By Vinod Moonesinghe
On June 13, 2025, Israel launched an air assault on targets in Iran, managing to terminate with extreme prejudice several top Iranian commanders and scores of civilians. However, this did not decapitate the Iranian military, which responded with a barrage of missiles. These hit military targets, including “Israel’s Pentagon”, its central military headquarters in Tel Aviv’s Kirya compound.
What is alarming for the Israelis is the ease with which the Iranian hypersonic missiles swamped their vaunted “Iron Dome” anti-missile system. The shock effect of this in media terms is also quite high. Israel has consistently been hyped as a military mini-superpower, with cutting-edge technology. Following the first Israeli attacks, Western sources began talking of Iran’s imminent collapse. The Iranian response changed that perception overnight.
Dr Jessica Genauer, a senior lecturer in international relations at Flinders University, told Australia’s SBS News that Iran is likely to continue retaliatory strikes as long as Israel targets sites within Iranian territory. She noted that the duration and potential escalation of these exchanges are the key concerns.
Israel has a higher defence budget than Iran, but there are questions about its actual military capability: its performance in Gaza against the lightly-armed Qassem Brigades, the military arm of Hamas, and against Lebanon’s Hezbollah militia proved rather less than spectacular. It has been pointed out that Israel’s air force, vaunted as one of the most advanced in the world, would not have been able to carry out this strike without the aid of its allies, particularly the US.
Table1: Comparison of population, economy and military strength of Iran and Israel.
| Category | Iran | Israel |
| Defence Budget | US$15.45 billion | US$30.5 billion |
| Active Military Personnel | 610,000 | 170,000 |
| Reserve Personnel | 350,000 | 465,000 |
| Total Aircraft | 551 | 611 |
| Tank Strength | 1,700 | 1,300 |
According to geopolitical analyst Brian Berletic, it is unlikely that Israel could have carried out the attacks without US backing. Certainly, Israel requires US surveillance capabilities to pinpoint the exact real-time location of its assassination targets. Questions have also been raised about the capability of Israel’s F35 fighters to carry out a 2,000 km mission without help with flight refuelling. However, Israeli sources claim that the F35 Adir variant has been modified to fly the additional range to Tehran and back. The US, has on its part denied involvement – although cynics might look upon such assurances with some scepticism.
While Iran has a larger standing army, it is unable to deploy it to Israel’s borders because two key Israeli allies, Jordan and Syria, act as a buffer in-between. This leaves Iran with only its drone and missile forces with which to retaliate against Israel. It is hampered in this task by Jordan, the UK and the US deploying their anti-missile capable forces in support of Israel’s Iron Dome. However, Iran has proved that it can swamp Israel’s air defences by sheer numbers. The question arises whether this can be sustained over a long period.
Iran’s population is nearly ten times Israel’s. Its economy is rather larger than that of the latter, and three times larger in PPP (purchasing power parity – adjusting for differences in purchasing power) terms. Even more pertinently, Iran’s industrial sector is double that of Israel’s (nearly six times larger in PPP terms).
Table2: Comparison of population and economy of Iran and Israel.
| Category | Iran | Israel |
| Population | 88.4 million | 9.4 million |
| GDP | USD 454 billion | USD 371 billion |
| GDP (PPP) | USD 1.44 trillion | USD 471 billion |
| Industry contribution to GDP | USD 158 billion | USD 72 billion |
Israel could not have continued to bombard Gaza, let alone engage with Iran, without US sustenance. The US provides USD 3.8 billion in military aid each year, including support for developing weapons technologies – the Iron Dome being one example. Israel relied heavily on US supplied weapons in attacking Iran, including F-35 Lightning II advanced stealth fighter jets, F-15E Strike Eagle Multi-role fighter jets, and precision-guided bombs.
On the other hand, although its aircraft fleet is antiquated, most dating from days before the Revolution, Iran has been upgrading its warplanes. However, it is in drones and missiles that Iran has made the most progress. The vast bulk of Iran’s missiles and drones are manufactured in Iran. It can also rely on weapons and raw materials delivered along secure supply lines from China, North Korea, Russia and Pakistan.
The war in the Ukraine showed that it was the power with greater production capacity that prevails. It is unlikely that a prolonged exchange will benefit Israel, which has a smaller population and economy than Iran – which will probably have the wherewithal to continue fighting longer.
Iran’s heavily self-reliant economy is also a great deal more resilient than Israel’s. Laden with sanctions, Iran still has a trade surplus of USD 12.2 bn, meaning it exports more than it imports. Meanwhile, Israel has a trade deficit of USD 29.8 bn, meaning it imports far more than it exports. It is heavily dependent on tourism, foreign investment and loans to bridge the deficit. A prolonged war, especially one in which Israeli cities are bombarded regularly, could impact its ability to sustain tourism or financial income.
A long war could also affect the influx of foreign workers. Israel has accelerated efforts to replace Palestinian labourers with foreign workers from India, Moldova Sri Lanka, Thailand, and Uzbekistan. Recruitment increased following the outbreak of the war in Gaza, when Israel barred entry to 72,000 Palestinian workers from entering Israel, leading to a severe labour shortage. To address this, Israel has brought in 65,000 foreign workers, from India, Thailand, and Sri Lanka. Indian workers, in particular, have become a major presence in Israel’s construction industry, filling roles previously held by Palestinians. Many are drawn by higher wages, which can be three times what they earn back home.
The shift from Palestinian workers to foreign labourers in Israel has major economic and social impacts, reshaping industries like construction and agriculture. While foreign workers help fill labour shortages, they often lack the experience of Palestinian workers, leading to efficiency concerns in some sectors. Now, as videos made by migrant workers, showing Iranian missile attacks go viral on social media, recruitment is likely to dry up.
Prolonged conflict could also pose an unexpected existential threat to the entire Zionist project. The Gaza conflict impacted Israel’s migration patterns significantly. Since October 2023, more than 42,000 Israelis have left the country and had not returned by mid-2024. In contrast, only 24,357 Jewish migrants arrived from the Diaspora during the same period.
Many Israelis have left the country due to security concerns, economic instability and political dissatisfaction. The rising emigration rate in Israel is creating significant challenges for the country’s future. A large portion of those emigrating are highly educated and secular young professionals, seeking better opportunities abroad. This brain drain weakens Israel’s workforce and the innovation on which it relies to give its economy an edge. At the same time, Jewish immigration to Israel has slowed by up to 42 percent, as potential migrants reconsider moving to a conflict zone. With fewer Jewish immigrants arriving and more Israelis leaving, the population balance is shifting, raising concerns about maintaining a Jewish majority.
The Israeli government is working actively to reverse migration trends. It recognises the value of Israelis abroad and implements initiatives to encourage the return of skilled professionals by offering financial benefits and career opportunities. It is simplifying immigration procedures for new immigrants, striving to reduce bureaucratic hurdles and streamline legal pathways for new immigrants, particularly under the Law of Return. Strengthening ties with the Israeli diaspora is one strategy it deploys. The government is also reassessing migration policies to better integrate foreign residents and improve population estimates. However, such policies may be rendered futile by a protracted struggle with Iran, with no end in sight.
Iran has been facing up to sanctions for years. What it lacks in battlefield experience it is acquiring gradually, much as Russia did in the first two years of its “Special Military Operation” in Ukraine. During the eight-year First Gulf War against Iraq, the Iranian armed forces, emerging from post-revolutionary chaos, proved their shock-absorber-like mettle. Nearly four decades later, Iran can back that up with a greatly enhanced economy and self-reliant technological development.
On the other hand, Israel’s short but intense ground battle against Hamas and Hezbollah gave it a bloody nose. Ironically, its expansionist behaviour, which some label genocide, has killed the two-state solution. It certainly cannot afford a long war against Iran. Israel’s opportunist and adventurist attack on Iran may have brought its potential nemesis, a democratic, secular, single Palestinian state, that much closer.
Vinod Moonesinghe read mechanical engineering at the University of Westminster, and worked in Sri Lanka in the tea machinery and motor spares industries, as well as the railways. He later turned to journalism and writing history. He served as chair of the Board of Governors of the Ceylon German Technical Training Institute.
Factum is an Asia-Pacific focused think tank on International Relations, Tech Cooperation, Strategic Communications, and Climate Outreach accessible via www.factum.lk.
The views expressed here are the author’s own and do not necessarily reflect the organization’s.
