For years, Karar Hussein has sold sweets in his shop near the entrance to one of holiest shrines, accepting whatever currency was offered to him by his clients, many of them religious tourists from neighbouring Iran. But lately, when Iranian pilgrims ask about prices, he tells them he can only sell if they pay in Iraqi currency. They often walk out, disappointed.

Hussein and many other shop owners in Baghdad’s northern neighbourhood of Kadhimiya have seen sales drop sharply over the past year since President Donald Trump began re-imposing sanctions on Iran.

The value of Iran’s currency, the rial, has decreased almost fourfold, pushing the price of nearly everything beyond the reach of ordinary Iranian consumers in Iran and abroad.

Standing in his shop wearing jeans and a T-shirt, 27-year-old Hussein said his sales have dropped 30% since last year, but he still prefers not to be paid in Iranian rials because the currency’s value keeps depreciating. “Their currency is crashing,” he said.

Millions of Shiites from around the world come to Iraq every year to visit its many shrines and holy places, including the cities of Najaf and Karbala in southern Iraq and the central city of Samarra, home to the revered golden-domed Al Askari shrine. They bring large amounts of money into the country, where tourism is the second biggest source of income for state coffers after oil exports.

Since the fall of Saddam Hussein’s government in 2003, Iranians have made up the majority of religious tourists to Iraq, although tens of thousands come from other countries.

But tensions have been rising recently in the Middle East between the United States and Iran and there have been concerns that Iraq, whose government is allied with both Tehran and Washington, would become caught in the middle, likely increasing pressures on Iraq’s tourism sector.

A favourite tourist destination is the Kadhimiya district in north Baghdad, typically bustling with Iranians shopping for clothes, sweets and trinkets. The area is home to the Al Kadhimayn shrine, known for its two domes and four minarets draped with gold and contains the tombs of Imam Moussa Al Kadhim and his grandson Mohammed Al Jawad.

On a recent afternoon in Kadhimiya, hundreds of Iranian pilgrims entered and left the shrine, passing by scores of shops on both sides of a pedestrian street leading to the holy site without buying anything.

Associated Press