Iran War May Cost US $1 Trillion: Harvard Study

The ongoing conflict involving Iran could ultimately cost the United States up to $1 trillion, significantly exceeding initial estimates, according to analysis by a Harvard academic.

Rising Initial Costs

According to a Pentagon briefing to Congress, the first six days of the joint US-Israeli military operation, which began on February 28, cost approximately $11.3 billion. However, experts suggest that the actual figure may already be higher.

A temporary ceasefire remains in place, though efforts to achieve a long-term settlement have so far failed. US forces recently initiated a blockade of Iranian ports following unsuccessful peace negotiations.

Higher Real Costs Than Reported

Professor Linda Bilmes of Harvard Kennedy School estimates that the total cost of the conflict could reach $1 trillion over the next decade. She argues that official Pentagon figures often underestimate real costs, as they are based on historical inventory values rather than current replacement costs.

Bilmes suggests that the reported $11.3 billion could actually be closer to $16 billion when adjusted for these factors.

Short-Term and Operational Expenses

The analysis estimates that the war has cost around $2 billion per day during active combat phases. These expenses include munitions, troop deployments, and equipment losses, including the destruction of three F-15 fighter jets due to friendly fire incidents.

Additionally, replenishing military inventory is significantly expensive. For example, interceptor missiles can cost up to $4 million each, compared to Iranian drones, which may cost as little as $30,000.

Long-Term Financial Burden

Beyond immediate military spending, long-term costs include reconstruction of damaged infrastructure, both for US assets and allied facilities in the Gulf region. There are also projected expenses related to healthcare and disability benefits for approximately 55,000 deployed troops exposed to hazardous conditions.

Impact on US Fiscal Deficit

The financial burden of the conflict is expected to further strain the US fiscal deficit. The White House has proposed increasing the defense budget to $1.5 trillion, alongside an additional $200 billion allocation specifically for the Iran conflict.

Even if Congress approves only part of the proposed increase, analysts expect at least $100 billion annually to be added to defense spending due to the war.

Comparison with Previous Wars

The projected costs are comparable to the Iraq War, which totaled approximately $2 trillion. However, current US public debt exceeds $31 trillion, significantly higher than during earlier conflicts.

Experts warn that borrowing to finance the war at higher interest rates will increase long-term costs, with interest payments alone adding billions of dollars to the total burden.

Future Implications

Analysts caution that the financial impact of the conflict will extend beyond immediate expenditures, placing a long-term burden on future generations through increased debt and interest obligations.