officials there say.

Like elsewhere in Iraq, some business owners are effectively boycotting Iranian tour groups until the payment issue is resolved. Some establishments will likely have to shut down if the crisis continues, said Mohammed al-Hir, who heads Karbala's hotel and restaurant association.

"The situation has hurt Karbala's economy," said Tareq al-Khegani, a member of the provincial council in Karbala. "The unemployment rate has risen. ... Most of the hotels and restaurants are empty."

In Najaf's old market, the mood is heavy.

Hussein al-Hamiri, a 31-year old owner of a textile and souvenir shop, said he now sells mostly to Iraqis and the small number of pilgrims who visit from other countries. He estimates business is down nearly 90 percent since the rial plunged.

"The market today is stagnant," he said.

Nearby, one of the few Iranian pilgrims in the market started examining a necklace in his hands. When the merchant mentioned the price, the Iranian raised his eyebrows in surprise, dropped the piece immediately and quickly walked away.

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