The Economics of War: How It Pays at Both Ends

By: Raphael Ofori-Adeniran

So, I have been wondering why a certain class of people keep dismissing claims by so-called “conspiracy theorists” that war is an elaborate business model, and that wars are designed, created, owned, and implemented by entities that make astounding windfalls from their business projects.

Yet, the real architects can only smile and bask in the knowledge that the masses have been successfully conditioned to wrongly believe that wars are mere aftermaths of explosive emotions, revenge, or a quest to deliver justice.

Since technology has made it easy to research even mundane topics, I spent time prompting my AI agent to do the heavy lifting of researching and outlining the facts around this topic.

Have you ever wondered who really wins in a war?

You think it is going to be either the coalition of Israel and the United States pitted against Iran?

Well, neither of them will win! As a matter of fact, the real winners are neither military generals nor the nations locked in the violence. The real winners are suit-clad boardroom and corporate hawks calculating their impending return on investment.

Let us evaluate this claim against the current conflict involving Iran and Israel. We’re witnessing a masterclass in what I call “two-sided economics”—where the same global financial giants who created the instruments of war have positioned themselves to profit regardless of who’s shooting and who’s being destroyed.

Let us walk through the numbers. They might surprise you.

Part I: The Missile Math That Will Open Your Eyes

Let’s start with a simple premise: there are costs involved in causing destruction. Conversely, there are inevitable, and sometimes disproportionate costs involved in defending against the destruction.

That there, is the core idea of a missile defence system. It is designed to fire counter-missiles to destroy incoming enemy missiles. It takes at least three interceptor missiles to stop and enemy missile.

I get the impression that prior to the 12-day war between Iran and Israel, many people assume the “Iron Dome” is a literal dome or an energy field deflecting missiles. Nope!

With this background and the unfolding events of the war, Iran has reportedly launched approximately 370 ballistic missiles at Israel in the first three days since chaos erupted in the Middle-East.

 According to defence analysts, Iran’s conventional missiles cost roughly $35,000 each. Even their more advanced “Fattah” hypersonic missiles—designed specifically to overwhelm Israeli defences—run only about $500,000 per unit.

Do the math on that 370-missile barrage:

• If all were conventional: $12.95 million
• If 30% were hypersonic: $64.6 million

For Iran, that’s a great bargain.

Now look at the other side of the ledger.

To stop those same Iranian missiles, Israel and America deployed their most sophisticated defence systems—Patriot PAC-3s at $5-12 million per interceptor, and Arrow-3s at $3-6 million each.

Because defending against ballistic missiles often requires firing multiple interceptors at a single incoming threat (sometimes 20 or more for hypersonic weapons), the math gets staggering.

Conservative estimate indicates that the interceptors that the coalition of Israel and the US fired to try to stop 370 Iranian missile in the past three days, cost American and Israeli taxpayers between $3 billion and $11 billion.

Let that sink in, and let it marinate.

Iran spent maybe $65 million to force its enemies to spend approximately $7 billions in just three days.

In the world of warfare, that’s not just a battle—it’s a budget disaster for the defenders and their taxpayers.

Yet, it took some companies to produce those interceptor missiles. And they are cashing in!

Part II: Meet the Companies Cashing In

Now here’s where it gets interesting. Who actually makes all these expensive interceptors that America and Israel are firing?

Let me introduce you to the  defence industry’s all-star team:

• Lockheed Martin produces the Patriot PAC-3 missiles, THAAD
• Raytheon produces the Tamir interceptors, Standard missiles
• Rafael Advanced Defence produces the Iron Dome, David’s Sling Israel
• Elbit Systems own the Critical components for everything
• Boeing supplies the Defence systems

Every time an interceptor is fired at an Iranian missile, these companies hear a cash register ringing somewhere.

And here’s the best part—once those interceptors are used, they need to be replaced. Defence production lines hum back to life. Stockpiles need replenishing. The cycle continues.

Official estimates have it that Patriot production currently runs at about 620 missiles annually. After firing an estimated 800 interceptors in the past few days, the US and Israel will need over 15 months of nonstop production just to get back to where they started.

That’s called recurring revenue for the weapon manufacturers.

Part III: The Other Side of the Coin—Rebuilding

But wait, there’s more.

The revenue stream doesn’t stop at weapons only. Wars don’t just missiles—those missiles destroy infrastructure. And destroyed infrastructure means reconstruction contracts. Lots of them!

After the war, someone has to rebuild the following destroyed infrastructure:

• Transportation networks (roads, bridges, ports, railways)
• Energy infrastructure (power plants, electrical grids, pipelines)
• Water systems (treatment plants, desalination facilities)
• Telecommunications (fiber networks, 5G infrastructure)
• Housing and hospitals (homes, schools, medical facilities)

And guess which countries and companies dominate the global reconstruction industry?

China (CCCC, CNPC), Turkey (Enka), South Korea (Hyundai, Samsung C&T), the UAE (Arabtec), Saudi Arabia (Binladin Group), and yes—American and European giants like Bechtel, Fluor, Bouygues, and Vinci.

So on one side, you have defence contractors profiting from destruction. On the other side, you have construction and engineering firms profiting from rebuilding.

Same war. Two profit models.

Part IV: The Masters of Both Games—Vanguard and BlackRock

Vanguard, State Street and BlackRock are two asset management behemoths collectively overseeing something like $15-20 trillion in assets. They are the single largest shareholders in countless public companies across every imaginable sector. And when it comes to the economics of war, they have positioned themselves to profit on both ends of the transaction.

Let me show you what I mean:

On the Defence/Interception Side

Lockheed Martin—the company whose Patriot missiles are shredding Iranian ballistic missiles over Israeli skies:

• Vanguard owns 9.25% (approximately $11.8 billion)
• BlackRock owns 7.69% (approximately $9.8 billion)
• State Street owns 14.6% (approximately $18.6 billion)

Together, they control nearly 17% of America’s largest defence contractor.

And these are the top stakeholders. It will take another article to dive into the others whose convoluted ownership structure leads back to the same companies and their owners. Essentially when you follow the money, these two behemoths and the web of interconnected corporations own over 70% of these defence companies.

Now to Elbit Systems—the Israeli defence company providing critical components for Iron Dome and other systems:

• Vanguard owns 1.96%
• BlackRock (through its fund advisors) owns 1.25%

Now, you might look at those Elbit numbers and think “that’s not much.” But remember two things: first, 1-2% of a multi-billion dollar company is still hundreds of millions of dollars. Second, Vanguard, State Street and BlackRock own pieces of every major defence contractor in the world.

Raytheon? They’re in there. Boeing’s defence division? They’re in there. General Dynamics, Northrop Grumman, BAE Systems—the list goes on.

Don’t forget that the Vanguard, State Street and Blackrock also hold significant interests in the other web of corporations and organisations that own the remaining stakes of the global defence contractors.

On the reconstruction side: when the war ends and reconstruction contracts start flowing, who’s going to rebuild Iran’s power plants? Perhaps China National Petroleum Corporation (CNPC).

Who owns a piece of CNPC? Through various index funds and emerging market portfolios, Vanguard and BlackRock hold stakes in Chinese state-owned enterprises.

Who’s rebuilding roads and bridges? Maybe Turkey’s Enka or South Korea’s Hyundai Engineering & Construction. Both are held in Vanguard and BlackRock’s international index funds.

Who’s getting the telecommunications contracts? Perhaps Huawei (private, but with suppliers that are public) or Nokia or Ericsson—all held in global portfolios.

Here’s the magic: Vanguard and BlackRock don’t need to choose between defence and reconstruction, between America and China, between Israel and Iran’s future rebuilding. They just own shares in all of them.

Every missile fired? Their funds capture a piece of the profit. Every interceptor launched? Their funds capture a piece of the profit.

Every contract signed to rebuild what was destroyed? Their funds capture a piece of that too.

For Vanguard, State Street and BlackRock:

• Own ~39% of Lockheed Martin (defence profits on the US/Israel side)
• Own stakes in the companies that own the remaining interests in the defence contractors
• Own stakes in Elbit and other Israeli defence firms
• Own stakes in Chinese, Turkish, South Korean, and European construction firms that will win reconstruction contracts
• Own stakes in global energy companies that benefit from oil price volatility
• Own stakes in virtually every publicly traded company touched by the conflict

They don’t win if one side triumphs. They win regardless of who triumphs.

Part V: Crunching the Numbers

The recent missile exchange between Iran and Israel/US forces (March 1-2, 2026) highlights a stark economic asymmetry in modern warfare.

Iran launched approximately 370 ballistic missiles at Israel. Cost estimates vary: conventional missiles run about $35,000 each, while hypersonic variants may reach $500,000. A baseline calculation puts Iran’s expenditure at roughly $13 million (all conventional). Accounting for a mix—say 30% hypersonic—yields about $65 million (111 at $500,000 + 259 at $35,000).

In contrast, Israel’s and America’s defensive response was far costlier. Using systems like Arrow-3 and Patriot, interceptors average around $4 million each (with some estimates higher, up to $12-15 million for advanced models like THAAD or PAC-3 MSE).

In a conservative scenario (2:1 interceptor ratio for most threats), defending against 370 missiles required 740 interceptors, totalling $2.96 billion.

A high-end scenario—factoring in hypersonic threats needing up to 20 interceptors each for 30% of incoming missiles—demanded 2,738 interceptors, pushing costs to $10.95 billion.

These figures align with broader reports. Defence analyses suggest intercepting similar salvos (e.g., 400 missiles with Patriots) could exceed $2-4.8 billion (U.S. vs. export prices). Israel reportedly added billions to its defence budget amid the conflict, while U.S. direct costs for related operations have already run into hundreds of millions daily.

Broader estimates from the Penn Wharton Budget Model project U.S. direct budgetary costs at $40-95 billion for sustained conflict, with total economic impacts (trade disruptions, energy spikes) reaching up to $210 billion if the war extends to about two months.

This is perhaps secret to Russia’s ability to sustain its war with Ukraine for this many years is partly attributable to its heavy reliance on low-cost missiles and drones, mostly from Iran.

For Iran, low outlays (potentially $65-130 million per two days of sustained missile bombardment) force massive enemy spending—a 20:1 to 50:1 cost ratio.

For Israel and the U.S., high expenditures risk depleting interceptor stockpiles rapidly (e.g., Patriot production at ~620 annually could take over years to replenish stocks.

This exchange underscores an “economic attrition war”: Iran can exhaust Western defences and budgets faster than replenishment allows, turning military clashes into unsustainable fiscal battles.

Part VI: War Scenarios

The math of modern warfare has fundamentally changed, and it’s a terrifying reality for the world’s superpowers.

Here’s the shocking reality: Based on the breakdown of the cost asymmetry between the warring factions, Iran could spend $3.6 billion forcing the US and Israel to spend $752 billion.

Let’s break down the numbers from three conflict scenarios.

• Scenario 1- Two-Week War: Iran fires 1,400 missiles costing $281 million. The US and Israel need 10,360 interceptors at a cost of $58.5 billion. Asymmetry ratio: 208 to 1.

• Scenario 2- Two-Month War: Iran fires 6,000 missiles costing $1.2 billion. The US and Israel need 44,400 interceptors costing $250.8 billion. Ratio: 209 to 1.

• Scenario 3- Six-Month War: Iran fires 18,000 missiles costing $3.6 billion. The US and Israel need 133,200 interceptors costing $752.4 billion. Ratio: 209 to 1.

Add economic disruption—higher oil prices, trade slowdowns, inflation—and the six-month cost hits $3 trillion.

Here’s the kicker: America produces only 620 Patriot interceptors annually. After six months of war, it would take 60-75 years to replenish what was fired.

Israel’s economy would collapse under the weight—six months of conflict would consume 130% of its GDP in direct military costs alone.

Iran understands something the West hasn’t fully grasped yet: in modern warfare, you don’t need to win militarily. You just need to make defence too expensive to sustain.

Part VII: The Uncomfortable Question

So here’s the question that should keep everybody up at night:

Is it possible to have peace when so much money is made from war?

The economic architecture that has been systemically built ensures that when conflicts do happen, a relatively small group of financial institutions and their investors profit enormously. And that profit motive creates constituencies whose entire business model is to ensure continuous wars.

Vanguard, State Street and BlackRock don’t even need to manipulate anything. They just need to be the biggest shareholders in everything. Then, no matter which way the wind blows—escalation or de-escalation, destruction or rebuilding, war or peace—they capture value.

The financial rabbit hole gets even more interesting when you peel the layers to reveal who really own these financial titans.

Part VIII: What This Means for Ordinary People

For most of people, this is all academic. We don’t own billions in defence stocks. We don’t sit on reconstruction company boards. We just watch the news, worry about escalating conflicts, and hope our leaders find a path to peace.

But here’s what the economics of war means for ordinary people:

• Higher taxes. Every interceptor fired is paid for with public money. That $3-11 billion missile defence bill? It comes from US and Israeli taxpayers. It’s money that won’t go to schools, healthcare, infrastructure, or anything else.
• Higher inflation. When oil prices spike due to conflict in the Strait of Hormuz, we all pay more at the pump. When shipping routes are disrupted, everything we buy gets more expensive. J.P. Morgan estimates this conflict could raise global consumer inflation by over 1 percentage point.
• Higher national debt. The US is already running massive deficits. Adding tens of billions in military spending—without corresponding tax increases—means borrowing more, which eventually affects interest rates, economic growth, and the value of our currency.

These wars, however remote they might appear to be , have a direct impact on individual livelihoods.

The consequent economic constraints borne out of these wars can diminish quality of life for the general population. Yet, the global populace have been desensitised from seeing how much these orchestrated wars affect them directly and indirectly.

The problem isn’t that a business model based on the continuation of wars exist. It is that the globalised economic system has normalised an insidious economic system where the same financial institutions and political interests profit from both the infliction and the repair of destructions caused by wars.

Maybe it is an opportune time that people unite to force politicians to present a cost-benefit analysis of every war they intend to start and the beneficiaries at both ends of the revenue stream.

This article tapped into data sources from: International Institute for Strategic Studies, Defense Express, Penn Wharton Budget Model, Investing.com, OnVista, Sohu military analysis, J.P. Morgan economic reports.