Hussein blames “politics that cut off people’s livelihood,” and said that “the Iranians and people of the Gulf make up the majority of religious tourists in the Shiite cities.”

Ali Hussein is a hotelier in Karbala, the city where Muhammad's grandson was killed in the year 680 in what is now Iraq. The hotelier fears the sanctions are already taking their toll on the flow of Iranian pilgrims to this holy city. He told Al-Monitor, “We await hundreds of thousands of visitors to spend weeks and months in the city every year. The signs, however, point at a dramatic decline in the number of visitors.”

The hardship on Iranian pilgrims is made even worse because Iraq has denied Iran’s request to waive the visa fee for during Muharram. Morteza Aqaei, who is in charge of religious tourism in Iran, said Sept. 10 that all pilgrims must pay the $40 visa fee in full prior to travel. The fee will be payable in Iraqi dinars this year, as Iraq is abiding by the US sanctions against trading with Iran using the dollar.

Officials say the number of Iranian religious tourists traveling to Iraq has fallen significantly because of the penalties against Tehran, which Washington reinstated Aug. 7.

US economic sanctions on Iran are stemming the flow of religious tourists to neighboring Iraq, even as the Muslim holy month of Muharram has already begun on Sept. 11. Also approaching is Ashura, the Shiite commemoration of the death of Hussein ibn Ali, the grandson of the Prophet Muhammad, on Sept. 20.

Millions of pilgrims spend a few days in Karbala as they commemorate Ashura and Arbaeen (the 20th day of Safar, or Oct. 30) before returning home. Iraq also hosts Iranian Shiite pilgrims who visit the Imam Ali Shrine (to Muhammad's cousin Ali ibn Abi Talib) in Najaf, and the Abbas and Hussein shrines in Karbala throughout the year (Abbas ibn Ali was Ali ibn Abi Talib's son and Hussein ibn Ali's half-brother). This is not to mention the holy sites in Babil and other parts of Iraq, as well as Al-Askari Shrine in Samarra, which al-Qaeda blew up in 2006.

Ali al-Yasiri, an investor, said he has given up on a project to build a hotel in Babil, where there is a famous shrine. He told Al-Monitor, "In light of the crises that came in succession in Iraq and Iran, particularly following the sanctions [against Iran], religious tourism enterprises are no longer making money.”

Saeb Abu Ghoneim, president of the hoteliers' union in Najaf, told Al-Monitor, "Investors expect the sanctions against Iran to bring a huge loss in [Iraq's] religious tourism sector.” He estimates 80% of those visitors to Iraq come from Iran. "In addition, the holy cities in Iran and Iraq are close to each other, which encourages [people] to visit them in large groups on different religious occasions.”

Abu Ghoneim said, "There is a high unemployment rate among those who seek to work in hotels, restaurants, clothes and fabric shops and among cab drivers. This has resulted in many of them shifting careers.”

Samarra Mayor Mahmoud Khalaf told Al-Monitor, “Iranians are barely visiting Iraq presently. ... Last week, an Iranian delegation visited the local government and demanded that hotels near the shrine offer [discounts]."

Ahmad Yassiri, a cab driver whose route takes him between the Shiite holy city of Najaf and its airport, explained that Iranians no longer arrive in large groups in the city where the Imam Ali Shrine and the largest Muslim cemetery in the world are located. "Instead, they make individual visits intermittently.”

The Najaf Travel and Tourism Co. said, “The average number of flights has dwindled to half the [usual seasonal] number," with some daily flights dropping from 30 to about 10. "In contrast, Iraqis are increasingly traveling to Iran for [medical] treatment and religious tourism, with tickets not exceeding $100 most of the time.”

Statistics show that almost 544,000 people work in the tourism sector in Iraq directly or indirectly. Religious tourism revenues amounted to more than $100 million in the first week of Muharram in 2017, which marks the most important occasion for Shiites to visit the Hussein shrine in Karbala.

Retired Judge Tariq Harb provided a legal view on the topic, telling Al-Monitor the private tourism sector will be hurt most by the US sanctions. "Under Iraqi law, no taxes are imposed on religious tourism. Based on that, the economic [value] in this sector [accrues to] the private sector, which will be affected by the sanctions against Iran.” He added, “This would further increase the already-high unemployment rate and place popular pressure on the government."

Given the burden placed on private business, Harb said the Iraqi government could possibly seek a sanctions exemption on religious tourism deals with Iran.

Despite the modest tourism services in Iraq and despite there having been no investments to turn them into lucrative enterprises, countless tourists arrived in Iraq in the 1970s and 1980s prior to the blockade and wars.

Salama Smeimin, an economist and director of Dar al-Nahrain For Business Consulting, also told Al-Monitor, “The Iraqi decision to stop trading with Iran in dollars and ban the smuggling [of dollars] into Iran has taken a toll on religious tourism.”

Nevertheless, Iran doesn't seem to agree that sanctions against the country have affected Iranians’ religious visits to Iraq. The assistant to the Iranian interior minister said Aug. 23 that about 2.4 million visitors are expected to enter Iraq via Mehran on the western border at the time of Arbaeen. This prompted Iran to demand Aug. 14 that Iraq abolish visa requirements for Iranians who enter Iraq to commemorate Arbaeen. Iraq’s prime minister, however, has refused.

However, the Religious Tourism Association in Karbala told Al-Monitor it may consider exempting Iranian visitors from the $40 visa fee for a limited time, as the charge would be substantial for them. According to the association, in the past few months, the occupancy rate of about 1,000 hotels in Karbala didn't exceed 10%.

Mahmoud al-Zubaidi, head of the tourism department at Iraq's Ministry of Tourism and Antiquities, told Al-Monitor that a compromise would have been to impose only a $10 fee on foreign visitors, as previously planned. "Yet the fact that there is no coordination between the interior and foreign affairs ministries and tourism firms has [ruled out] this plan,” he said.