RENEE MONTAGNE, host:
Many cities in Iraq are languishing, though not the Holy City of Najaf. The city is a major draw for Shiite pilgrims and it's becoming a political and commercial center as well. The city's rise is being sponsored and financed by Iraq's Shiite neighbor, Iran. And Iraqis are wary of too much Iranian involvement, as NPR's Anne Garrels discovered on a recent trip to Najaf.
ANNE GARRELS: Najaf is being transformed. And at the center of this transformation is the golden dome shrine to Imam Ali, the son-in-law of the Prophet Mohammed and the figure most associate with the founding of the Shiite sect. He's said to be buried here.
(Soundbite of praying)
GARRELS: The shrine brings the city not only its mystique, but its money. People here say it's the third most visited site in the Muslim world, behind Mecca and Medina.
(Soundbite of chanting)
GARRELS: Shiite pilgrims, the economic engine come mainly from Iran. They support local business and leave behind valuable donations. Deputy Governor Abdul Hussein Abtan says more than a million pilgrims come here each year.
Mr. ABDUL HUSSEIN ABTAN (Deputy Governor, Najaf): (Through translator) Iranian religious tourists are the most important thing for us, and we've asked Baghdad to permit still more pilgrims.
GARRELS: The Iranian government is paying for a major expansion of the shrine, as well as contributing to the construction of an electric power plant. But Abtan is trying to balance Iran's influence with other investors.
Mr. ABTAN: (Through translator) Obviously Iran wants to be inside Najaf, but we want to keep them at arm's length for now to avoid a conflict between Americans and Iranian forces. We are trying to be smart, using both sides, the best from the Americans and the Iranians.
GARRELS: The Islamic Supreme Council of Iraq is a political power in Najaf. Although the party's roots are in Iran, where leaders like Abtan sought refuge under Saddam Hussein, there appears to be ambivalence about Tehran's role now.
Mr. ABTAN: (Through translator) We told them we won't let you make Iraq, and especially Najaf, the battleground with the Americans.
GARRELS: Iran has armed competing Shiite factions, fueling intra-Shiite violence as well as attacks on Americans. There's been a backlash in the Shiite south against this Iranian meddling, not just from the supreme council but from its rival, anti-American cleric Moqtada Sadr, whose populist movement, the Jaysh al-Mahdi, remains strong.
Sheik Salah Obeidi, a key Sadr aide, says Iran overplayed its hand, taking control of elements of Sadr's movement for its own ends. Obeidi says one reason Sadr declared a six-month freeze on military activity last August was to reduce Iranian influence.
Sheik SALAH OBEIDI (Moqtada Al-Sadr's Aide): They want to make use of any power to balance the influence against them from the Americans, to stop any kind of mad usage from the Iranians. We are not enemies to them, but we are not intimate friends to them. We are very cautious.
GARRELS: While Iranian pilgrims are good for Najaf, other Iranian economic involvement raises concerns. The markets are swamped by subsidized Iranian agricultural produce, which hurts Iraqi farmers. A bookseller near the shrine worries about growing Iranian cultural influence.
Unidentified Man (Bookseller): (Through translator) Our publishing industry has been destroyed. It is much cheaper to publish in Iran. We will not let Iran control us.
GARRELS: Deputy Governor Abtan says competing political parties are now getting along in Najaf. But Sadr spokesman Sheik Salah Obeidi has a different view. He accuses Abtan and the Supreme Council of using Sadr's freeze to harass Sadr supporters.
Mr. ABTAN: We find our people are followed. Our people are targeted, which may be developed into a very big problem, a very big clash.
GARRELS: Security in Najaf is much improved for now, in part because of Sadr's freeze. Obeidi knows Najaf needs this peace for continued progress. He warns that if the government doesn't back off its attacks on Sadr's people, Sadr will consider lifting the freeze when it expires in a month, and that might well mean turning again to Iran for support.
Anne Garrels, NPR News.