The Hidden Side of War: Ruin and the Death of Hope
This war’s deepest cost is borne by wage-earners: inflation, unemployment, destroyed industry, and the crushing of hopes for change.
One month has passed since the military attack by Israel and the United States on Iran. What right-wing opponents—and even a broad spectrum of non-monarchist currents—called “helping the people” has now shown its harsher and more merciless face. After one month, it has become clear to everyone, even to those who still insist, falsely and deliberately, that the target is “only regime positions,” that these “liberating bombs” are being dropped to destroy the whole of Iran’s infrastructure. At the same time, with every day the war continues, its visible and hidden material costs grow—not only for the two sides, but for all the peoples of the earth.
In the media and propaganda headquarters of the United States and Israel, numerous reports are produced and published every day about the “destruction of the positions of the Iranian government.” Iran has adopted the same method: reports of blows to the enemy’s positions, from military equipment to military and civilian industries in the region. What both sides refuse to say is that the cost and consequences of this war fall on the people.
According to military officials and analysts, Iran has acquired the “knowledge of low-cost war” and, in comparison with the United States and Israel, has paid far less for this unequal battle. In the first six days alone, the United States spent between $11.3 and $12.7 billion on attacking Iran, and around $16.5 billion in the first 12 days. It is estimated that Donald Trump’s government is spending $1.4 billion a day on the attack on Iran. Based on this estimate, it spent $42 billion from the budget in the first month of the war. International institutions estimate Israel’s weekly cost in this war at around $3 billion, and $12 billion over four weeks.
According to a report by Le Monde, Israel reduced the annual growth rate it had estimated at 5.2 percent in December 2025 by half a percentage point in the first days of March 2026. Citing Benjamin Bental, an economic analyst, the report wrote that beyond the direct military costs, this war will also destroy industries and jobs, increase unemployment, and bring about vast devastation. Rising inflation is another unavoidable consequence of this war.
The Targeting of Foreign-Currency-Earning Industries
Iran, although it is spending far less on direct military confrontation, will have to bear much heavier destructive and costly consequences. In the first two weeks alone, several industrial towns in different regions were bombed and destroyed. Then fuel depots and the electricity grid were hit, followed by refineries and the petrochemical and steel industries. No precise statistics are available on the industrial units bombed by Israel and the United States. Reports in Iran’s domestic media indicate that at least 200 industrial units were damaged in the attacks on Iran.
“Eco Iran,” one of the economic websites in Iran close to the Donya-ye Eghtesad circle, reported on 10 Farvardin 1405 (March 30, 2026), after the attacks on the steel industries in Isfahan and Ahvaz, that a large part of Iran’s industries had been damaged in these attacks. According to this report:
Over the course of this one month, numerous industrial centers have been struck—centers that are among the most important pillars of Iran’s industry and play a major role in the country’s production chain. A search through the news on the targeting of Iran’s industrial centers reveals familiar names, from oil installations to metal industries. In the middle of the war, South Pars, the heart of Iran’s oil refining, was targeted first, and in recent days Iran’s two steel poles—Mobarakeh Steel in Isfahan and Khuzestan Steel—were hit. The attack on industrial infrastructure has not remained limited to large centers, and with the destruction of an electricity substation in Shohada Square in Tehran, it has now reached Tehran’s residential neighborhoods as well. The destruction of Tehran’s oil depots and the capital’s submersion in toxic black smoke for several days are further evidence that the damage of infrastructure war goes far beyond stopping factory production lines. The harm inflicted on these centers is not limited to the destruction of physical structures, but affects the entire economy in a chain reaction.
According to Iranian media reports, one of the most sensitive and strategic targets attacked was the South Pars gas field in Asaluyeh. This attack included strikes on parts of the gas and petrochemical units, including tanks and gas-processing infrastructure, and caused serious disruption in natural gas production. South Pars is the largest shared gas field in the world, and its Iranian section plays a vital role in domestic energy supply, electricity generation, winter fuel, and feedstock for the petrochemical industries. Any damage to this field can disrupt Iran’s energy supply chain and produce a domino effect on dependent industries, especially steel, petrochemicals, and electricity production.
Reports by non-Iranian research institutes and think tanks also stress that, besides the oil industry, three other key sectors of Iran’s economy have been severely damaged and paralyzed: petrochemicals, steel industries, and small businesses.
Because the petrochemical industry depends on gas feedstock, with Asaluyeh as its main source, it has faced up to a 70 percent decline in production. Petrochemicals play an important role in Iran’s foreign-currency income and are considered its second major source of hard currency after oil.
Attacks on the power grid and power plants had already reduced production in the metal industries even before the two major steel plants in Isfahan and Ahvaz were bombed, because electricity to large industries had been restricted in order to supply hospitals and household consumption. The attack on the steel and aluminum industries, accompanied by extensive destruction, has reduced production in this sector as well, so that all three of Iran’s main foreign-currency-earning industries have been directly affected by the war.
Iranian media have said that in the attacks on Mobarakeh Steel and Khuzestan Steel, parts of the vital infrastructure of both companies were damaged:
In Mobarakeh Steel, the 914-megawatt Shahid Kazemi combined-cycle power plant, the old 250-megawatt power plant, a number of direct-reduction modules, and parts of the steelmaking workshop were damaged. Khuzestan Steel also reported damage to reduction unit 2, the Zamzam 3 megamodule, and the steelmaking section; damages that ultimately led to the stoppage of the company’s production lines. At the same time, reports were published about disruptions in the electricity distribution network of surrounding areas due to damage to power substations, showing the intensity of the impact of the disruption in these power plants on people’s daily lives and on the country’s production chain. Khuzestan Steel, with production of more than 10.9 million tons and a heavy concentration on exports, is one of the most important foreign-currency sources of the steel industry. Its export share is estimated at between 55 and 65 percent, and a major part of its products is sent to Asian and Middle Eastern markets. News of the halt in Khuzestan Steel’s activity under wartime conditions is far more than a simple industrial disruption.
“Eco Iran,” stating that disruption in steel production would have multiple consequences, described “reduced profitability for Justice Shares and pension funds” as one of the most important consequences of these attacks and wrote that “the halt in production places economic pressure on low-income families and retirees.”
The report continued by describing this factory as one of the drivers of non-oil exports and an important source of foreign currency for the country, adding that “disruption in its production increases pressure on the exchange rate because of reduced exports, and as a result raises the cost of people’s daily lives.”
Alongside these three important and foreign-currency-earning industries that have been deliberately bombed, the blocking of the internet network at the same time as the continuing military attacks has shut down a large part of service jobs and even small workshops. Buying and selling housing and land has come to a complete standstill. Restaurant and café services, as well as tourism, have also been suspended. Even intra-city transportation has sharply declined, and large numbers of workers in these sectors and seasonal laborers have become unemployed and confined to their homes.
Inflation Is Ruthless, War Is Deadly
Wage-earners already, even after the wage increase in 2026–2027, have an income less than half the minimum subsistence basket. This is while unemployment will certainly rise, and at the same time food prices will continue their upward trend. It is even possible that if the war continues for a long time, it will disrupt the supply cycle for food and medicine as well. Let us not forget that even before the war began, Iran was already facing shortages of medicine and rising prices for medicine and medical equipment. In Bahman (January–February 2026), inflation in food items had already reached triple digits.
In the proposed budget for 1405 (2026–2027), before directly confronting wartime conditions, the government had intended to remove the foreign-exchange subsidy for importing medicine and essential goods, including animal feed and oilseeds. Gasoline and energy carriers were also subject to subsidy removal. But the U.S. and Israeli attack came while Iran was at the negotiating table, and it altered the course of the budget review.
The Statistical Center, one of the two bodies responsible for announcing the official inflation rate, reported point-to-point inflation for Esfand 1404 (February–March 2026) at 71.8 percent. This state institution says that annual inflation also reached 50.6 percent, the highest inflation rate “of the past 15 years.”
The inflation rate for food and beverages was announced at 112 percent at the end of the year, meaning that the cost to households of purchasing the same goods and services had increased by that amount compared with Esfand 1403 (February–March 2025).
In this situation, attacks on industrial units have sharply reduced production in some centers and also disrupted the supply chain of raw materials. Many production units have had no choice but to reduce their productive capacity and send more workers home or onto unemployment insurance—or will do so.
Even before the war began, it was being reported that more than 40 percent of Iran’s population was living below the poverty line. It was reported, in the words of the head of the Welfare Organization, in Dey (December 2025–January 2026), that the population below the poverty line may have increased by 10 percent.
The Hidden Catastrophe
Iran’s economy had already been severely emaciated under the impact of long-term economic sanctions. The oil dependence of the budget had reduced the government’s foreign-currency revenues to the lowest level. The flight of foreign currency capital by the regime’s agents and their rent-seeking accomplices, the deterioration of productive industries, and more had pushed economic growth to its minimum. This frail economy now, under the blows of an unequal war, is facing greater and more dangerous threats.
Estimates by international institutions indicate that Iran’s gross domestic product will shrink by at least 10 percent. Economic growth, too, will suffer under wartime conditions, and this means rising unemployment in the near future.
At the same time, inflation not only will not stop, but will accelerate even more rapidly. The government, in order to fund the budget, is forced to create liquidity, which mainstream economists describe as the main cause of inflation. Growth in liquidity will in turn stimulate inflation. It is estimated that if the war continues, the official inflation rate may exceed 150 percent.
With the export routes for oil, petrochemicals, and steel—the three main sources of foreign currency—blocked, the government will face an even larger budget deficit. At the same time, under these conditions, it must spend more than usual in order to meet essential needs and support those harmed by the war. The government’s solution in this situation is the same: borrowing and printing money.
In addition, for the reconstruction of the destruction caused by Israeli and American attacks, assuming that the war ends soon, the government will need more than $500 billion in investment. This figure can rise with every additional day the war continues. Neither the current government will be able to provide this amount, nor, even if it falls, will any probable successors. The only solution for those probable successors would be to submit to Trump’s very demand: handing over oil resources to him in exchange for rebuilding the ruins that American and Israeli bombs and missiles imposed on the people.
Killing the Future
The warmongers attribute the attack on Iran to the wishes of the people and say these bombs are collapsing on them at their own request and for their salvation. Some even go further than this and shamelessly say that people would rather have their lives ended by bombs that promise a better future than be killed by the government. The real question, however, is this: will these bombs truly bring a future better than the present one?
Mohammad Maljoo, a researcher and economist based in Iran, recently wrote in a short note that the end of the war, at any moment, also transforms the composition of the economy. In his words:
In an economy such as Iran’s, which is already confronted by structural limitations, war means the ever-intensifying deepening of a vicious cycle: declining production, rising government costs, and the weakening of the capacity for social reproduction. This cycle is not merely the result of physical destruction, but also of disrupted expectations, chronic uncertainty, and the more rapid flight of capital.
He went on to describe the government budget in this situation as “the main field of the manifestation of crisis,” because “on the one hand, war and support costs rise sharply. On the other hand, the government’s revenue bases, from taxes to exports, become smaller and more unstable. It is this gap that drives the government more and more toward costly forms of financing: borrowing from the central bank, pressure on the banking network, or pre-spending future resources.”
Maljoo identifies the result of this situation as “the growth of liquidity on a far larger scale than yesterday, and therefore the formation tomorrow of inflation at rates we have never experienced in Iran’s contemporary history,” which “is not merely a consequence, but a mechanism for the reproduction of crisis” that “will sink the economy ever deeper in the days to come into the quagmire of self-reinforcing instability.”
The quagmire of inflation and destruction in a society that still remembers the eight-year war with Iraq, and that lived through the many “shock therapies” of the postwar era in the very first term of Akbar Hashemi Rafsanjani’s presidency, is a step backward. “Reconstruction” after the eight-year war was the starting point for the entry of the Revolutionary Guards into the economy, the militarization of Iran’s economy, and, of course, the impoverishing policies known as “economic adjustment.”
Before signing Resolution 598, the government, “deliberately,” in order to preempt possible uprisings caused by the economic policies known as “adjustment,” killed members of left political organizations and the Mojahedin-e Khalq in groups, so as to delay any possible organized rebellion.
The 1367 massacre (1988), and the organized assault that followed on the idea of the left and social justice, could not permanently shield the Islamic Republic from the danger of urban revolt. In the 1370s (1990s), urban uprisings in several cities were the first open reaction to “reconstruction.” Later, workers protested privatization on a broad scale. The defining feature of Iranian society in the years after the war and the massacre was precisely these intermittent yet connected uprisings, which in later decades became broader and more radical.
The January uprising of 1404 (December 2025–January 2026), had it not been appropriated and tied to the name of the son of the shah overthrown in the 1357 Revolution (1979), might well have won achievements: forcing the government to make the minimum wage realistic and to stop the policies known as “price liberalization.” But under the pretext of “foreign interference,” while reaching an agreement with the bazaar merchants, the government repressed the protesters and presented the protests as a prelude to “civil war.”
Now the war has happened, and the current around Reza Pahlavi and many other groups have not only welcomed it but claimed it is helping the people to free themselves from a repressive government. The government, under the pretext of war, has established a state of emergency and lubricated the wheels of the repression machine. At the same time, it has increased military spending without transparency and needs a bigger budget to continue the war imposed upon it. The many demands of different social groups have been pushed into the margins under the shadow of war. For this reason, the possibility of collective protest has been stripped from everyone, and major economic decisions are being made and implemented far from even that minimum level of transparency.
The end of the war has become the main demand of citizens who day and night experience the anxiety of bombs and missiles and whose every saving and possession is at risk of destruction. But for them, the end of the war also means the beginning of a new cycle of shock-therapy policies, because the theorists of shock therapy have said that every crisis is an opportunity for a new shock. They are already under pressure to pay for “defense” and “reconstruction,” and once the wartime situation ends, under any scenario, they will have to pay an even heavier price—a price that is not only material, but also includes the killing of hope for change from within and the halting of neoliberal policies.
The Hidden Side of War: Ruin and the Death of Hope #WarImpact #EconomicCost
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