David vs Goliath: Iran war reveals pricing asymmetry of weapons systems

Over the past few years, the world has seen a rash of conflicts break out. Some were old but took on new vigour, such as Israel’s bombing of Gaza or Russia’s invasion of Ukraine. Others exploded out of nowhere, such as the current conflagration in Iran.

 

Wars, as the historian Correlli Barnett once argued, are the ultimate audit. They reveal the strengths and weaknesses of states, economies, and institutions. They also have a tendency to reveal that certain commonly held assumptions were erroneous.

 

If there is one such generally held view that seems to have been called into question by the events of the past few years, it is this: That modern war is about quality over quantity. Years of precision-bombing exercises and the use of cruise missiles and Predator drones by the United States (US) against far worse-equipped enemies had led to the comfortable belief that a technological edge was the crucial differentiator.

 

This may not be true in the least — particularly in larger wars, fought over expansive fronts, and that last longer than a few strikes. The Russia-Ukraine war has been something of a shock to the West, in particular. The Russian Federation has a gross domestic product (GDP) of only $2.5 trillion — and yet it has been able to somehow outproduce Ukraine’s suppliers in Europe and North America, with a combined GDP of $50 trillion. Early on, Kyiv would complain that there were too many restrictions on what it was permitted to receive; but, over time, the real constraint has shifted to the use rate of munitions and interceptors being unsustainable, especially as compared to what Russia was able to deploy.

 

This can happen because of sharply asymmetric costs. One long-range Patriot interceptor, made in the US or Japan, costs over $3 million. One round from the Norwegian-American NASAMS air defence system costs over $1 million. Meanwhile, Iran’s Shahed drones, widely licensed by the Russians and used extensively in Ukraine, cost just about $35,000 each to manufacture, and have a 2,500-kilometre range. Lockheed Martin makes about 600 Patriots a year; Russia makes 400 a day, and intends to eventually raise that to 1,000, according to the Ukrainian high command.

 

The broad notion that the West’s strategic advantage came from the fact that it had clusters of advanced, high-tech production that could easily deal with countries that merely had wide swathes of low-value manufacturing seems to have gone up in smoke.  This is becoming evident even in the enormously mismatched contest playing out in the Gulf right now. Secretary of War Pete Hegseth has argued, to the extent that his statements can be said to contain an argument of some sort, that the world’s “two most powerful air forces” have complete air superiority over Iran — but added, almost in the same breath, that they “can’t stop everything” that Tehran fires. The Iranians have perhaps 10,000 Shaheds in storage, according to Israel; they have caused chaos in their entire neighbourhood by just firing off a couple of thousand at best. The tempo of their launches has decreased, but that may be in response to attacks on launch infrastructure — which can be improvised elsewhere, if the Ukraine-Russia conflict is any guide. Most importantly, Tehran could continue to threaten shipping in the Gulf and through the Strait of Hormuz, as well as fossil-fuel extraction infrastructure in Qatar and Saudi Arabia, for months if it chose.

 

For US allies in West Asia, the imbalance is a severe problem: The United Arab Emirates has shot down, according to the Stimson Centre, 92 per cent of what Iran has fired at it, including 165 ballistic missiles and 541 Shaheds. But Abu Dhabi’s requests for replenishment of its depleting supplies of the US munitions it is using have been stonewalled.

 

And as East Asian nations consider the possibility of another, and far worse, conflict breaking out in the Taiwan Strait, they will be even more worried. In Japan, Mitsubishi makes Patriots, having gained a licence to do so from Lockheed Martin. They make only about 30 a year. It’s hard to increase production, as some crucial inputs come from the US, and appear to be drying up.

 

We are not so distant, it appears, from a world in which wars are won by countries that can absorb initial damage from a higher-tech enemy while preserving enough of a low-tech military-industrial base. The way the Soviet Union beat Nazi Germany in the Second World War remains the benchmark.