Israel is the surprising cost of Iran’s war US-Israel War on Iran

Since the start of the war on February 28, the US-Israeli conflict with Iran has been made to exist in Tel Aviv and Tehran. However, a calm, steady count of the past five months of war and conflict reveals a paradox: the party that started the war has been the one that has not seen its fire and that has gathered most of what has come.

While Iranian missiles and drones fall on the most critical weapons in the Gulf, while Asian and Arab consumers pick up the bill to close the Strait of Hormuz, and while American soldiers die in strikes on Iran, the stock exchange in Tel Aviv keeps records, the shekel continues to rise, and the Israeli defense industry posts unprecedented figures.

Israel is enduring the lowest price in a war that is destroying its enemy’s defenses and destroying its territories.

The breakdown of Iran’s frontline defenses

Iran’s security doctrine built over four decades is now unraveling. It is based on moving the conflict away from Iranian territory through a network of supporters and allies, from Hezbollah in Lebanon to the Houthis in Yemen and various militias in Iraq.

That network was the foundation of Iranian deterrence and the source of its expansionist policies. The modern war has destroyed this doctrine in the most painful way in its history.

Hezbollah entered 2026 already tired of its 2024 war with Israel and its deep losses in Syria. In March, it made the big mistake of intervening on Tehran’s behalf and suggesting a devastating response to Israel. The United States then pressured the Lebanese government to take action against Hezbollah, prompting the group to suspend military operations and talk of disarmament.

Iraqi pro-Iranian groups intervened on behalf of their allies, but were devastated by US strikes. The US managed to prevent the return of the pro-Iran Nouri al-Maliki to the post of Prime Minister of Iraq and install an unknown banker, Ali al-Zaidi. His government is now under increasing pressure to join forces with Iran and disarm them by the end of September or face US sanctions.

The Houthis, having learned about Hezbollah’s fate and the cost of their initial confrontation with Washington, were unwilling to join the conflict. They are now forced to act, but not against the US or Israel directly; targeting Saudi interests, thus confronting one of the largest armed forces in the world, as well as Yemeni forces loyal to the internationally recognized government.

The result is that Iran is increasingly shouldering the burden of war itself. Israel’s first and perhaps the most important means of profit lies here: the war contributes to the erosion of the network Iran spent more than forty years building, and it is a logical principle surrounding Israel with several borders.

A war without a home

At the beginning of the war, Israel captured Iranian weapons, but most of them were brought down by Iron Dome and additional air defense systems sent by the US. In contrast, the Gulf states faced Iranian threats that went beyond military targets and destroyed energy and infrastructure.

Increasingly, Iran’s protests have focused on the security of civilians in the Gulf region and Jordan, deliberately avoiding both Israeli and American military bases on Iran’s shores.

Tehran understands that US aircraft carriers will open the gates of hell, and that a strike inside Israel will escalate the war at a time when it is trying to maintain a negotiating position with Washington. Instead it has chosen to pressure Washington through its Gulf neighbours.

The result is that the Israeli army has moved out of its established territory. The deterrence price that Israel, as the initiator of the war, must pay has been transferred to the civilians of the Gulf who have no part, some in the governments are removed from any culture and Israel.

As US airstrikes continue to degrade Iran’s military, military and government officials, Israel enjoys the benefits of continued repression without retaliating.

Increasing profits in war

While Israel is managing military spending in the US and the Gulf, its economy is improving. The Bank of Israel, despite cutting its forecasts because of the war, still expects the economy to grow 4 percent in 2026, ahead of the most developed economies even in peacetime. The expected growth in 2027 is 5.5 percent.

Markets are very talkative. The shekel has risen by 20 percent against the US dollar in the past year; Tel Aviv-35 Index maintains records; and in March, at the height of the war, Google completed a $32bn acquisition of Israeli cloud cybersecurity startup Wiz.

The world capital, in other words, is pricing this war as an opportunity to reshape the region in Israel’s favor, not as a threat to it.

Then there is a direct war on the economy. In June, Israel’s Ministry of Defense announced that defense exports will reach $19.2bn in 2025, up nearly 30 percent for the fifth year in a row, led by its military and aerospace defense industries, which are its biggest investment assets. Each new engagement is, from the vantage point of the Israeli defense industry, a public display in front of potential customers.

In the energy sector, Israel’s natural gas output from the Leviathan and Tamar fields is on track to exceed three billion cubic meters (85 million cubic meters) per day this year, adding to exports to Egypt, which are released and sold on the international market at high prices.

Israel’s shipping industry has not yet been affected by the war, its Mediterranean ports are fully operational. Meanwhile, Iran’s blockade creates a crisis that punishes the Gulf and its Asian partners.

The war cost a lot of money

None of this suggests that Israel is fighting a war without cost. Defense spending has skyrocketed, the economy has fallen below pre-war levels, and protracted mobilization has led to many economic and financial problems.

But a strategy is measured not by the absence of cost, but by the relationship between cost and benefits, and by that measure Israel’s position seems stronger than its greatest enemy.

This is the central paradox of modern warfare. Israel’s great gains did not come from the success of the war, but from the changes in the regional environment: the evacuation of the Iranian infrastructure, the disruption of the Iranian army in several theaters, and a large part of the money spent during the war was transferred to other areas. The distribution of the money has been very uneven.

Whether the asymmetry proves temporary or becomes the basis of a new regional order remains to be seen. Keeping it that way may be the main goal of Israeli Prime Minister Benjamin Netanyahu as he heads to Washington this week.

The views expressed in this article are those of the author and do not reflect Al Jazeera’s influence.