Iraq’s tourism sector is a key source of revenue and domain of influence for Iran. Iranian actors’ deep involvement in this industry is not limited to its well-known historic ties to religious tourism and visitation of Iraq’s Shi’i sacred sites. Through both the religious and non-religious high-end tourism industry in Iraq, Iran dominates swaths of the Iraqi market, preying on and co-opting key Iraqi business networks to transfer funds illicitly from Iraq to Iran and Lebanon.

Iraqi local businesses and anti-Iranian Iraqi activists lament that Supreme Leader Ayatollah Ali Khamene’i and the IRGC-QF are dominant players in all parts of Iraq’s religious tourism industry (organized trips, transportation, lodging, food, security, etc.). Tehran controls and sponsors Iranian religious pilgrim affairs in Iraq. In 2003, Tehran established the Reconstruction Organization of the Holy Shrines in Iraq (ROHSI), which facilitates religious tourism. ROHSI and a number of its past and present leaders who hail from the IRGC-QF were included in the March 26, 2020 designation along with front companies in Iran and Iraq. Co-owners and employees of Kosar Company, an Iranian Iraq-based IRGC-QF entity that works closely with ROHSI, were sanctioned for money laundering and other material assistance to the IRGC-QF.

This set of designations, however, neglected to include one of Iran’s most integral assets in Iraq’s tourism sector: All-Iran Central Company of Pilgrimage Service Providers (Sharekat Markazi-ye Dafater-e Khadamat-e Zeyarati-e Sarasar-e Iran, SHAMSA; henceforth: SHAMSA)

In 2005, SHAMSA, a quasi-governmental private corporation that provides packaged tours was formed. SHAMSA is subordinate to the Iranian government agency Hajj and Pilgrimage Organization, which officially is a branch of Iran’s Ministry of Culture and Islamic Guidance. Supreme Leader Ayatollah Ali Khamene’i has veto power over its actions and decisions and maintains a permanent liaison to the organization. Khamene’i’s liaison office similarly controls many aspects of SHAMSA. With around 2500 offices throughout Iran, SHAMSA is the sole operator of Iranian tourism to Iraq. SHAMSA officials are embedded in the Iranian embassy and consulates throughout Iraq.

Like the entities designated in March 2020, SHAMSA is critical to the movement of massive funds from Iraq to Iran and is acting as a cover for IRGC-QF activity. Beyond its integral value to Iran’s strategic position in Iraq’s religious tourism, in coordination with Iraqi governmental bodies, SHAMSA has imposed oppressive conditions on Iraqi businesses that provide tourism and hospitality services to Iranian pilgrims, suffocating Iraqi businesses in the tourism industry. SHAMSA provides its own food to Iranian pilgrims and hires Iranians, depriving Iraqis of work. Activists from the October 2019 protest movement in Iraq took aim at Iranian practices and Iraqi complicity in tourism, portraying it as additional terrain of Iranian ownership of Iraq. SHAMSA has and continues to work closely with ROHSI and its sanctioned IRGC leaders such as Hassan Pelarak and Jalal Maab.

Iraqi Oligarchs and the Role of the Iraqi Tourism Authority

Most Iraqi oligarchs with stakes in lucrative hotels also hold assets in the oil, banking, real estate, construction, aviation, and food industries. Many benefit from partnerships with international companies such as PepsiCola, Honeywell International, and Staywell Hospitality Group. Other Iraqi tycoons and networks might only hold minor stakes in the hotel sector itself, but are closely linked to central players in the tourism industry. These actors simultaneously control important swaths of industries that are crucial to tourism such as security, aviation, and food.

Since 2006, former Iraqi PM Nouri al-Maliki began to facilitate Lebanese Hezbollah‘s entry into the Iraqi tourism sector. Hezbollah’s strategy has relied on the cooptation of Iraqi businesspersons, often transferring ownership and management to Iraqi partners and installing them in key positions on the boards of governmental bodies such as the Iraqi Economic Council and National for Tourist Investment and Real Estate Projects (NTIREP), a public company owned mainly by the Iraqi National Insurance Fund and the Iraqi Department of Retirement and Social Security for Workers, Ministry of Culture, Tourism, and Antiquities (henceforth: Iraqi Tourism Authority).

Talal Ibrahim Rahoumi and Yakzhan Nazir Saleh are but two prime examples of this strategy in action. Talal Ibrahim Rahoumi, a key associate of the Muften network– an entrenched player in the tourism sector discussed below – was previously a shareholder of NTIREP. He is its director and a board member and holds a number of additional positions: director and general manager of the Union Bank of Iraq; previously reserve director of Ishtar Hotels and shareholder of Sadeer Hotel Company.

Yakzhan Nazir Saleh is one of the few non-governmental owners of NTIREP. Notably, he is also an owner of a major food supply company that has ties to and investments in companies controlled by sanctioned individuals and other actors who have collaborated with Hezbollah in enabling Iran’s circumvention of sanctions. The placement of co-opted players like them in key positions is central to Tehran’s dominance in the industry.

Coopted Iraqi Networks and Key Hotels in Non-Religious Tourism

Hezbollah‘s implementation of this strategy in Iraq is most pronounced in the hotel and food industries. Beyond the economic significance of this entrenchment, Hezbollah‘s involvement in the hotel sector carries strategic political implications. Many of the hotels host governmental meetings and gatherings of Iraqi and international actors that comprise the pro-Iran political camp in Iraq and the region. Hotels also serve as important sites for intelligence gathering.

Sadeer Hotel Company was owned by the notorious Essam al-Asadi until 2013, when the Al-Muften Group purchased it. Major owners of Al-Sadeer Hotel Company include: the Iraqi Tourism Authority, Iraqi Department of Retirement and Social Security Workers, Iraqi Land Transport Co (a company exposed for its involvement in oil blending and smuggling operations.)., and four members of the Muften Network. This includes, key Muften associate, Mohamed Abdulhussein Gaafar, who is the Chairman of the Board and CEO of the Iraqi Land Transport Company. He is also an owner of the Union Bank of Iraq (also exposed for fraud that benefits Iran).

Babylon Rotana Hotel is a subsidiary of Al-Sadeer Hotel Company. It is also a shareholder of Cristal Ishtar Hotel, which has a partnership with the Australian based, Staywell Hospitality Group. According to a 2017 investigative report, Karim al-Nouri, described as “a member of Hezbollah” is the general manager. Owners of Babylon Rotana Hotel include: Essam al-Asadi, the Iraqi Tourism Authority, Iraqi Department of Retirement and Social Security Workers, Tarek Mohammed Ibrahim El-Hassan, Emad Nour Muften. The latter two individuals own shares in a major food company, Baghdad Soft Drinks (PepsiCo), and other adjacent sectors.

Palestine Hotel – Notable owners of Palestine Hotel include: Iraqi Airways, Gulf Commercial Bank, Sama Babel Aviation Company (owned by Sami al-Asadi, cousin of Essam al-Asadi), Iraqi Tourism Authority, and a Lebanese-Iraqi offshore company.

Crystal Ishtar Hotels – Notable owners of Crystal Ishtar Hotels include: Iraqi Tourism Authority, Gulf Commercial Bank, Sama Babel Aviation Company, Babylon Rotana Hotel, Palestine Hotel, and Mansour Hotel.

Mansour Hotel – Notable owners of Mansour Hotel include: Iraqi Tourism Authority, Gulf Commercial Bank, Sama Babel Aviation Company, and Dawood Shemo Kheidr (see below). The Mansour Hotel is widely known for housing roulette halls that are significant sources for money laundering.

Gulf Commercial Bank, which is owned and managed by representatives from energy and aviation companies, constitutes an important connective point between the Asadi network and other networks and entities in the banking, tourism, and food industries. The bank is a subsidiary of Asadi’s Baghdad Soft Drinks (PepsiCo), Al-Ameen for Financial Investment, and Ahlia Insurance Co. Tens of subsidiaries of Gulf Commercial Bank include many other problematic banks and companies spanning the real estate, tourism, hotel, and manufacturing industries. Also, Sama Babel Aviation Company, an owner of Gulf Commercial Bank and aforementioned hotels, has acquired joint ownership in a number of the companies controlled by Essam al-Asadi.

Co-Opted Networks and Groups Active in the Non-Religious Tourism Industry

Muften Network – The Muften Network, one of Lebanese Hezbollah‘s primary assets in the Iraqi economy, is a leading tourism industry actor that enables Iranian penetration. Muften associates have been installed in strategic governmental bodies and ministries to facilitate IRGCHezbollah economic activity in Iraq. Beyond the Muften Group’s ownership of central aforementioned hotels and Baghdad Soft Drinks (PepsiCo), it owns other companies in the food industry and the Coral Boutique Hotel in Baghdad, which regularly hosts meetings of the Popular Mobilization Units, the umbrella organization of (mainly) Shi’i militias, Assad supporters, Houthi delegations, and Bahraini opposition figures. In 2017, unnamed Iraqi government officials confirmed that the hotel management staff is Lebanese and Syrian.

The Muften and Asadi networks are enmeshed financially through several major banks, companies in the aviation, oil and transport industries, Baghdad Soft Drinks (PepsiCo), and the aforementioned key Baghdad hotels.

Asadi Network – Essam al-Asadi and Sami al-Asadi have deep presence in banking, construction, aviation, security, food, and tourism. A number of their companies have been exposed thoroughly for their illicit activity and broad facilitation of Iranian interests in Iraq. They are notorious for corruption and their relationships with Maliki and other Iranian allies, earning them the ire of the Iraqi public and protesters.

Asadi’s relationship to sanctioned oligarch Aras Habib exceeds their partnership in Baghdad Soft Drinks (PepsiCo). Habib, similarly deplored by so many Iraqis, was designated in 2018 for providing support for the IRGC-QF and Lebanese Hezbollah, enabling “the IRGC-QF’s exploitation of Iraq’s banking sector to move funds from Tehran to Hizballah, jeopardizing the integrity of the Iraqi financial system.” Habib is the chairman and chief executive of the sanctioned Al-Ataa Islamic Bank (formerly Bilad Islamic Bank). Karbala Hotels is a subsidiary of Al-Ataa Islamic Bank. The following shareholders of Karbala Hotels are entities and individuals that known for aiding Iran such as: Essam al-Asadi’s Al-Warka Bank, Commercial Bank of Iraq, and Ayad Salman Yahya., chairman of the board at Karbala Hotels. He is the former managing director of Al-Ataa Islamic Bank; and since 2017, he has founded two new companies in Cyprus.

Al-Bunnia Group has minor shares in Palestine Hotel, Crystal Ishtar Hotels, and Mansour Hotel, but major holdings and investments in the banking and adjacent food industry, including entites known for their facilitation of Iran’s sanctions circumvention, such as Al-Warka Bank, Commercial Bank of Iraq, Ahlia Insurance Co., and Baghdad Soft Drinks (PepsiCo). Saad al-Bunia is a chief executive and is on the board of directors at Al-Warka Bank.

Gambling and Alcohol in Baghdad Hotels

The high-profile case of Dawood Shemo Kheidr highlights another critical facet of Iran’s influence and gains from Iraq’s tourism sector. Kheidr, an owner of the aforementioned Mansour Hotel and Baghdad Hotel (at the latter, he also served as chair), was a director at National for Tourist Investment and Real Estate Projects (NTIREP). Kheidr is a prominent Yezidi businessman known as Iraq’s largest importer of alcohol. He was kidnapped and later arrested by the Popular Mobilization Units in 2019. He fled Iraq through the Iraqi Kurdistan region, raising speculation that actors from within the PMU itself or Ministry of Interior arranged his escape, lest he reveal incriminating information on politicians and PMU leaders.

Another explanation for the sudden raids on roulette halls and apprehension of Kheidr centers on pro-Iran militias, such as Asa’ib al-Haqq, which have built an economic empire in alcohol and gambling. Many believe that pro-Iranian actors were seeking to oust competitors such as Kheidr and take over this important source of revenue and conduit for money laundering. The official explanation for the sudden raids given by the PMU is that Iranian intelligence provided information concerning this illicit activity, and that furthermore, the UAE had co-opted such mafia leaders and individuals running illegal activities in Baghdad’s most prominent hotels.
Regardless of the PMU’s motivations for cracking down on these targets, it is clear that Iranian intelligence was involved, and that alcohol consumption and gambling in Baghdad hotels controlled by the Muften, Asadi, and Al-Bunnia networks are an important source of revenue and channel for money laundering to Lebanese Hezbollah and the IRGC.

Tehran exercises inordinate direct control of Iraq’s religious tourism sector through bodies such as SHAMSA that operate freely, while coopted Iraqi oligarchs, notorious for corruption and prioritizing transactions with Iran over Iraqi interests, advance Tehran’s sanctions circumvention in the high-end hotel sector. These Iraqi economic players do so through illicit collaboration with Lebanese Hezbollah and IRGC-QF, while they also enjoy partnerships with international conglomerates and companies. Many of the central Iraqi family business networks that operate in the hotel industry hold important stakes in related sectors such as food, aviation, and construction, as well as banking. Their economic expansion and other investment activity is facilitated through the installment of coopted actors in influential governmental bodies such as the Iraqi Economic Council and National for Tourist Investment and Real Estate Projects, which allocates resources and promotes investment in entities such as Baghdad’s high-end hotels.

From sacred tourism to religiously prohibited vices such as gambling and drinking, Iran profits from Iraq’s tourism and hospitality sector. Tehran has cultivated an indispensable source of revenue and cultural legitimacy on the backs of Iraqis.