According to sketches, many of the hotels and markets will be knocked down to make room for the expanded shrine. The central government has allocated $25 million to compensate property owners, whose investments will be wiped out. New hotels will be built a little farther away.

The role of the Iranians in helping the province is largely unacknowledged by Najaf’s politicians, most of whom are members of the Supreme Council. Although the party’s roots are in Iran, it has forged a strong allegiance with the United States and appears eager to keep at arm’s length  at least publicly  from its former sponsor. Najaf officials said they had refused most of the help the Iranians offered, because they felt it could be too controversial politically. They did say they had made a deal with Iran to organize tours that would bring several million more pilgrims to the city each year.

“Iran would like to help us with many things, but we are not giving them the chance because of the tensions with America,” said Mr. Abtan, the Provincial Council chairman. “We don’t really want to shift the battle between Iran and America to Najaf. We want Najaf to become a very powerful commercial city, and this policy means you have to stay out of sensitive positions.”

However, Iranian engineers have helped build two large new wells at one of the shrine’s entries so that many more pilgrims can complete the ritual washing before praying and drink pure water. They are also constructing expanded restroom facilities for them, according to hotel keepers near the shrine who housed the Iranian engineers working on the project. It was not clear whether the Iranian engineers were from a private firm or associated with the Iranian government.

Despite the Iranian support there appears to be genuine ambivalence about Tehran’s role. Twice, when reporters for The New York Times produced video cameras and telephoto lenses outside Grand Ayatollah Sistani’s office, the cleric’s security detail pounced immediately, demanding to know: “Are you Iranians?”

Even with much of the construction just now getting under way, the city is already a showcase for the Islamic Supreme Council of Iraq, which controls Najaf’s governorship and Provincial Council. In the relatively short time it has been in power, the party appears to have largely eradicated security problems and erased public signs of strife with the Shiite faction led by the anti-American cleric Moktada al-Sadr. His militia occupied the shrine and battled American and Iraqi troops in 2004. Mr. Sadr remains a formidable populist force elsewhere in the south.

Despite all the politics, the shrine has the mystical aura of great places of worship the world over. It is most unmistakable at dusk, when the fading light reflects off the colored tiles, making the whole place shimmer as if it were a jewel box. Even those who work in the shrine every day occasionally stop as they walk through the courtyards, struck by the way the light falls on a mosaic or a doorway.

In the minds of Najafis, their city is already a capital.

Riadh al-Najafi, an earnest young man who works for the administrative office that manages the shrine, walked visitors through the enormous complex on a recent day, pointing out architectural details and recounting stories of Imam Ali. As the visitors turned to go, Mr. Najafi, in a tone full of confidence, said, “You have never seen anything like this, have you?”