Coronavirus outbreak eclipses last bright spot in Iran’s economy

Tourism was bringing in much-needed foreign exchange to Iran’s sanctions-ravaged economy. Then coronavirus struck.

Visitors browse the exhibition stand of Iran at the International Tourism
Visitors in Europe browse the exhibition stand of Iran at the International Tourism Trade Fair; COVID-19 is dealing a blow to Iranian businesses that rely on tourists [File: Fabrizio Bensch/Reuters]

Saeed, an Iranian private tour operator in Tehran, is seriously considering a change of careers.

“After seven years of operating off-road tours, I think I should soon be looking for a new job,” the 37-year-old told Al Jazeera.

Tourism was one of the few sectors of Iran’s economy that had not fallen prey to successive rounds of United States economic sanctions unleashed by the administration of US President Donald Trump when it unilaterally withdrew from the Iran nuclear deal with world powers in 2018.

But now Iran is facing an even more formidable foe than Washington, as the coronavirus pandemic sweeps through the Islamic Republic.

More than 1,100 people have died from COVID-19 in Iran, where the number of confirmed infections is surpassing 17,300, according to Iran’s health ministry.

To contain the virus, authorities have shuttered schools and universities across the country, cancelled all religious and social gatherings including Friday prayers in most major cities, and urged people to remain indoors. Major religious sites across the country have also been closed including the most revered ones in Mashhad, Qom and Shiraz.

I think I should soon be looking for a new job.

by Saeed, private tour operator in Iran

Devastating timing

Tourism has been a source of much-needed foreign exchange for Iran’s sanctions-ravaged economy, and the government had ambitions to grow it from an $11.8bn industry representing three percent of the country’s total economic output to a $24bn industry over the next five years.

That timeline is in serious jeopardy now.

Coronavirus was officially diagnosed in the Islamic Republic on February 20th – just a month ahead of the start of a two-week national holiday that marks the ancient Nowruz festivities – a peak time for tourism.

For the government, as well as individuals and businesses whose livelihoods are tied to tourism, the timing was devastating.

Iranian authorities have ordered all travel agencies, airlines and hotels to refund all bookings and tickets and waive all cancellation fees.

Iranian airlines alone have been hit with at least three trillion rials of damage so far ($71.4m at the official government exchange rate), a ccording to Maghsoud As’adi Samani, the Secretary of Iran’s Aviation Companies Association.

Faced with a crisis of this magnitude, many businesses that depend on tourism are either closing their doors or letting go of staff to cut costs.

Alibaba, Iran’s largest online booking platform, announced last week that it is laying off 182 people. Eligasht, one of the largest tour operators in the country, has furloughed 80 employees.

“Our reaction [to dismiss 80 staff] was in response to recent problems and the shrinking market,” Amir Fanaeian, the CEO of Eligasht, told Al Jazeera, adding that coronavirus has brought the tourism industry to a “total halt”. will be a significant blow to the economy

by Alireza Arahimi, Deputy Chairman, Tourism Commission, Iran Chamber of Commerce

Gathering clouds

With successive rounds of US sanctions targeting almost all of Iran’s major industries, the administration of President Hassan Rouhani has been working to boost the travel industry with the goal of attracting 20 million tourists to Iran annually by 2025.

To meet that target, the state has made large investments in hundreds of tourism projects in recent years.

The strategy was bearing fruit. Eight million people visited Iran during the first 10 months of the current Iranian calendar year, and the county was ranked as the third fastest-growing tourism destination in the world last year, with almost 28 percent annualized growth, according to the United Nations World Tourism Organization.

But clouds started gathering over Iran’s tourism industry in the months before coronavirus reared its ugly head.

In November, deadly protests swept the nation after the government announced it was rationing petrol and hiking prices.

“Everything was going well during the first half of the year; we were even experiencing more demand for our tours because a greater number of those who could no longer afford to go abroad were turning to local tours,” said Saeed, who asked Al Jazeera to withhold his surname to protect his privacy.

“Such an increase in [the] price of gas did affect us, since we use 4WD [four-wheel drive] cars to reach remote locations and that raises our costs,” he added while stressing that it was still manageable, as those interested in this kind of luxury tours could still afford them.

Iran’s attractiveness as a tourist destination suffered another big setback in January after the US assassinated Iran’s Quds Force Commander General Qassem Soleimani in Baghdad. Iran retaliated days later by firing missiles at military bases in Iraq that hosted US troops. In the fog of escalating tensions, Iran’s military mistakenly shot down a Ukrainian passenger plane over the skies of Tehran.

Foreign travellers cancelled bookings amid fears of a possible war brewing.

Then February brought coronavirus.

“We were just trying to get ourselves back together again by planning for Nowruz holidays, hoping that it would make up some of our losses. But then came the damn coronavirus and destroyed everything,” Saeed told Al Jazeera.

“We had two special upcoming tours: one for Chaharshanbe Suri [the ancient Persian festival of fire, on the last Tuesday of March] and another one for Nowruz [the Persian New Year, marked on the first day of spring], but they were both cancelled,” he said.

Though government efforts are currently focused on containing the virus, Mohammad Nahavandian, President Hassan Rouhani’s economic deputy, recently told reporters that an economic committee has been formed to prepare a list of affected businesses and draft a series of proposals for how to help them weather this latest crisis.

Last week, the world got an indication of just how dire the coronavirus crisis has become after Iran asked the International Monetary Fund for $5bn in emergency funding to fight the outbreak – marking the first first time in 60 years that the country has asked the international lending institution for a lifeline.

“It is not clear yet how long it is going to take for things to return to normal again, but it will be a significant blow to the economy,” said Alireza Arahimi, Deputy Chairman of the Tourism Commission of the Iran Chamber of Commerce. “If we don’t get over it quickly, we’ll be witnessing a sharp hike in unemployment and inflation,” he told Al Jazeera.

Source: Al Jazeera