The invisible front of war
Iran has resisted military attacks from the United States and Israel, maintaining its stance on nuclear development and supporting allies like Lebanon. Still, the war has left a deep mark on its economy. Military facilities have been damaged, inflation has soared, and the value of the Iranian rial has dropped sharply. The economic pressure Iran faces could be more damaging than the direct military impacts. Rivals such as the U.S. and Israel hope that this strain will push the Iranian government into making major compromises in negotiations or could even lead to a public uprising that could change the political landscape in Iran.
The cost of war in numbers
The Iranian government claims that the war has cost the country around $270 billion in economic damage. However, the Foundation for Defense of Democracies, a U.S.-based think tank, estimates the losses at about $144 billion. Other economists argue that the damage could be even worse, with up to 12 million jobs possibly lost or at risk—that is nearly half of Iran’s workforce. In the long term, rebuilding major industrial centers like Mahshahr and Assaluyeh, which are key to Iran’s petrochemical industry, might take more than ten years. These figures highlight the deep economic toll the war has taken.
Economic collapse and its consequences
The rial’s value fell to a historic low in April, reaching 1.9 million per U.S. dollar. By June, the cost of living in Iran had risen by over 88 percent. These economic pressures have not yet sparked major protests. Instead, the U.S. and Israeli bombing campaign, which included an early strike on a girls’ school, has only made people in Iran more anti-American. Despite the worsening situation, Iranians have not taken to the streets again. Past protests, including those in December, were met with a harsh government response. Now, with the economic crisis intensifying, the regime is under pressure to find a way to manage these challenges without further unrest.
In May, U.S. President Donald Trump said that Iran’s navy and air force were completely destroyed, claiming that both are now '100 percent gone.' A BBC investigation later found that more than 50 military sites across Iran, including air bases, naval facilities, and compounds linked to the Revolutionary Guard and Basij forces, had been damaged. While the exact scale of the damage remains a point of disagreement, the long-term economic consequences are clear. Many of these facilities are central to Iran’s defense and industrial operations, and their damage has disrupted the country's economic infrastructure. Rebuilding these will require time and resources that Iran may not have.
President Masoud Pezeshkian has acknowledged that the war has shifted the battlefield to the economy. He argued that while military strikes failed to break Iran’s spirit, economic pressure remains a key challenge. In his view, the future of the nation depends on how well it can withstand financial hardship. The government has yet to offer a clear plan to address the growing economic crisis. Meanwhile, the U.S. and Israel continue to see economic pressure as a potential tool for forcing concessions from Iran. However, whether this will lead to the desired outcomes remains uncertain. As the war continues, economic struggles may shift political dynamics, possibly favoring hard-liners in the regime and making compromise even harder.