Picture it. An Iranian Shahed-136 drone is closing in on Kyiv. Production cost: €20K1. A handful of banknotes, barely the price of a second-hand car. Facing it, an American Patriot PAC-3 missile built by Raytheon streaks into the Ukrainian night. Unit cost: $3.3M. In a few seconds, the equivalent of 165 years of the French minimum wage goes up in smoke to intercept what is, at bottom, nothing more than a flying moped stuffed with explosives.
A former French general (the Aster being the missile of France’s own air defences) sums up the absurdity:
“When you kill a Shahed with an Aster, in reality it’s the Shahed that has killed the Aster”
That economic equation sums up, on its own, the paradox of modern warfare. Conflicts have never been so short in their “hot” phase: the invasion of Iraq in 2003 was wrapped up in three weeks - yet they have never cost so much. The Napoleonic Wars bled Europe for two decades. Britain’s war effort, for instance, cost around £831M, the equivalent of tens, or even hundreds, of billions of today’s dollars depending on the conversion method. The Second World War? €4.1tn in today’s money2. But brace yourself3: in Ukraine, reconstruction alone is now estimated at €524bn. And the war isn’t even over. Iraq, then, cost several hundred billion dollars. Probably more than $6,400bn over the following 20 years4, split between Iraq ($800bn5) and the famous War On Terror (Iraq, Afghanistan, security)6
Take another, very recent example: the 12-day blitz war between Israel and Iran. Twelve little days. Less than a fortnight’s holiday. The result? $12bn up in smoke on the Israeli side. A billion for every day of fighting.
The numbers are dizzying: 550 Iranian ballistic missiles launched, of which only 31 hit populated areas. But those 31 impacts were enough to shake the Israeli economy. The Treasury has already absorbed ILS 22bn7, or $6.5bn. And that’s just the beginning.
Because the real bill comes in layers, like a poisoned millefeuille. First, ILS 10bn for the military operations themselves: the planes taking off, the tanks rolling, the reservists who have to be called up. Then ILS 5bn for direct missile damage to buildings and infrastructure. The Weizmann Institute hit. The Haifa refinery ripped open. Even the Kirya, Israel’s Pentagon in the heart of Tel Aviv, was not spared.
But the most telling figure may be this one: between $10M and $200M a day, just to keep the missile defence systems running. Every interception burns through between $50K and $3M, a Ferrari per shot, sometimes a Bugatti. Meanwhile, 40,000 compensation claims are piling up on the desks of the tax authority. Ruined families, destroyed businesses, a wobbling economy.
Because behind every tank that rolls, every missile that launches, every drone that explodes, there is a bill. And somebody has to pay it. Usually, the idea is to make the loser pay. And war debts die hard. Britain only finished repaying its Second World War loans to the United States in... 20068, sixty years after the war ended. Germany, for its part, made its very last payments under the Treaty of Versailles in 20109. Yes, you read that right: Germany was still paying for the First World War in the 21st century.
Under pressure, states get inventive about finding money. Economically suffocated from 2022, Ukraine tried something new: raising $277M in war bonds10, sold on the financial markets. A drop in the ocean compared with its needs, but a powerful symbol. Even armed groups are adapting: Hamas and other terrorist organisations have turned to cryptocurrencies to get round banking sanctions. The FBI seized €200K from these digital wallets in 2023, the tip of an underground financial iceberg that goes far beyond crypto, which plays a growing but minor role.