Israel-Iran Conflict: Who Spends More On Defence, Whose Army Is Stronger?

Last Updated:June 16, 2025, 21:27 IST

The latest flashpoint was Israel's targeted strike on Iran's suspected nuclear facilities, a move that triggered an immediate and fierce Iranian retaliation

Israel's dependence on US aid ensures steady modernisation, while Iran's economic isolation necessitates self-reliance and ingenuity

As missiles rain down between Israel and Iran in 2025, what began as a simmering geopolitical standoff has now exploded into open warfare. Last year saw scattered military provocations, but this year marks a turning point – both nations have now officially entered a cycle of tit-for-tat missile attacks. The latest flashpoint was Israel’s targeted strike on Iran’s suspected nuclear facilities, a move that triggered an immediate and fierce Iranian retaliation.

With the region teetering on the brink of a wider conflict, global observers are now closely examining the military capabilities, budgets, and strategic doctrines of the two adversaries. According to recent data from the Stockholm International Peace Research Institute (SIPRI) and other economic think tanks, Israel and Iran operate on vastly different defense models – one bolstered by advanced tech and US support, the other defined by ideological networks and regional proxies.

High-Tech Warfare, Hefty Budget, and US Backing

In 2024, Israel’s defence expenditure soared to $46.5 billion, representing 8.8% of its GDP – a staggering figure that is second only to war-torn Ukraine on the global stage. Despite possessing a relatively small population, Israel has maintained an outsised military footprint due to persistent regional threats, ongoing operations in Gaza and Lebanon, and existential security concerns.

Central to Israel’s military edge is its cutting-edge arsenal: from the Iron Dome air defence system to sophisticated cybersecurity infrastructure and AI-enhanced surveillance tools. A significant cushion to this expenditure comes from the US. The United States provides an estimated $3.8 billion annually in military aid, covering nearly 8-10% of Israel’s defence budget. This partnership not only reinforces Israel’s deterrence capabilities but also alleviates some of the domestic economic strain.

Lower Budget, Asymmetric Reach

In stark contrast, Iran’s defence spending stood at $7.9 billion in 2024, which amounts to just 2.2% of its GDP – aligning closely with the global average. But Iran’s relatively modest defence allocation does not reflect its regional military clout. Despite being hobbled by sanctions and an ailing economy, Tehran has leveraged asymmetric warfare and a vast network of proxy militias to project influence across West Asia.

From the Houthis in Yemen to Shiite militias in Iraq and Syria, Iran has cultivated a decentralised but loyal web of armed groups. These allies serve as force multipliers, allowing Iran to engage in prolonged conflicts without direct confrontation or massive capital outlay. Its emphasis on ballistic missiles, drone technology, and a controversial nuclear program provides a low-cost, high-impact military option.

The fiscal contrast between the two countries is sharp; Israel spends nearly six times more than Iran. Yet, Iran’s domestic manufacturing capabilities and lower production costs give it strategic breathing room. Experts point out that Iran’s military doctrine is less about conventional firepower and more about political leverage and regional destabilisation, while Israel’s strategy is rooted in precision defence, deterrence, and maintaining a technological edge.

Furthermore, Israel’s dependence on US aid ensures steady modernisation, while Iran’s economic isolation necessitates self-reliance and ingenuity, often relying on reverse engineering and local innovation.

What Lies Ahead?

As missile exchanges grow more frequent and deadly, the possibility of full-scale war looms. But beyond the battlefield, the duel between Israel and Iran is also being waged in defence economics and strategic calculus. One side is built on advanced warfare and international alliances; the other on ideological fervour and unconventional influence.

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