Latest news with #AaronInstituteforEconomicPolicy
Time of India
7 hours ago
- Business
- Time of India
'$12 billion a month': The cost of Israel's daily strikes and defence against Iran - war at a premium
Israel is spending hundreds of millions of dollars each day in its escalating conflict with Iran, with the cost of interceptors, munitions, air operations, and infrastructure damage mounting rapidly, according to The Wall Street Journal. The daily military expenditure could run as high as $200 million just for missile interceptions, with broader operational costs and infrastructure damage driving that figure significantly higher. Experts estimate that rebuilding damage caused by Iranian missile strikes could alone cost Israel at least $400 million. Former Bank of Israel governor Karnit Flug warned that while the economy may absorb the costs of a short conflict, a prolonged war could be far more damaging. 'If it is a week, it is one thing,' she said. 'If it is two weeks or a month, it is a very different story.' The financial toll is being driven in large part by the heavy use of Israel's air defence systems. The David's Sling system, used to intercept short- and long-range threats, costs around $700,000 per activation when firing its minimum of two interceptors. The Arrow 3 system, designed to stop long-range ballistic missiles, costs around $4 million per interception, while Arrow 2 costs approximately $3 million, according to military analyst Yehoshua Kalisky. The conflict has seen more than 400 Iranian missiles fired at Israel in recent days, most of which required interception. The cost of deploying fighter jets—particularly F-35s—adds further pressure. Each hour of flight costs around $10,000 per aircraft. The cost of fuel, munitions like JDAMs and MK84s, and logistics for long-range missions all contribute to Israel's spiralling war bill. Zvi Eckstein, head of the Aaron Institute for Economic Policy, noted that 'per day, it is much more expensive than the war in Gaza or with Hezbollah,' citing the overwhelming burden of ammunition and interceptor usage. His institute estimates that a one-month war with Iran could cost Israel around $12 billion. Despite the sharp military spending, Israel's economy has not entered recession. However, disruptions are widespread. Civilian life has slowed, with many businesses—including restaurants—closed, and only essential workers reporting to duty. The country's main international airport was shut for several days before partially reopening for return flights. On Monday, S&P Global released a risk assessment of the Israel-Iran conflict but left Israel's credit outlook unchanged. Surprisingly, Israeli stock markets rose on Wednesday, with investors betting on the resilience of the economy and a possible swift end to the hostilities. Economists point to Israel's past ability to weather prolonged conflicts, including the 20-month war in Gaza. However, the destruction inflicted by Iranian missile attacks is severe. Structural engineer Eyal Shalev said the damage caused by large ballistic missiles is worse than anything seen in recent conflicts. Hundreds of buildings have been destroyed or heavily damaged, with repair costs expected to run into the hundreds of millions. Meanwhile, Ynet News also reported that Brigadier General (res.) Re'em Aminach, a former senior defence official and IDF financial consultant, estimated that Israel spent about $1.45 billion during the initial two days of combat. Of this, around $593 million went toward offensive operations, such as airstrikes and flight hours, and the rest to defensive measures like missile interception and reservist mobilisation. 'These are direct costs only,' Aminach said. 'The indirect costs — including impact on GDP — cannot be measured at this stage.' The finance ministry has already lowered its GDP growth forecast for 2025 from 4.3% to 3.6% and warned that the existing emergency reserve, mostly depleted by the war in Gaza, does not account for a concurrent conflict with Iran. Israel's deficit ceiling for the year is 4.9% of GDP, or roughly $27.6 billion, which could now be under pressure as the war drags on.
Al Manar
8 hours ago
- Business
- Al Manar
Israeli Economy Hit Hard by Iranian Missiles: Losses Estimated in Billions of Dollars
The confrontation with Iran has been imposing significant economic burdens on the Israeli regime, surging into the hundreds of millions of dollars per day, as reported by The Wall Street Journal, threatening Tel Aviv's ability to sustain a prolonged war. Zvi Eckstein, an Israeli economist, and head of the Aaron Institute for Economic Policy at Reichman University, confirmed that 'this war is far more expensive than Gaza or Hezbollah,' referring to the latest war on Lebanon between September and November 2024. He said: 'The ammunition- defensive and offensive- is the big expense.' The institute estimated that a month-long war could cost Israel as much as $12 billion. According to a June 15 report by the Israeli news outlet Ynet News, quoting a former financial adviser to the Israeli military's chief of staff, stated that the cost has exceeded 5.5 billion shekels (roughly $1.45 billion) for the first two days of confrontation with Iran alone. The economic losses mainly constitute of the Israeli attacks on Iran and the interception of Iranian missiles – attack and defense. Consequently, the financial toll from Iranian missile strikes increases accordingly. $14 billion in damage to Israel after morning attack Today's Iranian strike has already caused initial losses of $14 billion on the Tel Aviv Stock Exchange. Israel's main stock exchange index, with a total turnover of $475 billion, fell more than 3% – its biggest drop since the… — Sprinter Observer (@SprinterObserve) June 19, 2025 High-Tech Attack and Defense Systems According to Israeli economic advisers, Israel has been spending more than 2.75 billion shekels ($725 million) per day on direct military operations against Iran. Just jet fuel and armaments require a cost of almost $300 million each day. The Israeli Air Force has been actively launching F-35 fighter jets across distances exceeding 1,000 miles, costing roughly $10,000 per hour of flight. In terms of air defenses, David's Sling is one of Israeli key defense systems that intercepts short-to-medium range missiles and drones at a cost of approximately $700,000 per intercept, typically using two missiles per launch. Meanwhile, 'Arrow 3' system, operating beyond the atmosphere to counter long-range ballistic missiles, costs about 4$ million per interception. Its predecessor, 'Arrow 2,' designed for in-atmosphere interception, costs roughly $3 million per missile. Mounting Damage Drains the Israeli Economy Engineers has been estimating that reconstruction costs due to missile strikes will exceed $400 million as a result of the damage of hundreds of buildings, and the evacuation of more than 5,000 civilians. After being hit, the largest Israeli oil refinery in Haifa has been temporarily shut down, and work in several significant infrastructure sectors has been suspended. According to the Israeli public broadcaster 'Kan,' the Israeli regime will approve a payment of 500 shekels (approximately $145) for each settler whose home was destructed in the Iranian missile strikes, neglecting any compensation for owners of commercial properties. An Israeli economic journalist, Liel Keiser, also highlighted the destruction of around 1,500 homes and apartments over just 4 days of the Iranian missile strikes. She warned that the fund designated for property tax holds roughly 9.5 billion shekels and has been gradually depleted, imposing an emerging cause for concern.
