Iran‑Israel war drains $25 bn, Gulf states hedge
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- Israel's Finance Ministry estimated the war with Iran cost $11.5 billion in budgetary expenses, with potential economic damage of nearly $3 billion per week under wartime restrictions (Reuters).
- U.S. Pentagon comptroller told lawmakers the Iran operation cost about $25 billion, prompting congressional questions about strategy and cost.
- UNRWA reported 72,344 Palestinians killed in Gaza between Oct 7 2023 and Apr 15 2026, based on OCHA and Gaza health authorities.
- Iran launched a drone and missile attack on Israel in April 2024 after Israel struck Iran's consulate in Damascus (Reuters).
- Houthis disrupted Red Sea shipping, forcing firms to reroute vessels around southern Africa, impacting global trade.
- SIPRI estimated Middle East military spending at $218 billion in 2025, with Saudi Arabia $83.2 billion and Turkey $30 billion.
- Carnegie noted Saudi Arabia and the UAE are expanding security beyond borders, hedging through ties with China, Russia, regional partnerships, and domestic defense industries.
Why it matters: The $11.5 bn Israeli estimate, $25 bn U.S. cost, and $218 bn regional arms spend show that heavy militarization is draining state coffers without delivering decisive security, while Gulf states’ pivot toward China, Russia and domestic defense reshapes the regional power balance and forces policymakers to seek crisis‑hotline rules and political tracks for Palestine.
