Israel-Iran, a billion dollars for the six-hour war. How much would a new conflict cost (and what would be the economic implications)

The growing tension between Israel and Iran, culminating in last night’s missile attack, raises significant questions regarding the economic sustainability of a potential prolonged conflict not only for the Jewish state but also for its Western allies, already engaged on other fronts like the Ukrainian one. This latest confrontation, characterized by Tehran’s massive use of drones and missiles and Israel’s effective but very expensive defensive response, has highlighted a notable disparity in costs between the military operations of the two contenders.

The costs for Israel and the differences with Iran

While Iran spent around $30 million on its attack, Israel incurred far more costs. According to estimates, the shooting down of Iranian missiles and drones alone cost Israel over 550 million dollars, to which must be added the expenses incurred by the Western allies (United States, France and England) for joint defense. In total we would touch the billion dollars in spending. This was revealed by Israeli army spokesman Daniel Hagari, who explained that the costs were very high to intercept 99% of Iranian drones and missiles. This figure also takes into account the costs incurred to keep 100 Israeli warplanes in the air for six hours.

Too much expense for everyone

Strategically and politically, tensions with Iran represent a dilemma for Israel and its allies. The military response, while technically effective, carries with it a significant economic burden. Furthermore, opening a new war front at a time when the West is already engaged in Ukraine could prove unsustainable. Iran’s show of force, purely symbolic according to some analysts, suggests that any escalation could easily degenerate into a wider conflict, with unpredictable consequences. The Western allies, the United States, the United Kingdom and France, would see their economic resources under far too much stress with a new large-scale conflict.

Global economic implications

An extended conflict between Israel and Iran could have significant repercussions not only regionally but also globally. Tensions in the Middle East have historically affected global energy and financial markets, increasing uncertainty and risks for the global economy. In this context, a further deterioration of the situation could lead to an increase in oil prices, with knock-on effects on inflation and global economic growth. In a period of general uncertainty, with economies still recovering from the pandemic and under pressure from other international conflicts, the opening of a new front in the Middle East seems potentially unsustainable.

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