The cost of rebuilding Iran after its brief but devastating 12-day war against Israel may exceed half a trillion dollars, with an economy strained by sanctions, capital flight, and investor jitters, Middle East scholar and Col. (res.) Dr. Moshe Elad told Maariv on Tuesday.
Elad warned that Tehran must now divert scarce resources from social services and long-promised infrastructure upgrades to basic reconstruction, while trying to calm domestic unrest and reassure skittish partners abroad.
“Direct war damage alone runs to tens of billions – mostly energy and infrastructure,” Elad told Maariv. Israeli missile strikes and cyberattacks, he says, destroyed or crippled at least 120 residential towers, power stations, and key nuclear-enrichment facilities. Internet blackouts in the run-up to the ceasefire carried an extra price tag of roughly half a billion dollars.
Even before the conflict, Tehran estimated it needed more than $500 billion in foreign investment just to modernize outdated roads, grids, and ports. “Now a large share of resources will go to rebuilding the wreckage,” Elad noted, forcing the government to shelve or pare back major development plans that were meant to placate a weary public.
Iran entered the war demanding the release of about $70 billion in overseas assets and courting huge energy deals with India, China, and Russia; those aspirations are now on hold. Sanctions have tightened, investors fear fresh volatility, and even long-time buyers such as China are sending cautious signals. Elad argues that instead of the hoped-for relief, Tehran now faces “a worsening economic crisis” marked by capital flight and a credit squeeze.
Mounting pressure at home from economic pains
Economic pain is feeding social unrest. Prices for basic goods have surged, and unemployment in hard-hit provinces is climbing. The regime has responded with mass arrests and expedited executions aimed at deterring dissent. “Thousands have been detained, and the little popularity the regime had is gone,” the Middle East scholar said, warning that flash points like Ahvaz, Tabriz, and Mashhad could ignite larger protests if reconstruction stalls or bread-and-butter subsidies shrink.
To coordinate the recovery, President Masoud Pezeshkian has convened a new Supreme National Security Council that includes senior defense, intelligence, and legal officials. Their immediate tasks: to restore power to industrial hubs, reopen damaged highways, and reassure foreign insurers that shipping lanes and pipelines are safe. Yet without hard currency, progress will be slow. “Even if sanctions eased tomorrow,” a Tehran-based economist told Maariv, “it would take years to line up the financing, labor, and materials for a project list this long.”
The economic shortfall hampers Iran’s ability to rebuild its Islamic Revolutionary Guard Corps (IRGC) missile sites and restart advanced centrifuge production – the same programs that once gave it leverage in nuclear talks. Israeli strikes killed at least 11 senior scientists and 20 IRGC commanders, hollowing out technical expertise and leadership. Elad believes Tehran will now struggle to “grow” replacements quickly, further delaying any bid to return to full-scale enrichment or regional power projection.
Moscow has condemned the strikes but offered no aid; Beijing remains Iran’s biggest oil customer but is unwilling to bankroll reconstruction. In Europe, Tehran’s reliance on cyber-proxy groups and criminal networks has deepened its pariah status. “Instead of deterring its rivals, Iran is the one deterred and isolated,” Elad concluded.
If the regime cannot show visible progress within the next six to twelve months, analysts say, economic grievances could merge with political anger over planning for the succession of Supreme Leader Ali Khamenei, now 86. “How twenty years of buildup collapsed in twelve days of fighting,” Elad quipped, “may soon describe not just Iran’s military assets but its economic hopes as well.”