Israel’s Dual Wars Burn Through Billions, Threatening Economic Stability

by Emmitt Barry, Worthy News Washington D.C. Bureau Chief

(Worthy News) – Israel is pouring unprecedented sums into its simultaneous wars in Gaza and against Iran, spending billions of dollars at a pace that is shaking the foundations of its economy. The twin conflicts have driven military and civilian expenditures to levels not seen in decades, placing extraordinary strain on public finances and raising alarms about the country’s financial future.

Soaring Costs in the Iran Conflict

Israel’s ongoing confrontation with Iran is costing the nation hundreds of millions of dollars per day, primarily driven by the high price of missile defense and air operations. New figures released by Brig. Gen. (res.) Re’em Aminach, former senior defense official and financial consultant to the IDF chief of staff, revealed that Israel spent $1.45 billion during the first 48 hours of military operations against Iran. Offensive actions–including airstrikes, flight hours, and munitions–accounted for about $593 million, while defensive measures, such as missile interceptions and rapid reserve mobilization, made up the rest.

Since the conflict began, Iran has launched more than 400 missiles at Israel. The cost of intercepting these barrages is immense. Air-defense systems like David’s Sling and Arrow 3 play a critical role, but each David’s Sling engagement can cost around $700,000. At the same time, Arrow 3 interceptions run about $4 million apiece, according to Yehoshua Kalisky of the Institute for National Security Studies. Experts estimate that the Iran campaign is costing Israel about $725 million per day in direct military spending.

“The main factor which will really determine the cost of the war will be the duration,” said Karnit Flug, former governor of the Bank of Israel and senior fellow at the Israel Democracy Institute. “If it is a week, it is one thing. If it is two weeks or a month, it is a very different story.”

Israeli officials have signaled that the current offensive could last up to two weeks, with Prime Minister Benjamin Netanyahu showing no sign of halting operations before achieving key objectives: eliminating Iran’s nuclear program and its missile arsenal.

Gaza War Costs Mount

Meanwhile, the Gaza war–now stretching into its second year–has cost Israel more than 250 billion shekels ($67.5 billion), according to Calcalist. This includes direct military operations, civilian support programs, infrastructure repairs, and economic losses. Reserve mobilizations are a major contributor: keeping 100,000 reservists in the field costs up to 100 million shekels ($27 million) per day.

“Per day, it is much more expensive than the war in Gaza or with Hezbollah,” said Zvi Eckstein, head of the Aaron Institute for Economic Policy at Reichman University, referring to the Iran campaign. His institute estimates a month-long war with Iran could cost Israel $12 billion.

Impact on Budget and Economy

Israel’s defense budget has ballooned from 60 billion shekels in 2023 to 99 billion in 2024, with projections of 118 billion shekels ($31 billion) for 2025. This surge comes despite only modest growth in tax revenues. The Finance Ministry has lowered its 2025 GDP growth forecast from 4.3% to 3.6%. It warns that the fiscal deficit ceiling of 4.9% of GDP (approximately $27.6 billion) could be breached, as a significant portion of the emergency reserve was spent during the Gaza campaign.

Damage from Iranian strikes has also been severe. Hundreds of buildings have been destroyed or heavily damaged, with rebuilding costs expected to exceed $400 million. Structural engineer Eyal Shalev said that repairing a single modern skyscraper in Tel Aviv could cost tens of millions of dollars. Over 5,000 residents have been displaced, and the state is covering the cost of hotel accommodations.

Critical infrastructure has been hit hard. Iranian missile strikes on Israel’s largest oil refinery killed three employees and forced a shutdown. Sensitive industries have scaled back or suspended operations due to safety concerns.

Despite the staggering costs, the Israeli market has shown resilience. The stock market has outperformed U.S. benchmarks, and S&P Global has not downgraded Israel’s credit outlook. However, economists warn that defense spending now approaching 7% of GDP–a level second only to Ukraine globally–could leave deep economic scars even if military objectives are achieved.

Israel faces a daunting challenge: securing a victory on the battlefield without compromising its economic stability in the years ahead.

Copyright 1999-2025 Worthy News. This article was originally published on Worthy News and was reproduced with permission.