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Corona Strikes the Heart of Mecca’s Economy

Hajj is the largest annual human gathering in the world. Therefore, it could be a potential hotbed of contagion as millions of pilgrims flock to crowded religious sites. Saudi Arabia recorded more than 170,000 people infected with the virus, of which 1,428 died and more than 117,000 recovered. Analysts believe that reducing the numbers, while necessary, will deepen the kingdom’s economic difficulties.

New reality

The Hajj and Umrah are the mainstays of a tourism development plan under Prince Mohammed bin Salman’s campaign. His campaign aimed to increase the number of Umrah performers to 15 million by 2020. But due to the Corona epidemic, the implementation of that plan has been stopped. The campaign also aims to increase the number to 30 million by 2030.

Official data show that the Hajj and Umrah activity generates 12 billion USD in revenue. Pilgrims and Umrah spend on accommodation, transportation, buying gifts, food, and fees. In late July, Saudi Arabia organized and allowed a limited number of pilgrimages for the first time in modern history. A few thousand pilgrims participating in the rites instead of the usual number of nearly three million.

In the vicinity of Al-Haram al-Mikki, hotels were almost empty, and commercial centers were closed hours before Umrah resumed. Dozens of shops and restaurants closed. Economists estimate that the hotel industry in Mecca could lose at least 40% of its income this year.

Mecca and COVID19

Saudi Arabia’s decision to suspend Hajj and Umrah this year was due to the spread of COVID19. As a result, this decision affects the economy of the kingdom. The holy city, where the Haram Mosque and Kaaba, was teeming with life before the outbreak of the virus.

Suspending rites which provide 12 billion USD a year, strikes the heart of the city’s economy where two million people live, as well as the oil-rich kingdom, the largest in the region. On the other hand, the construction boom in recent years which provides a collection of shopping centers, apartments, and luxury hotels, some overlooking the Kaaba, became empty of its visitors coming from different parts of the world due to fears of the virus.

Not only that, Precautionary measures which were held by companies- that rely on Hajj- to protect against the virus have caused many losses. Even the other services which are provides to the pilgrims from travel agents to street barbers, gift shops, and restaurants. Many spoke of large-scale layoffs, cuts, or delays in salaries.

It is not only the inhabitants of Mecca who suffer. Pilgrims, some of whom spend their savings to visit the Kaaba, have also had to cancel their trips, causing great difficulties for the world’s Hajj tour operators.

In a politically and religiously sensitive decision, Saudi Arabia said it would allow only about 1,000 of its residents to perform the rites in the last days of July 2020 compared with 2.5 million in 2019. Saudi Arabia confirmed that the pilgrims will be of different nationalities. However, the selection process will not be an easy matter as the priority may be for Mecca residents.

The economy due to COVID-19    

The decision coincides with a sharp decline in oil prices and losses from the virus protection measures, including the closure of airports and a weeks-long curfew, which prompted the adoption of an austerity strategy, an increase in the value-added tax from 5 to 15%

Salary delay

The Saudi Bin Laden group, known for developing mega projects including holy sites, has delayed the payment of salary to thousands of workers for the last few months.

They traded the hashtag #pay_bin_laden on Twitter at a time when the economic downturn is affecting the business of the company, which has taken over huge projects including the hotel skyscraper overlooking the haram Mosque. The company also was seeking to hire a series of planes to deport many of its workers to their countries in South Asia.

Slowdown

The economic slowdown was a burden to the kingdom’s ambitious plans to build a tourism industry from scratch, one of the key plans of the “Vision 2030” program to boost non-oil revenues launched by Prince Mohammed bin Salman.

What was next?

Saudi Arabia has decided to allow citizens and residents to perform Umrah on the last October, of about 6000 rituals per day. The kingdom has opened its doors to Muslims from abroad from the first of November.

As the umrah performers circled the Kaaba, officials stood to supervise their commitment to diverge to ensure their safety. Worshippers are no longer allowed to touch the Kaaba.