The Iranian crisis casts economic shadows over Turkish border regions.

The repercussions of the severe economic crisis in Iran are extending beyond its geographical borders, directly impacting neighboring Turkish regions, particularly Van province in easternmost Turkey.

The continuous decline in the value of the Iranian rial, the drop in real income levels, the erosion of the middle class, as well as the recent protests that lasted for weeks, have not limited their effects to Iran’s interior. Their impact has extended to the movement of people, tourism, trade, and employment on both sides of the roughly 550-kilometer-long border.

Iran and Turkey share a long land border, with about 300 kilometers of it adjacent to Van province, where the Kapikoy crossing is the main artery for the movement of people.

Van is classified among Turkey’s less economically developed regions, with a significant portion of its commercial and service activity dependent on cross-border tourism from Iran.

Fewer Visitors

Before the crisis worsened, Van was a traditional destination for Iranians, whether for shopping, entertainment, or short stays, benefiting from the short distance, relatively low cost, and variety of services. However, the economic collapse in Iran has weakened this pattern, transforming cross-border movement from tourism and consumption to limited transit driven by necessity rather than leisure.

This decline in tourist and commercial activity coincided with an unprecedented collapse in the value of the Iranian currency, which plummeted to a record low of approximately 1.53 million rials per US dollar in the last week of January, according to reports.

By comparison, the exchange rate for the Iranian rial hovered around 55,000 rials per dollar in 2018, when the US administration reimposed sanctions on Tehran, as part of a policy aimed at restricting its oil exports and reducing its ability to obtain foreign currency.

The deterioration in the rial’s value has led to a widespread erosion of Iranians’ purchasing power and increased the cost of travel and spending abroad, especially in nearby destinations like eastern Turkey.

From Bustle to Stagnation

Workers in the tourism sector confirm that Iranians used to form the largest block of hotel guests in Van. In previous years, even during winter, occupancy rates hovered around 30%, while during Iranian holiday seasons, especially Nowruz on March 21st, high occupancy rates were recorded, according to the head of the Van Tourism Workers Association.

He adds that current data indicates a sharp decline, with most hotels in Van operating at no more than 10% of their capacity, while other establishments have temporarily closed their doors.

Workers attribute this to the Iranian rial losing a large part of its value, making the costs of accommodation, food, and transportation in Van high compared to the income of an Iranian visitor.

This decline has also been reflected in retail trade, especially clothing stores, which used to benefit from Iranian spending, where visitors previously filled entire suitcases with purchases. Today, merchants’ accounts indicate an almost complete halt in demand, with visitors tending to reduce spending or limit themselves to basic necessities.

Testimonies from Iranians crossing the border for work or temporary residence highlight this, with individual accounts indicating that amounts sufficient