PROGRESS REPORTED IN REDUCING IRANIAN DOMINANCE IN

C O N F I D E N T I A L BAGHDAD 002830 NOFORN SIPDIS E.O. 12958: DECL: 10/21/2019 TAGS: PREL PGOV ECON IR IZ SUBJECT: PROGRESS REPORTED IN REDUCING IRANIAN DOMINANCE IN IRAQ,S RELIGIOUS TOURISM SECTOR REF: A. 09 BAGHDAD 1876 ¶B. IIR 068 5910 09 ¶C. DIIR 6 059 0202 09 ¶D. DIIR 6 059 5714 08 ¶E. 09 BAGHDAD 2287 ¶F. 08 BAGHDAD 3655 Classified By: Greta Holtz, OPA Director, for Reasons 1 (b) and (d) ¶1. (U) This is a PRT Karbala reporting cable. ¶2. (C/NF) Summary. According to a trusted source in Karbala,s tourism industry, private Iraqi and Iranian tourist agencies are successfully working around an unfavorable deal the Iraqi Ministry of Foreign Affairs (MFA) struck with the Iranian government that threatened to increase the market dominance of the Iranian tourist parastatal company Shamsah at the expense of private entrepreneurs in both countries. The source alleged an Iranian hand in a major terrorist incident that occurred in Diyala on July 22, naming a Karbala-based Jaish al-Mahdi Special Groups (JAM SG) facilitator as the perpetrator of the attack. End summary. ¶3. (C/NF) The Iranian parastatal tourism agency Shamsah has been engaged in an ongoing battle with private travel agencies and hoteliers in Iraq,s Shi,a pilgrimage cities to control profits from religious tourism (Reftels). In August, Iranian officials escalated the feud by publicly threatening to reduce visitor volumes if the treatment of Iranian religious visitors was not improved (Reftel E). Several sources reported that the number of Iranian visitors to Karbala did drop significantly over the summer, but it was unclear the extent to which this was caused by the visa deal, alleged poor border treatment, a slowdown in services by Shamsah, Iranian internal political instability after the disputed June elections, or a combination of these and other factors. Mohammed Sadiq al-Hir (protect),president of Karbala,s Hotel and Restaurant League, recently related to Karbala PRT staff the latest chapter in this struggle. ¶4. (C/NF) Although the Iraqi MFA reportedly reached a deal with the Iranians to issue all visas in Tehran through the Shamsah tourism agency, the Iraqi Ministry of Interior (MOI) has continued to issue single-entry visas at border checkpoints along the eastern Iraqi border. According to al-Hir, some Karbala travel agencies and hoteliers successfully established direct ties with non-Shamsah Iranian tourism companies. Pilgrims using these companies continued to enter Iraq on single-entry visas issued at eastern Iraqi border crossings such as Khosrabi. The companies could avoid the required payments to Shamsah, improving their profit margins and allowing them to provide better services than the Shamsah-affiliated companies. Some Iranian tourism companies even broke their contracts with Shamsah to participate in the new scheme and were then denied Iranian government-controlled haj visas for their clients in retaliation. ¶5. (C/NF) Al-Hir alleged that Karbala tourist agency owner Sayed Kareem Abu Bakr, at the behest of Iranian intelligence, engineered the July 22 ambush of a tourist bus in Diyala that killed five people and injured 35. He believed the intent of the attack was to make the eastern border crossings used by non-Shamsah agencies appear unsafe, driving pilgrims back to Shamsah and its Iraqi partners. Al-Hir said he believed Abu Bakr was a Fadhila member. (Comment: PRToffs cannot corroborate al-Hir,s claim, but believe that Abu Bakr is the same individual described in three military intelligence reports -- Reftels B, C, and D -- as a JAM SG facilitator, hotel owner and tourism agency operator with close ties to the Iranian Revolutionary Guard Corps. End comment.) Qthe Iranian Revolutionary Guard Corps. End comment.) ¶6. (C/NF) According to al-Hir, he and several Iraqi tourism companies met on August 16 with a senior Iraqi Ministry of Tourism official from the ISCI party. The Iraqi companies agreed to improve services for pilgrims in exchange for continued issuances of single-entry visas at border crossings. Karbala,s Governor, al-Hir,s cousin Amal al-Din al-Hir, publicly expressed support for the continuation of the single-entry visa system. ¶7. (C/NF) Comment: This is but the latest skirmish in what has been a long-running battle between the Iranian government and private sector entrepreneurs to control the profits from the religious tourism trade. For the moment, at least, it is encouraging to see a victory for the Iraqi private sector and progress in getting a fairer share of these important tourism revenues for entrepreneurs in Iraq,s holy cities. End comment. FORD