Politicians Wage War, People Pay

“In war, whichever side may call itself the victor, there are no winners,
but all are losers.”

Neville Chamberlain, British Prime Minister 1937-1940

War is expensive, and smart politicians should be able to weigh the cost vs benefit and consequences in advance. The Israel-Iran war should have been avoided, but Israel started the war and the Israeli economy is paying the price of the 12-day conflict. The cost of the war reached over USD 10 billion, according to media reports.

New revelations by Brig Gen (ret.) Re’em Aminach, a former senior defence official and financial consultant to the IDF chief of staff, show that Israel spent USD 1.45 billion in the first 48 hours of its recent military operations against Iran. Offensive actions alone, including initial airstrikes, flight hours and munitions cost approximately USD 593 million.

Israel then spent around USD 5 billion in the first week of the attacks on Iran, according to the Financial Express website, while daily expenses reached USD 725 million, USD 593 million of which were used for attacks and USD 132 million allocated for defensive measures and military mobilisation. The Wall Street Journal reported that the daily cost of anti-missile air systems ranged from USD 10 million to USD 200 million for Israel.

One of the most significant expenses has been Israel’s Iron Dome defence system. Experts estimate that when Iran fires a wave of missiles, the cost to intercept can range from tens of millions to USD 200 million a day. For instance, each activation of the David’s Sling system costs about USD 700,000, while the Arrow 3 system can run up to USD 4 million for each interception. It’s challenging to track the number of sorties flown each day, but keeping warplanes, like the F-35, airborne is costly, averaging around USD 10,000 per hour of flight time.

Naser Abdelkarim, an assistant professor of finance at the American University of Palestine, said the attacks did not only directly affect Israel’s military spending, but also the country’s production activities, noting that directly and indirectly, the war could cost Israel up to USD 20 billion.

Abdelkarim stated that Israel’s budget deficit is expected to rise by 6% while compensation payments to affected citizens will further reduce the country’s public finances.

The number of Israelis evacuating their homes in the first week exceeded 10,000, and some 36,465 people filed for compensation, according to the Israeli Tax Authority.

Abdelkarim said that the Israeli government is considering one of the three following measures to cover the widening budget deficit: cutting public spending on health and education, increasing taxes, or resorting to borrowing, which could bump up the public debt to national income ratio by over 75%.

Furthermore, the Israeli Ministry of Finance revealed that the current financial resources of the country are rapidly depleting, and it requested USD 857 million to be transferred to the Ministry of Defence while requesting USD 200 million of cuts from health, education and social services, which means the costs are being shifted to the people who have to bear this burden.

Israeli financial newspaper Globes reported that a major portion of expenditures would be used to cover military personnel expenses. Some 450,000 reservists were called for duty as a part of the large-scale mobilisation efforts during the war.

It appears Iran targeted critical infrastructure in Tel Aviv and Haifa, including an attack that shut down Bazan, Israel’s largest oil refinery, causing an estimated daily loss of USD 3 million, according to Financial Times.

Ben Gurion Airport suspended operations in response to Iran’s retaliatory strikes. The airport typically handles about 300 flights and 35,000 passengers daily and has only partially reopened as of Sunday for repatriation purposes. This disruption could very well result in even greater economic losses.

Iran has also inflicted physical damage on Israel. Hundreds of Israeli buildings suffered heavy damage or destruction, resulting in significant repair costs. More than 5,000 people had to evacuate their homes, with some temporarily housed in state-funded hotels.

For actual war expenses, according to Reuters, for Israel, estimated losses range from USD 11.5 billion to USD 20 billion, representing 2.1–3.3% of Israel’s estimated GDP. Daily war expenses are about USD 725 million, with the first week costing around USD 5 billion.

Interceptor missiles alone cost between USD 10 million and 200 million daily. Property damage is estimated at a minimum of USD 1.5 billion, with total claims exceeding USD 1.32 billion. Additional costs for rehabilitation could be USD 294 million to 440 million. The economic shutdown cost about USD 294 million per day, totalling over USD 3.5 billion, with Israel’s budget deficit expected to increase by up to 6%. Civilian costs, including compensation for businesses, workers and evacuees, are estimated at USD 1.5 billion.

For Iran, estimated direct and indirect losses are between USD 24 billion and 35 billion, or approximately 6.3–9.2% of its estimated USD 380 billion GDP. US and Israeli strikes caused damage to nuclear and military infrastructure and led to a drop in oil exports, which is expected to worsen existing fiscal and social challenges.

In summary, the conflict has resulted in significant costs for both nations, with initial estimates for Israel over USD 12 billion and projections up to USD 20 billion, and estimates for Iran between USD 24 billion and USD 35 billion, respectively. These figures are expected to rise as the full impact is realized.

Economists have said, as a consequence of war, Israel will face budget constraints. Israel’s defence budget has ballooned dramatically in response to the wars from 60 billion shekels in 2023. Their defence allocation rose to 99 billion in 2024 and is projected to reach 118 billion shekels (USD 31 billion) in 2025, nearly double the pre-war figure.

Despite a modest rise in projected tax revenues, the Israeli Finance Ministry has lowered its 2025 GDP growth forecast from 4.3% to 3.6%, citing the economic drag caused by extended reserve duty and reduced civilian productivity. The country’s fiscal deficit ceiling of 4.9% of GDP, equating to USD 27.6 billion, is now at risk of being breached, especially since much of the emergency reserve was already depleted during Gaza operations.

Beyond the immediate cost of weapons and operations, the war effort is also affecting daily life. The Israeli Tax Authority’s Compensation Fund has paid out 2.4 billion shekels to cover civilian property damage between January and May 2025, with total fund withdrawals reaching 3 billion shekels.

With defence spending now approaching 7% of Israel’s GDP, a level second only to war-torn Ukraine, experts warn that even a decisive military outcome will leave long-term economic scars. The challenge for Israel’s leaders is how to finance their wars without derailing the country’s financial future

The US also shared costs. According to the Pentagon, the bombing operation against Iran’s nuclear sites involved 125 US military aircraft, including B-2 Spirit stealth bombers, refuelling tankers and support aircraft.

Seven B-2 bombers targeted Iranian nuclear facilities in Fordo, Natanz and Isfahan, while 24 cruise missiles were fired at Isfahan from a submarine. In total, 75 precision-guided weapons were used in the operation.

The B-2 is the most expensive aircraft in US military history, costing approximately USD 2.2 billion per plane, with operating costs ranging from USD 130,000 to 150,000 per flight hour, according to the New York Times. The B-2 bombers used in the Iran strikes flew for approximately 37 hours, with operational costs estimated at around USD 56 million.

The bombers dropped 14 GBU-57 Massive Ordnance Penetrators (MOPs), or bunker buster bombs, designed to penetrate fortified underground structures, on Fordo. Each GBU-57 costs between USD 10 million and 20 million while the Tomahawk cruise missiles fired from submarines are priced at approximately USD 2 million each.

Hence, war is wrong and peace is right, as Eleanor Roosevelt (1884-1962) said, “I cannot believe that war is the best solution. No one won the last war, and no one will win the next war. While I am in accord that we need force and we need this force to preserve the peace, I do not think that complete preparation for war is the proper approach as yet.”

Analysts also said, war is hell as well as expensive.

Business / Business

Politicians Wage War, People Pay

Kamol Kamoltrakul 28 Posts

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