Iraq's holy city of Najaf witnessing an economic boom

NAJAF, Iraq -- The city's first airport is weeks away from opening, but already a bigger one is talked about. Land prices are soaring. Merchants say they don't remember business ever being so good.

Four years ago, Najaf was an urban battlefield with American troops fighting Shiite militiamen loyal to cleric Muqtada al-Sadr. Today, the Shiite holy city is a hot spot of a different kind thanks to improved security, a free-for-all market economy -- and a direct pipeline to the Shiite-led government.

The boomtown buzz in Najaf is more remarkable for its limited company. It's matched only in the northern cities of Sulaimaniyah and Irbil in the self-ruled Kurdish region in northern Iraq, which has been mostly a bystander in the war.

Now, Najaf may point to some of the same ambitions for wider autonomy by the most powerful Shiite party -- with possible far-reaching implications for the country.

The Supreme Islamic Iraqi Council hopes to maintain its domination of Najaf's local government in provincial elections expected late this year or early 2009.

Its broader goal is a self-governing region in Iraq's Shiite south -- with its oil wealth and important religious shrines.

Shiite rivals oppose such a move, fearing it would cement the Supreme Council's sway over Shiite affairs. Sunni groups, meanwhile, argue that a Shiite autonomous region would fall under Iranian influence and lead to the eventual breakup of Iraq.

"We already are making every effort to win Najaf" in the provincial elections, said Ridha Jawad Taqi, a Supreme Council lawmaker. "We may well make it the capital of a future region."

It's already getting a major facelift -- even as plans to build new commercial towers and hotels in Baghdad remain little more than blueprints. Other ideas, including a giant Ferris wheel bigger than the famous London Eye, are even farther out the fringes.

But in Najaf, the rumblings are real. Construction crews race to keep pace with millions of Shiite pilgrims -- some from as far away as India and Britain -- who visit the shrine of the revered Imam Ali or bury their dead in the massive "Valley of Peace" cemetery.

The city's ancient bazaar stays open until around 11 p.m., quite late for a market in most parts of Iraq these days due to security concerns. Shoppers fill narrow alleys to buy gold and silver jewelry, spices, worry beads and perfumes sold in small ornate bottles.

Ahmed Redha, head of the state Investment Authority in Baghdad, estimated that US$38.8 billion in projects are on the drawing board for Najaf and many will be undertaken by private companies. The core of the plans call for new luxury hotels and more than 200,000 housing units, he said.

It's all a far cry from 2004. Then, the city's cemetery and old quarter were front lines between U.S. forces and al-Sadr's Mahdi Army militia until the city's Shiite clergy mediated an end to the fighting.

A dramatic improvement in security has persuaded more Iraqis -- as well as Shiites from abroad -- to travel to Najaf.

Police patrols and checkpoints fill the city of about 1 million people on the edge of Iraq's western desert, but local authorities say they plan to greatly reduce the number of security forces on the streets by installing security cameras around the Imam Ali shrine and other busy parts of the city.

The locals are happy to see foreign visitors returning, particularly big-spending Arabs from the Persian Gulf.

"Everyone is doing good business," gold jeweler Aitan Abdul-Hussein said after he served two Iraqi women in black flowing abaya robes in his tiny shop. "I sell a kilogram of gold every day. That used to be my monthly average a year ago."

The $55 million airport on the southeastern edge of the city is giving everyone hope that even better days are ahead. A ceremonial opening took place in July and the anticipation of commercial flights has pushed land prices up by as much as 60 percent, according to the airport's manager Karim al-Abdali.

Tour operator Ali Abdul-Hussein says most of the 11,000 Shiites he has brought to Najaf over the past two months flew to the southern city of Basra and traveled north by bus. Most came from Gulf nations as well as Iran, India and Pakistan.

"The airport will help our work," said Abdul-Hussein as a Bangladeshi worker dusted air conditioners in the marble-and-glass lobby of Najaf's newest hotel, Qasr al-Dur. "Najaf will become the most important city in Iraq after Baghdad."

Al-Abdali said the airport's expansion potential was limited because developed areas were too close. One proposal is building a separate airport just for international flights. He did not have a timeline.

The boom also is strengthening ties between the Supreme Council -- al-Sadr's main rival -- and Najaf's merchant class, which takes pride in the city's famous entrepreneurial spirit.

It is that spirit, say residents, that has cost al-Sadr support here back in 2004 when his militiamen controlled Najaf, driving visitors away and forcing most businesses to shutter down.

Al-Sadr still enjoys some support in Najaf, but his mix of street politics and violence is deemed by many as bad for the city's economic well being.

Najaf residents appear happy over the jobs and money that have flowed into their city. But some complain that local authorities have much to learn.

For example, no-bid contracts are awarded to local companies with little expertise or resources, while foreign companies remain reluctant to come to Iraq, fearing for the safety of their workers.

"We are still very new in this," said al-Abdali, the airport's director. "In our rush to develop the country we are making mistakes."

The rush to modernize the city is also bringing worries about blows to Najaf's character as the world's oldest seat of Shiite learning and home to the sect's top clerics.

"We stand for preservation and modernization going hand in hand," said Hassan al-Hakim, who lectures on Islamic history in the nearby Kufa university and heads a local foundation to protect the city's heritage.

"There is a danger that expanding the Imam Ali shrine and building more hotels could mean demolishing parts of the old city," he warned in an interview at his Najaf home.

Sheik Ali Bashir al-Najafi, son and top aide of one of Najaf's four top clerics, says the powerful religious Shiite establishment in the city has its own vision for development in Najaf.

"We support the development of the city in the best possible way," he said. "But we want the work done in a way that respects the spirit of a city that hosts Imam Ali."

Hazem al-Haidari, a key member of Najaf's provincial council, sought to allay fears over the loss of the city's identity.

He said plans under consideration for the old quarter would strive to create a balance between modernity and history. "There will be no giving up of the old town's heritage and landmarks," he said.

But he noted that parts of the old cemetery may have to be removed to make way for new roads.