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Al Mayadeen correspondent: The Israeli occupation forces are carrying out demolitions of residential buildings in Gaza's al-Tuffah neighborhood amid intensifying airstrikes.

'Israel' faces massive economic fallout from its war on Iran

  • By Al Mayadeen English
  • Source: Israeli media
  • 4 Jul 2025 14:10
  • 2 Shares
3 Min Read

Amid tightened censorship, Israeli media report escalating compensation claims, unchecked defense spending, and long-term risks to economic stability after the 12-day war on Iran.

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  • I'Israel' faces massive economic fallout from its war on Iran
    Israeli first responders work in a residential area hit by a missile fired from Iran, near Tel Aviv, occupied Palestine, on June 15, 2025. (AP)

Israeli media sounded the alarm over $14 billion in losses, a surging defense budget, and tens of thousands of compensation claims, as economic strain deepens in the aftermath of the 12-day war on Iran.

According to a report by the Israeli daily Maariv, the war has inflicted severe financial damage on the Israeli economy, with the total impact estimated at over 52 billion shekels (approximately $14 billion USD). The report noted that the war has delivered a major blow to "Israel’s" total economic activity and threatens broader budgetary stability.

“It’s no longer just about rebuilding damaged buildings, it’s about rebuilding the economy,” Maariv reported, highlighting that daily life during the war was “nearly impossible” due to constant sirens, rocket fire, destroyed infrastructure, and casualties.

Even under optimistic recovery scenarios, the paper noted that half of the damage is unlikely to be recuperated, leaving a net loss of 26 billion shekels, or 1.3% of GDP, a substantial economic blow.

Defense budget grows into a ‘bottomless pit’

The financial strain is further compounded by the ballooning costs of the Israeli occupation's defense spending. Maariv reports that the 2025 defense budget, recently approved by the Knesset, stands at 135 billion shekels, or 21.8% of the national budget. This includes 75.7 billion shekels in debt repayments to the National Insurance Institute.

The newspaper described both the security establishment and debt servicing as “a bottomless economic pit,” given the continued war-related expenditures.

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Of the allocated defense budget, 67 billion shekels had already been spent within the first five months of 2025. Now, the Israeli military is reportedly requesting an additional 55–60 billion shekels to fund recent wartime expenses, further straining fiscal resources.

Infrastructure damage, compensation soar

In parallel to military spending, the Israeli entity faces rising compensation obligations. According to Maariv, more than 36,000 compensation claims have been filed with the Property Tax Authority and the Compensation Fund at the Tax Authority, with an estimated added cost of 5 billion shekels.

The claims include:

  • 3,392 for destroyed vehicles
  • 3,758 for household damage
  • 10,996 from evacuated settlers
  • Nearly 4,000 settlers were forced to relocate to their relatives’ residential units

Thousands more claims are still being submitted, the paper added, warning that the financial toll on "Israel" is rapidly escalating and may continue to rise sharply in the coming months.

This report follows earlier findings from Calcalist, which estimated the total cost of direct damage at over 5 billion shekels (approximately $1.3 billion), though thousands of cases remain under review or are yet to be formally filed.

Israeli censorship hindering assessment of damage from Iranian strikes

"Israel" has admitted to being struck by more than 50 missiles during its 12-day war on Iran, but the full scope of the damage may never be revealed due to strict press censorship.

Such media restrictions are long-standing in "Israel", where any content, written or visual, considered potentially harmful to the vaguely defined notion of “national security” can be legally suppressed.

Recently, the Israeli entity has further tightened its grip on wartime reporting.

Read more: 'Catastrophic loss': Iranian blow to Weizmann’s war-linked facilities

  • Defense budget
  • destruction in Israel
  • war on Iran
  • Israeli economy
  • compensation claims
  • Iran
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