Israel's war on Iran is costing hundreds of millions of dollars a day
Israel faces steep costs to repair hundreds of buildings damaged in Iranian missile strikes, including in Tel Aviv.
Israel's conflict with Iran is costing the country hundreds of millions of dollars a day, according to early estimates, a price tag that could constrain Israel's ability to conduct a lengthy war.
The biggest single cost are the interceptors needed to blow up incoming Iranian missiles, which alone can amount to between tens of millions to $200 million a day, experts say. Ammunition and aircraft also add to the price tag of the war, as does the unprecedented damage to buildings. Some estimates so far say that rebuilding or repairing damage could cost Israel at least $400 million.
The mounting costs add up to pressure on Israel to wrap up the war quickly.
Israeli officials have said the new offensive could last for two weeks, and Israeli Prime Minister Benjamin Netanyahu has shown no indication of stopping before Israel achieves all of its goals, which include the elimination of Iran's nuclear program and its ballistic-missile production and arsenal.
But the war is expensive.
'The main factor which will really determine the cost of the war will be the duration," said Karnit Flug, a former governor of the Bank of Israel and now a senior fellow at the Jerusalem-based think tank Israel Democracy Institute. Flug said she thought Israel's economy could sustain a short campaign. '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."
An interceptor responds to an incoming missile this week in the skies above Tel Aviv.
Over the last few days, Iran has launched more than 400 missiles at Israel, according to the Israeli government, which require sophisticated air-defense systems to stop. More missiles usually means more interceptors.
The David's Sling system, developed jointly by Israel and the U.S., can shoot down short-to-long range missiles, drones and aircraft. It costs around $700,000 each time it is activated, assuming it uses two interceptors, normally the minimum launched, according to Yehoshua Kalisky, a senior researcher at the Tel Aviv-based Institute for National Security Studies.
Arrow 3, another system being used, shields against long-range ballistic missiles that leave the earth's atmosphere, at a cost of around $4 million per interception, Kalisky said. An older version of the Arrow, known as Arrow 2, costs around $3 million per interceptor.
Other military expenditures include the cost of keeping dozens of warplanes, such as F-35 jets, in the air for hours at a time some 1,000 miles away from Israeli territory. Each costs around $10,000 per hour of flight time, according to Kalisky. The cost of refueling jets, and ammunition including bombs such as JDAMs and MK84s, also must be factored in.
'Per day it is much more expensive than the war in Gaza or with Hezbollah. And it all comes from the ammunition. That's the big expense," said Zvi Eckstein, who heads the Aaron Institute for Economic Policy at Reichman University in Israel, referring to both defensive and offensive munitions.
According to an estimate by the institute, a war with Iran that lasts one month will amount to around $12 billion.
The arrivals hall at Ben Gurion Airport near Tel Aviv was largely empty on June 13 after Israel closed its airspace to takeoffs and landings.
Israeli military spending has gone up since the war began yet economists don't foresee a recession at this point, Eckstein said. Much of Israel's economy has shut down in recent days as a result of the Iranian strikes. Only workers in essential industries were called to work, and many businesses such as restaurants were closed. The country's main international airport was closed for several days and has now opened for limited flights back to Israel for those stuck abroad.
On June 16, S&P released a risk assessment for the Israel-Iran escalation but didn't change its credit outlook. Israeli markets rose to record highs Wednesday, continuing to outperform U.S. benchmarks despite the conflict with Iran, betting that the war will end in Israel's favor. Some economists say that the markets appear to think that Israel's economy will prove resilient as it has demonstrated over the past 20 months of war in Gaza.
Still, the damage inflicted by Iranian missile attacks will add up. Engineers say that the destruction caused by the large ballistic missiles is unlike anything they have seen in recent decades of war in Israel. Hundreds of buildings have been destroyed or heavily damaged, and they will cost hundreds of millions of dollars to rebuild or repair, said Eyal Shalev, a structural engineer who has been called to assess the damage to civilian infrastructure.
Shalev estimated it would cost at least tens of millions of dollars to repair a single newly-built skyscraper in central Tel Aviv, which was affected by the strikes.
More than 5,000 people have been evacuated from their homes because of missile damage, and some are being housed in hotels paid for by the state, according to Israel's National Public Diplomacy Directorate.
Targeting of critical infrastructure has been a top concern in Israel. Two strikes on Israel's largest oil refinery in northern Israel led to its shutdown and killed three of the refinery's employees. Some employees who work in sensitive or critical infrastructure industries have been told in recent days not to come to work, according to Dror Litvak, CEO of ManpowerGroup Israel, which supplies over 12,000 employees in Israel to different sectors.
On Wednesday, Israel's home front command said it would partially lift a ban on gatherings—allowing up to 30 people in total to meet—and that workplaces in much of the country could reopen as long as there is a nearby shelter.
But with schools still closed, many parents are struggling to juggle working from home and entertaining their children amid yet another military campaign.
Ariel Markose, 38 years old, a chief strategy officer for an Israeli nonprofit, now holds her morning work calls from a park in Jerusalem where she spends several hours with her four young children. She heads home at around 4 p.m. and continues to work while her husband takes over with the children.
'There are families that are completely collapsing under this," she said.
Iranian missiles have hit critical Israeli infrastructure, and some homes have been damaged, as in Ramat Gan.
Write to Anat Peled at anat.peled@wsj.com
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