Via CNBC

An Iranian street vendor sells protective masks in the capital Tehran on February 20,2020.

Atta Kenare | AFP | Getty Images

DUBAI, United Arab Emirates — Iran’s health ministry on Tuesday confirmed 15 deaths from the coronavirus, the most fatalities of any country outside of China, where the deadly illness originated. Iran also said there are 95 current cases. And Iran’s deputy health minister, Iraj Harirchi, has tested positive for the virus after downplaying outbreak concerns just days prior.

Amid accusations from within Iran of a government cover-up, it’s widely suspected that the number of cases and deaths are higher than officially reported.

The majority of Iran’s cases have been linked to Qom, a major religious destination for Shiite pilgrims 85 miles south of Tehran, Iranian’s health ministry spokesman said on state television Tuesday. An official from Qom claimed Monday that 50 people had died in the city; Tehran quickly rejected the figure and denied hiding anything.

The virus’s rapid spread in Iran signals a greater risk to the wider region. And Iran’s links to the rest of the Middle East through travel by religious pilgrims and workers — as well as its dire economic situation — make it particularly ill-prepared to handle the intensifying outbreak, regional experts say.

“Iran is perhaps the first example of a high incidence of COVID-19 in a country with relatively weak public health infrastructure,” Hasnain Malik, Dubai-based managing director for frontier markets equity strategy at Tellimer, told CNBC. Iran has about 1.5 hospital beds per 1000 people, which is about half the level of the U.S. or Saudi Arabia, Malik said. “It is inevitable that we will see more examples across Asia and, perhaps, Africa.”

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Regional repercussions: Middle East hubs, airlines at risk

Several new countries — Iraq, Kuwait, Afghanistan, Bahrain and Oman — reported their first coronavirus cases on Monday, which they say are all linked to Iran, raising fears of a greater outbreak spread to the whole region. Lebanon, the United Arab Emirates, Bahrain, and even Canada have reported cases they say stemmed from Iran.

“The regional repercussions are greatest for the tourist and pilgrimage centers like Dubai, Mecca and Karbala (in Iraq) and any associated companies,” Malik said. “Regional airlines, particularly those already squeezed by high debt, are among the companies being most severely hit,” he added.

Iran’s role as a major regional hub for religious pilgrimage exacerbates the outbreak risk. “Large numbers of people are congregated in often densely packed premises, thereby increasing the risk of transmission,” Osman Dar, a project director at Chatham House’s Global Health Programme, told CNBC via email.

Sanctions hurting access to medical equipment

Large movements of refugees and pilgrims over historically porous borders with Afghanistan, Pakistan and Iraq mean cases may have moved across land borders into these countries, Dar said. Some 30,000 people reportedly returned to Afghanistan from Iran in January alone, and millions of Shiite pilgrims and workers move between Iraq and Iran annually.

U.S. sanctions on Iran, which dramatically intensified since the Donald Trump administration withdrew from the Iran nuclear deal in 2018, have crippled Iran’s economy. As a result of the sanctions, Dar said, Iran is “less able to access quality-assured medical equipment and countermeasures necessary for combating the outbreak… and so is more limited in its response capacity than some neighboring countries.”

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That equipment includes personal protective gear and medicine, Dar said, which “may be accounting for some of the increased mortality rate that we’ve seen.”

Iran’s neighbors are shutting their borders

Already nearly all of Iran’s neighboring countries have shut their borders and suspended flights to Iran. Turkey, Armenia, Pakistan and Afghanistan have closed their borders and Iraq says it has blocked travel to and from Iran while Bahrain, Oman, Jordan, Saudi Arabia and the UAE have suspended all flights to the Islamic Republic. Iraq has also closed its only border with Kuwait, which has three confirmed cases, all reported to be from individuals who had traveled from Iran.

Iran has not yet suspended air travel to and from China, with which it has strong trade links.

The outbreak follows a tumultuous and at times violent few months in Iran, which saw dramatically escalated tensions with the U.S. and popular protests in November and January that witnessed hundreds of Iranians killed by state security forces. It culminated in the lowest parliamentary election turnout in the Islamic Republic’s history on Friday, which many say is a sign of badly weakened faith in the regime. This dynamic is worsening the public’s response to the coronavirus outbreak, some Iranian experts warn.

“The lack of public trust in government has meant that directives to stay in aren’t being followed, as people are panicking and heading to hospitals to get tested, worsening the spread of the disease,” said Dina Esfandiary, a research fellow at the Harvard Kennedy School’s Belfer Center.

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“Sanctions have made it harder for health officials to detect and deal with the outbreak, which inevitably will affect the spread of the virus beyond Iran’s borders, as it has over the past couple of days.”