The financial costs of stopping Iran...

It takes $87 million to keep a single F-16 in the air year-round.

The option of striking Iran's nuclear facilities has been in the headlines for two years. According to foreign media reports, Israel and America have drawn up precise contingency plans covering every scenario, from a one-time operation aimed to destroy all of Iran's nuclear installations at a single blow, to a prolonged military siege. But what of the economic implications? What are the costs of the aircraft, ordnance and fuel for the various scenarios? How would an attack affect global oil prices?
  • Analysis: The price of not preventing Teheran from going nuclear At a conference last week at the Institute for National Security Studies in Herzliya, Dr. Efraim Kam noted that an attack by Israel would require planes reaching a range of 1,200 to 1,500 km, depending on whether Jordan allowed them to fly over its territory. Getting to the target, and back, would require aerial refueling. Having the aircraft pass through Iraq would require coordination with the United States. Without this, the planes would have to fly over the Indian Ocean, which would require mid-air refueling twice. The number of targets that would have to be struck - four or five - include the centrifuge facility in Natanz and the heavy water production plant at Arak. Several bombing and escort squadrons would have to be allocated to each target. The IAF would be likely to attack the hardened targets in bunkers using huge US-made bombs, the largest of which weigh nine tons. Israel reportedly already has several bombs of this kind, though the Americans are sparing in allocating them. If, rather than an attack, Israel chose to rely on deterrence against a nuclear Iran, creating the necessary "second strike" capability would require three components: missiles located in hardened, underground silos; bombers in the air around the clock; and submarines. Israel would presumably adopt the US outlook, which is based on an around-the-clock deployment of air force planes. An hour of flight time for an F-16 fighter jet costs about $10,000. That translates into $87 million a year. According to this calculation, maintaining one squadron carrying nuclear weapons in the air, 24-hours-a-day, would cost NIS 1.5 billion per year. Even if we assume that the cost of a submarine's cruising time is about a third of that of a flight hour (their diesel/electric engines are relatively inexpensive to operate, although maintenance is very expensive), and that Israel in a modest scenario would maintain two submarines at sea, the overall cost of a squadron in the air and two submarines at sea is a staggering NIS 2.5b. per year. Israel has three submarines, and one of them is undergoing routine maintenance at any given time. Taking delivery of the two submarines currently being built for Israel in Germany will require increasing the defense budget and the Israel Navy's share of it. And maintaining submarines on permanent operational duty at sea, around the clock, is infinitely more expensive than the way the submarines are used today. Foreign sources say the Israel Navy's Dolphin-class submarines, bought from the Germans, can carry missiles with nuclear warheads, and that Israel has installed launch doors on these submarines wide enough to fire such missiles. An analysis of the Israeli context shows that submarines are of critical importance, and that Israel might require more than five. The warning-time for the launch of nuclear weapons during the Cold War was about 20 minutes; in the Iranian context, it is just 7 minutes. That is a very small window, making it difficult to rely solely on a ground-based second-strike capability. The Arrow anti-missile defense system will significantly enhance Israel's second-strike capability. A team of researchers led by Uzi Rubin, a former head of Israel's Missile Defense Organization, which developed the Arrow, studied various scenarios in which the IAF's airfields are attacked, and found that the Arrow would intercept enough enemy missiles to ensure the survival of runways and squadrons. Expanded use of the Arrow would not require an increased budget. Some $2.2b. was spent developing and producing the Arrow, half in the form of a US grant, and spread out over 20 years. Iran is the world's fourth largest producer of oil, and the second largest producer of natural gas. However Iranian oil exports decline 10% each year, due to the rise in its domestic petroleum consumption, which now stands at 40% of production. At this rate, Iran's oil exports will hit zero in 2015. According to Prof. Arnon Gutfeld, a Tel Aviv University expert, Teheran is not meeting its OPEC quota. It has not invested in maintaining its oil fields and needs to import refined products. In distress, Iran may disrupt the passage of oil through the Straits of Hormuz, through which 40% of the world's oil passes. Oil prices would jump to more than $200 a barrel. Between 80% and 90% of Iran's revenues, and nearly 50% of its budget, come from oil. Per capita income has decreased 25% since the 1970s. Without its oil revenues, Iran would be forced to ration food and slash its defense budget. Clearly, an international embargo on Iran's oil exports would deal a near-fatal blow to its economy. On the other hand, such an embargo could boomerang on the countries party to it.