Commenters at various blogs determined this photo actually was most likely taken in Istanbul, Turkey. Various indicators in the image reveal the location of the intersection: Many signs are written in Turkish, but none in Arabic, women are seen wearing revealing (western) clothes, taxi cabs are similar to those seen in Istanbul, European traffic signs are visible, as are signs of businesses based solely in Turkey.
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After insisting that the image was really Iraq Kaloogian dismissied it as an error by his webmaster.