VZCZCXRO1538
PP RUEHBC RUEHDE RUEHDH RUEHDIR RUEHIHL RUEHKUK RUEHTRO
DE RUEHGB #2426/01 2521409
ZNY CCCCC ZZH
P 091409Z SEP 09
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 4639
INFO RUCNIRA/IRAN COLLECTIVE PRIORITY
RUCNRAQ/IRAQ COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 002426 
 
SIPDIS 
 
DEPARTMENT FOR NEA/IR AND NEA/I. 
 
E.O. 12958: DECL: 09/02/2019 
TAGS: PGOV PREL PECON IR IZ
SUBJECT: IRAQ/IRAN: KARBALA EAGER FOR PILGRIMS WITH DEEP 
POCKETS 
 
REF: A. BAGHDAD 2287 
     ¶B. BAGHDAD 1876 
     ¶C. BAGHDAD 1100 
 
Classified By: Political Counselor Yuri Kim for Reasons 1.4 (b) and (d) 
 
¶1.  (C) SUMMARY AND COMMENT: According to the governor of 
Karbala and the brother of the imam of the al-Abbas shrine, 
Iran continues to exert a dominating influence, notably in 
business dealings in Karbala province.  Both interlocutors 
lamented Iraq's inability to negotiate with the Iranians for 
more favorable terms for Iraqi businesses in the lucrative 
religious tourism sector, water rights, and other key areas. 
With security improving over the past year, Karbala is 
experiencing a resurgence of economic activity, including 
visible construction in the city.  However, the city's 
potential for luring and benefiting from religious tourism 
and increased foreign investment remains to be realized given 
a slow government bureaucracy, inadequate incentives for 
investors, and lingering concerns about long-term security. 
Determined to project its "soft power" in Iraq, Iran is 
likely to continue to play a dominant role in Karbala and 
other predominantly Shia cities, especially those with 
religious cachet.  END SUMMARY AND COMMENT. 
 
Show Me the Money 
----------------- 
 
¶2. (C) During an August 31 meeting with PRT and visiting 
Emboffs (Iran Watcher and Econoff), Karbala's Dawa party 
governor, Amal al-Din al-Hir, discussed Iran's role in the 
province's lucrative religious tourism industry.  Governor 
Amal al-Din, himself a long-time former resident of Iran, 
complained about Iran's abusive and heavy-handed approach to 
securing unrealistically low prices for visiting Iranian 
pilgrims at the expense of local Iraqi businessmen. 
 
¶3. (C) With four hundred hotels (two/three-star equivalent), 
each Iranian pilgrim pays 20 USD daily for meals and lodging, 
an exorbitantly low fee that leaves Iraqi hoteliers with just 
5 USD in profit per pilgrim, Amal al-Din noted.  Such 
heavy-handed tactics have prompted provincial officials in 
Karbala to consider a boycott of Iranian pilgrims, Amal 
al-Din said.  The boycott proposal is pending the approval of 
the city's hotel owners' association. The governor pointed 
out that Iranian officials complain about the lack of 
adequate services and amenities, but are unwilling to pay the 
price for improved services, leaving Iraqi businesses in a 
quandary. (NOTE: A boycott of Iranian pilgrims is unrealistic 
and unlikely given the political and economic ramifications. 
Ironically, Iranian officials are threatening to reduce the 
number of Iranian pilgrims, citing the lack of adequate 
services and amenities in Iraq.  See ref A for more details. 
END NOTE.) 
 
¶4. (C) While Karbala receives an average of 15,000 Iranian 
pilgrims monthly, the governor complained that with few 
tourism sites other than the city's two holy shrines, most 
pilgrims stay only 3-4 days.  Efforts by a UAE-owned company 
to construct a multi-billion dollar "New Karbala" development 
project on the outskirts of the city have stalled, pending 
GOI approval of the project.  "The Iranians (government) 
spend most of their money on maintaining the shrines and very 
little on other things," Amal al-Din lamented. 
 
¶5. (C) With control of all Iranian pilgrim travel in the 
hands (and pockets) of one Iranian-based company (see ref B), 
local Iraqi businesses have yet to reap the benefits of the 
lucrative religious tourism industry.  That said, the 
governor was lukewarm on the idea of breaking the monopoly by 
allowing competition among various local travel agencies, as 
Qallowing competition among various local travel agencies, as 
is done in Turkey and other countries in the region. 
 
Picking the Right People 
------------------------ 
 
¶6. (C) PRT and Emboffs met separately with Kadhum Nour 
Al-Safi, a soft-spoken local engineer and brother of Shaykh 
Ahmad Nour Al-Safi (see ref C), imam of the al-Abbas shrine 
and one of Grand Ayatollah Sistani's two representatives in 
Karbala (the second is Shaykh Karbala'i, imam of the 
al-Husayn shrine).  Unlike his more prominent sibling, Kadhum 
is a mechanical engineer specializing in water issues who 
periodically agrees to meet with USG officials. (NOTE: 
Sistani and his representatives refuse to meet with USG 
officials for religious and political reasons.  END NOTE.) 
 
¶7. (C) Kadhum echoed the governor's concerns about a 
domineering Iran, stating that the GOI has been ineffective 
 
BAGHDAD 00002426  002 OF 002 
 
 
in protecting its own interests against Iran, citing water 
rights and usage as one main example. "We never appoint the 
right person with the right qualifications for negotiations 
with Iran," he asserted.  This shortcoming is a glaring 
weakness that is easily exploited by Iran and Iraq's other 
aggressive neighbors, Kadhum said. He encouraged greater GOI 
effort to address Iraq's water problems with neighboring 
states who refuse to compromise.  "It's time for less talk 
and more action," Kadhum asserted. 
 
 
Lucrative Market for Iranian Companies 
-------------------------------------- 
 
¶8.  (C)  Karbala is seen by Iranian companies as a 
potentially lucrative market for products and services 
outside of the tourism sector.  Representatives of the Iran 
and Iraq Chamber of Commerce, Industries and Mines 
(www.ir-iqcc.com) recently paid a call on the Karbala Chamber 
of Commerce (CoC) to discuss trade and investment 
opportunities.  The  President of the CoC Nabeel Salman 
Al-Anbaree (please protect) told Karbala PRT Business Advisor 
that nine Iranian businessmen paid a call on him to discuss 
areas of potential cooperation between the Karbala CoC and 
the Iran-Iraq CoC.  They proposed leasing a building down the 
street from the Karbala CoC building for ten years to house 
about 50 Iranian companies interested in doing business in 
Karbala.  The group said a number of Iranian businesses are 
looking for Iraqi dealers for their products and raised the 
possibility of holding a trade show in the near future. 
Finally, the group expressed an interest in working with the 
Provincial Investment Commission (PIC) to invest in a five 
star hotel and a housing complex. 
 
¶9.  (SBU) The group provided copies of &Trade Book of 
Karbala,8 published in Iran by Trade Karbala 
(www.tradekarbala.com), in conjunction with the Iran-Iraq 
CoC.  The book, in English and Arabic, includes a listing of 
287 Iranian companies offering a variety of products and 
services across all sectors.  The book provides a list of 
large projects recently executed by Iranian companies 
throughout the Middle East as well as a few pages of trade 
statistics, which while slightly dated, generally track with 
what we have seen in other open-source reporting. 
 
¶10.  (SBU) The representatives of the Iran-Iraq CoC that paid 
a call on the Karbala CoC included the following persons: 
--Dr. Hassan Tizmaghz, Head of Iraq-Iraq CoC 
--Sayed Ahmad Khadem Al-Sharieh, Executive Member and 
Secretary General, Chairman of Trade and Tourism Commission, 
Iran-Iraq CoC 
--Najem Beit Chanaan, Chief of the Khorramshahr Chamber of 
Commerce, Vice-President of Iran-Iraq CoC 
--Ali Asghar Farschi, Director General for Europe, America, 
Africa and Arabian Countries, Iran-Iraq CoC 
--Abdolreza Mizban, Board Member, Member of Trade and Tourism 
Commission, Iraq-Iraq CoC 
--Seyed Morttada Shahrestani, Board Member, Member of 
Insurance and Investment Commission, Iran-Iraq CoC 
 
 
 
 
 
FORD