Mahabad, Iran

Capital City

The population of this northwestern Iranian city has swelled to 168,393, but the employment rate has plummeted from a once-robust 95.8% down to just 88.8%. Bureaucracy is a persistent headache, with the city's short-lived Kurdish republic brutally crushed by the Shah's forces in 1947. The bitter winter climate - Mahabad sits 1,300 meters above sea level - is another drawback. Overall, this Kurdish-majority city is better suited for those with a high tolerance for red tape and cold weather who can look past the heavy legacy of political violence.