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Desperation Can Cost KSA Billions in Hajj Revenue

Desperation Can Cost KSA Billions in Hajj RevenueDesperation Can Cost KSA Billions in Hajj Revenue

Saudi Arabia’s break in diplomatic relations with Iran could cost billions of dollars following the Iranian government’s decision to block pilgrims from visiting the holy city of Mecca.

The regional rivals broke off diplomatic relations last week after Saudi diplomatic missions in Iran were attacked following the kingdom’s execution of prominent Shia cleric Sheikh Nimr.

Commentators believe the government of the Kingdom of Saudi Arabia’s move to cut ties with Iran, which led to the Iranian government banning its citizens from making the annual Islamic pilgrimage to the holy city of Mecca — known as the hajj — will cost the kingdom billions of dollars, according to an analytical article by Forbes.

About 100,000 Iranians take part in the hajj annually, comprising 5% of all Muslims participating in the hajj in 2015.

In addition, 500,000 Iranians annually come to Mecca for the umrah – a non-compulsory but recommended pilgrimage which can take place at any time of the year.

“The hajj is a big boon for Saudi Arabia’s economy. A Saudi economist claimed in 2014 that the country would earn $18.6 billion from the hajj and umrah combined, with $8.5 billion of that coming from the hajj,” the article read.

According to the Mecca Chamber of Commerce, an average hajj pilgrim coming from abroad spends around $5,000 during the stay at Saudi Arabia. If multiplied by the number of hajj pilgrims from Iran, the figure reaches $500 million in revenue.

Assuming that expenditures of umrah pilgrims are approximately the same and adding them to the previous figure, one can calculate that Saudi Arabia may all in all lose about $3 billion a year as result of its rash and thoughtless decision.