While a ceasefire, fragile and uncertain, entered into force between the Islamic Republic of Iran and Israel, another war, less visible but just as decisive, wins in intensity: economic war. Because, beyond strikes and missiles, it is public finances, monetary stability and industrial resilience that shape the balance of power.
On June 20, the United States hit the Fordo site, a highly secure installation built on the mountainside near Qom, designed to withstand possible bombings. This site embodies the clandestine advance of the Iranian nuclear program and its destruction – unfinished according to several sources – Marque a new stage in military climbing between Israel and the Islamic Republic of Iran (RII).
The wars are not only decided on the military field. They are based on the economic capacities of the states that lead them. An army can pull, move forward, strike, only if his country can finance his weapons, maintain his troops, repair his infrastructure and maintain his internal cohesion. Without resources, without production capacity and without budgetary margin, the war effort collapses, whatever the military strategy.
This is what several economists, from various intellectual traditions, strongly underlined. Kenneth Boulding said in 1962 that an economically weakened country saw its military power mechanically eroding. Duncan Weldon recalls that the Allies won the Second World War not only on the front, but especially by their industrial superiority. Brigitte Granville, in What Ails France ?shows how prolonged macroeconomic imbalances weaken state sovereignty. Mark Harrison insists on the link between economic power, state capacity and strategic efficiency. J. Bradford Delong, finally, observes that the authoritarian diets of the XXe century have often been defeated not for lack of political will, but by the structural inability of their economies to support an prolonged war.
All these works converge on the same teaching: military force depends on economic solidity. A degraded economy limits armament capacities, disorganizes logistics chains, weakens the mobilization of the population – and reduced, in finethe chances of victory.
From this perspective, and beyond the still uncertain military verdict, a question is essential today: in the open conflict between Israel and the RII on June 13, 2025 and interrupted 12 days later by a fragile and uncertain cease-fire which does not guarantee the appeasement of tensions, which wins the economic war-that which conditions any victory in the field?
State of the economic forces of belligerents at the threshold of war
When the war broke out on June 13, 2025, Iran’s economy is already bloodless. According to the IMF, its real GDP growth for the year is estimated at only 0.3 %, compared to 3.7 % for Israel in the first quarter.
Unemployment also illustrates this imbalance. In 2024, it reached 9.2 % in Iran, a figure well below reality, against a rate contained between 3.0 and 3.5 % in Israel. This differential reflects an unfavorable socio-economic dynamic for the Islamic Republic, the impoverished population of which is much less mobilizable over time.
Inflation further accentuates this asymmetry. It is projected at 43.3 % in Iran against only 3.1 % in Israel. The rapid erosion of purchasing power makes social mobilization difficult to maintain for the regime, both logistically and politically.
On the public finance side, the Iranian budget deficit reaches 6 % of GDP, weighed down by targeted subsidies and ideological expenditure. Israel, for its part, manages to contain its deficit to 4.9 %, despite a sharp increase in military spending. Again, the contrast signals a structural strategic dissymmetry.
The monetary situation strengthens this imbalance. The Rial collapsed, going from 32,000 IRR/USD in 2018 to nearly 930,000 IRR/USD in 2025. Conversely, the Shekel remains stable around 3.57 they/USD. A stable currency allows Israel to maintain its critical imports and finance its war effort in sustainable conditions. The RII, on the contrary, sees its military financing capacity undermined by a generalized monetary distrust.
Finally, the economic opening widens the gap more. Iran remains largely isolated from the international financial system, struck by sanctions and deserted by foreign investors, thus evolving in constrained autarky. Israel, on the contrary, benefits from industrial and technological integration consolidated by its strategic alliances.
In total, the Islamic Republic of Iran is part of the conflict in a structurally unfavorable position: weak growth, rampant inflation, uncontrolled public deficit, free fall currency, economic isolation, and unhappy precarious population. Israel engages with a solid economic base, indicators of resilience and a strategic depth which allow it to envisage an prolonged military effort.
The daily cost of war: uneven pressure on economies
The conflict between Israel and the RII is characterized by intensive air campaigns, targeted bombing, long -range missile fire and cyber attacks. Israeli strikes have primarily targeted military and logistical infrastructure.
The expenses incurred are considerable: guided ammunition, missiles, drones, fighter planes, radars, anti -aircraft systems, electronic warfare devices, wages and military premiums, as well as all logistics linked to the front. According to the Middle East Monitorbased on data relayed by the Wall Street Journalthe daily cost of the conflict would amount to around $ 200 million for Israel.
For the RII, no independent estimate is available to date in recognized sources. However, some observers advance, without rigorous verification, a range ranging from $ 150 to 200 million per day. This hypothesis must be taken with caution, in the absence of confirmed public sources.
But these amounts, similar in absolute value, do not have the same economic weight depending on the country. Their effects, sustainability and impact on duration depend directly on the structure and economic health of each state. Where Israel can absorb the shock, Iran already seems in tension.
Finance the war: between available resources and levers depletion
Israel supports its war effort thanks to a solid financial environment, full access to international markets and an efficient productive fabric. It also benefits from direct logistical and strategic support from the United States (supplies, Thaad batteries, interceptors, naval presence) and British reinforcements. L’OECD Economic Survey : Israel 2025 concluded that Israel retains a robust macroeconomic stability despite geopolitical tensions.
The RII, on the other hand, remains deprived of bilateral aid and excluded from the capital markets. Its war financing is based on:
1) residual oil exports;
2) Interior debt via treasury vouchers;
3) Religious informal collections (ṣADAQ, naḏr o niyāz) since the summer of 2025.
In the 2025 budget, the increase in credits allocated to the guards of the revolution and to religious entities exceeds 35 %, while public wages increase from 18 to 20 %, in a context of inflation estimated at more than 40 %. Iran thus directs its resources towards ideological survival rather than long -term economic sustainability.
Conclusion: Iran leads war in increasing fragility – without tax margins, without external support and in a climate of generalized distrust – while Israel retains for the time being a sustainable capacity for action.
Strategic asymmetry with systemic scope
At the end of this analysis, an observation is essential: Israel is winning the economic war, regardless of immediate military evolution.
The country is based on solid alliances, substantial budgetary margins and a stable financial environment which allow it to support its war effort over time. This base is consolidated by direct logistical and diplomatic support from the United States-and, to a lesser extent, of the United Kingdom-which extends its strategic depth far beyond its borders.
The Islamic Republic of Iran, on the other hand, leads this conflict in an almost total isolation, without external support and with increasingly fragile internal resources: limited oil exports, poorly sustainable internal debt, capture of religious funds. This situation does not only reflect two distinct economic models, but two divergent institutional trajectories, now subject to the test of an prolonged war.
Recent history – from Yugoslavia in the 1990s to Russia in 1917, including imperial Germany in 1918 or Syria after 2012 – shows that economic collapse can precipitate defeat, even without immediate military collapse.
Consequently, the central question becomes that of sustainability. Can the Islamic Republic of Iran continue its military commitment without triggering budget, monetary or social ruptures? Israel, despite its solidity, can it maintain the support of its population in the case of a stammering or an external strategic shock?
In this face-to-face, the economy does not play a secondary role. It is the revealing of the strategic imbalance-and perhaps, in the long term, the decisive factor of the tilting. A strategy comparable to Reagan’s “star war”, which had exhausted the USSR by dragging it into a race for unbearable military spending, seems to be applied today to the Islamic Republic of Iran.
