Five months on: The real cost of the Iran war
Pentagon’s $37.5bn estimate is ‘tip of the iceberg’, with an analysis by The Telegraph putting true bill at $151.3bn
When Donald Trump launched Operation Epic Fury on Feb 28, he predicted it would last “four to five weeks”.
Five months later, the war in Iran still rages on, leaving American taxpayers to shoulder an ever-growing bill.
Pete Hegseth, the US defence secretary, acknowledged the conflict had already cost the government at least $37.5bn (£28bn), warning that the
Pentagon was running out of money.
Yet the true cost, experts predict, is likely to be far greater and more damaging to the American economy than anyone could have predicted.
“We should consider the $37.5bn figure as the tip of the iceberg,” said Prof Linda J Bilmes, of Harvard University, and one of America’s leading experts on the economics of war. “Most members of Congress don’t take that number seriously.”
Prof Bilmes, who has written two books on the cost of the war in Iraq, said Mr Hegseth’s figure entirely excludes the medium-term and long-term costs of the conflict.
According to an analysis by The Telegraph, the real cost of the war in Iran to the American economy had reached $151.3bn (£113.8bn) by July 24.
If the war continues at the current rate, that figure would climb to $311.3bn by the end of the year.
The impact is already filtering through to consumers. Petrol prices have been 21.7 per cent higher than they would have been without the conflict, while diesel prices have been 36.7 per cent higher.
The price of Brent crude has leapt from extreme to extreme since the war began, frequently topping $100 (£75) per barrel before crashing back down to the high 60s.
Some estimates are substantially higher still. Prof Bilmes said that, once the full cost of the conflict was taken into account, the eventual bill could reach $1tn.
This financial burden is creating a political headache for Mr Trump as he looks ahead to
November’s midterm elections.
The conflict has proved unpopular across the political spectrum, and this is likely to show when Americans go to the polls to decide the balance of power in Congress on Nov 3.
Laurel Rapp, director of the US and North America programme at Chatham House and former US state department official, said the cost of the war had left the president facing a “politically perilous moment”.
“A lot of these voters are going to be voting on economic matters, and the economic outlook is not very rosy right now, with high fuel prices and quite high inflation. Those realities will not likely resolve themselves before November,” she said.
Mr Trump’s latest net approval rating also stands at -19.5 per cent, down from around -11 per cent before the start of the war.
The financial burden has been accompanied by mounting human losses.
Eighteen US service members have been killed in the conflict, although the Pentagon officially
counts only 14 fatalities because it excludes four troops killed after the ceasefire announced in April.
The Trump administration has faced repeated criticism over the transparency of its reporting on the
war’s human toll.
Maziyar Ghiabi, director of the Centre of Persian and Iranian Studies at the University of Exeter, said: “This presidency seems particularly concerned with the way it appears in the public eye.
“That prompts covering up injuries and the destruction of highly costly military assets.”
According to an analysis by The Telegraph, Iran has damaged at least 20 US military sites in the region since the start of the conflict, including three state-of-the-art anti-ballistic missile battery systems at the Al Ruwais and Al Sader air bases in the United Arab Emirates and Muwaffaq Salti Air Base in Jordan.
Beyond the financial and human toll lies another cost that is harder to quantify: America’s global position.
Analysts say every additional dollar and military asset committed to the Middle East reduces Washington’s ability to deter rivals elsewhere, particularly China and Russia.
“When resources are sent to the Middle East, that means resources are not being sent in the same way to the Indo-Pacific. That’s great news for China,” Ms Rapp said.
“That’s what China wants to see. China wants to see the US unable to resource its Indo-Pacific operations; it wants to see the US’s global standing diminished.”
History suggests the final bill is unlikely to resemble today’s estimates.
“We learned in the Iraq and Afghanistan wars that costs have a long tail,” Prof Bilmes said.
The war in Afghanistan lasted 19 years and 10 months and cost an estimated $2.26tn. Spread evenly, its first five months would have cost roughly $47bn – substantially less than the current estimated cost of the Iran conflict across the same period.
Prof Bilmes also noted that in 2001, the US budget was in surplus and Washington spent around 8 per cent of the total budget paying interest on the national debt.
Today, US debt has climbed to 100 per cent of GDP, borrowing costs are higher, and the country spends 15 per cent of its budget on interest payments.
“So the Iran war is likely to have long-term negative fiscal consequences even if we can bring it to an end soon,” she added.
Five months into a conflict Mr Trump predicted would last weeks, the Pentagon’s $37.5bn figure may prove to be only the opening chapter of America’s total bill.
