Bloomberg: Israel estimates $3 billion in damages from Iran’s missile strikes

Israel has estimated the direct damages from its 12-day war with Iran at 10 billion shekels ($3 billion), as authorities begin calculating the impact of Iran’s missile attacks on densely populated areas and infrastructure.

The estimate, announced this week by the Finance Ministry and the Israel Tax Authority, highlights the scale of damage inflicted by Iranian missile strikes that repeatedly penetrated Israel’s defence systems. The figure covers property damage and compensation to businesses forced to close, but excludes the costs of replacing weaponry and defence systems expended during the conflict — expenses expected to significantly increase the overall bill, Caliber.Az reports via Bloomberg reports. 

“This is the greatest challenge we’ve faced — there has never been this amount of damage in Israel’s history,” said Shay Aharonovich, director general of the Tax Authority, who is overseeing compensation payouts.

Finance Minister Bezalel Smotrich said the total cost of the war could ultimately reach $12 billion, while Bank of Israel Governor Amir Yaron offered a more conservative estimate of about half that in an interview with Bloomberg TV on June 25.

The 12-day exchange began on June 13 with an Israeli strike on Iran, followed by intense cross-border fire until a ceasefire was declared by US President Donald Trump in the early hours of June 24. Israel’s emergency services reported 28 deaths and more than 1,300 injuries due to missile attacks, while Iranian officials reported 627 people killed.

During the campaign, large parts of the Israeli economy shut down. Schools and non-essential businesses were closed, and the government now expects to pay up to 5 billion shekels ($1,4 billion) in compensation to businesses for losses suffered during that period.

The cost of this latest conflict is already double what Israel paid in property damage compensation since the October 2023 Hamas attacks, and it surpasses earlier expenses related to Hezbollah missile fire from Lebanon.

Unlike previous conflicts where attacks primarily targeted rural or peripheral communities, Iran directed ballistic missiles toward central Israel, including the greater Tel Aviv area — home to roughly half of Israel’s population and many of its high-rise residential and commercial buildings.

Israel’s defences typically allow 10 to 15 per cent of incoming missiles to breach their shields. 

“Those ballistic missiles, boy, they took out a lot of buildings,” said President Trump on June 25, adding, “Israel and Iran are tired, exhausted.”

In addition to residential areas, strategic and symbolic targets were also hit. The Weizmann Institute of Science, Israel’s leading research center, and the country’s largest oil refinery in Haifa suffered significant damage. A hospital in southern Israel was also struck directly.

The severity of this conflict stems in part from Iran’s use of powerful ballistic missiles, some carrying at least 500 kilograms of explosives with fragmentation effects upon impact. In contrast to Tehran-backed militant groups like Hamas and Hezbollah, whose rockets typically target border towns, Iran’s arsenal posed a much graver threat to Israel’s urban centers.

Prime Minister Benjamin Netanyahu stated that curbing Iran’s ballistic missile capabilities was a central aim of the campaign, along with countering its nuclear program. According to Israeli intelligence, Iran entered the war with 2,000 to 2,500 ballistic missiles and retains roughly half of them.

The financial and psychological toll of the short but intense war is expected to weigh on an already strained Israeli economy. The Bank of Israel has projected economic growth of 3.5 per cent this year, though analysts warn the estimate may be revised downward in the wake of the latest hostilities.

By Sabina Mammadli