Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: On Monday, NATO announced it it shot down a second
Speaker 2: missile fired toward Turkey, sparking concerns that the Iran war
Speaker 2: could widen. Oil prices briefly topped one hundred dollars a
Speaker 2: barrel for the first time in four years, as oil
Speaker 2: production slows in several Gulf states and traffic through the
Speaker 2: Strait of Hormuz remains at a near standstill. As the
Speaker 2: US and Israel continue their attacks, Iran has shown little
Speaker 2: sign of changing course. Over the weekend, the country appointed
Speaker 2: the sun of Ayatola Ali Hamane as the new Supreme Leader.
Speaker 3: And it seems to be that there are two critical
Speaker 3: factors to look at, markets and munitions.
Speaker 2: Former US Secretary of State Anthony Blincoln sat down with
Speaker 2: my co host David Gerrow last week to talk about
Speaker 2: the factors that could bring a quicker end to the war.
Speaker 2: Big market losses, he said, could cause President Donald Trump
Speaker 2: to pull back.
Speaker 3: Or munitions. There's really a race on to figure out
Speaker 3: who expends their munitions first and fastest.
Speaker 4: We can be clear with the American people that this
Speaker 4: is not a fair fight.
Speaker 2: In an interview on CBS's sixty minutes. Defense Secretary Pete
Speaker 2: Hegseth said the US and Israel's military resources can overwhelm Irans.
Speaker 4: The ability for US to be up over the top
Speaker 4: and hunting with more conventional munitions, gravity bombs five hundred pound,
Speaker 4: one thousand pound, two thousand pound bombs on military targets
Speaker 4: that we haven't even really begun to start that effort
Speaker 4: of the campaign.
Speaker 2: As the costs of the war continue to mount, the
Speaker 2: US's ability to stay in this fight depends on more
Speaker 2: than the Trump administration's appetite to continue. It might also
Speaker 2: come down to weapons. I'm Sarah Holder, and this is
Speaker 2: the big take from Bloomberg News today. On the show
Speaker 2: the munitions powering each side of this conflict, how much
Speaker 2: which they cost and who could run out first? I
Speaker 2: sat down with Bloomberg's Global Defense editor Jerry Doyle and
Speaker 2: Bloomberg Economics Defense lead Becca Wasser to find out. Jerry
Speaker 2: and Becca, thank you so much for joining us. As
Speaker 2: the war in Iran escalates, there have been mounting consequences.
Speaker 2: There's the human toll. More than a thousand Iranians have died,
Speaker 2: according to Iranian officials. Seven US service members have died
Speaker 2: as of this taping attacks on oil reserves have sent
Speaker 2: oil prices mounting. But today we're going to talk about
Speaker 2: weapons because they can be a useful proxy to understand
Speaker 2: how and how quickly this war might end. Jerry, you
Speaker 2: wrote in a story last week that just three days
Speaker 2: into the conflict, the Iran war has become attritional. What
Speaker 2: did you mean by that?
Speaker 5: Whoever run out of their crucial ammunition first, it's going
Speaker 5: to be in a much worse position as Iran burns
Speaker 5: through with missile inventory firing them. The US and Israel
Speaker 5: destroy those missiles on the ground and destroy launchers on
Speaker 5: the ground, and at the same time balancing the other
Speaker 5: side of it, of the US and Israel and its
Speaker 5: partners using large numbers of air defense missiles to protect themselves.
Speaker 2: How much does one of those patriot air defense missiles
Speaker 2: that the US and Israel are using cost? And what's
Speaker 2: the life span of this technology.
Speaker 5: It's a missile, so you fire at once and it's done,
Speaker 5: and they cost about four million dollars each, maybe maybe
Speaker 5: a few hundred thousand dollars more. So you can kind
Speaker 5: of see the mismatch between using a relatively expensive weapon
Speaker 5: like that to defend against something smaller and cheaper like
Speaker 5: the sort of head one thirty six one way attack
Speaker 5: drone basically rudimentary, cheap, slow cruise missiles that Iran has
Speaker 5: and is launched in large numbers. If you use your
Speaker 5: air defense missile to defend against the system like that,
Speaker 5: you're losing the money battle.
Speaker 2: And Becca, you've been crunching the numbers on this, can
Speaker 2: you walk us through what we know about the supply
Speaker 2: of munitions on either side and how we know what
Speaker 2: we know?
Speaker 1: All right, so let's start with Iran. Iran, we don't
Speaker 1: have a very good sense of their missile and drone stockpiles,
Speaker 1: and part of that is by design. Last numbers that
Speaker 1: we have is Iran had about two thousand or so
Speaker 1: ballistic missiles prior to the Twelve Day War and that
Speaker 1: some of those were fired in great number, and then
Speaker 1: it has tried to rebuild in that interrect num period.
Speaker 1: In terms of drones, we don't have good data on
Speaker 1: what Iran drone production rates are, specifically shaw heads, but
Speaker 1: we do have some decent data. On the Russian side,
Speaker 1: they've been able to crank out upwards of four hundred
Speaker 1: a day. So if you assume that Iran has a
Speaker 1: very similar production rate. Iaine that their drone arsenal is
Speaker 1: quite large. Shifting over to the US and its golf partners,
Speaker 1: the Golf partners have spent years and years buying US weaponry,
Speaker 1: including a lot of very expensive air defense systems. We
Speaker 1: don't have a good sense of their stockpile numbers, but
Speaker 1: we have heard that they are running low on some
Speaker 1: of the precious air defense interceptors that they've been using,
Speaker 1: as Jerry said, to take out the missile and drone
Speaker 1: thread emanating from Iran since the start of this conflict.
Speaker 1: There's just never enough air defense systems to go around.
Speaker 1: There are never enough missiles and interceptors. So we don't
Speaker 1: have a good sense of stockpile numbers because they are classified,
Speaker 1: but at the rate at which they've been used, you
Speaker 1: could imagine that some of those are running a little
Speaker 1: bit low. That doesn't mean that the US is running out,
Speaker 1: but it does mean that the US may need to
Speaker 1: pull them from other theaters if possible. When you look
Speaker 1: at some of the long range weapons, they're pricey, and
Speaker 1: those have been used to great effects already in this conflict,
Speaker 1: and the US is trying to shift away from using
Speaker 1: those standoff weapons to now using closer range stand in
Speaker 1: weapons in part because those joint attack munitions are more plentiful.
Speaker 1: But that requires the US to be able to get
Speaker 1: a little bit closer in order to drop these largely
Speaker 1: by air.
Speaker 5: Maybe to put a sort of a quantifiable point on that, right,
Speaker 5: So if the US used to say two hundred and
Speaker 5: fifty Tomahawk missiles in the opening days of this operation,
Speaker 5: so each of those is going to cost let's sort
Speaker 5: of ballpark at a million dollars each day, probably a.
Speaker 1: Little bit more than that, one point seven.
Speaker 5: One point seven, all right, so let's say two let's
Speaker 5: just call it an even two million. So that's five
Speaker 5: as a half billion dollars spent just on the munitions, right,
Speaker 5: and we currently manufacture something like ninety Tomahawks a year,
Speaker 5: So it would take you two and a half years
Speaker 5: to replace the Tomahawks that were fired over the course
Speaker 5: of one day at the cost of half billion dollars.
Speaker 2: What we're talking talking about here in terms of the
Speaker 2: cadence of how many munitions have already been deployed just
Speaker 2: you know, ten days into this war, is this typical?
Speaker 5: Becca.
Speaker 1: I think the intensity of US and Israeli strikes is
Speaker 1: quite notable. The United States has said that they alone
Speaker 1: have conducted over three thousand strikes. You also have the
Speaker 1: Department of Defense saying that they have used more air
Speaker 1: power in the first few days at this conflict than
Speaker 1: they did in the opening days of the war on Iraq.
Speaker 1: So you know, if you look at this historically, it's
Speaker 1: a massive use of air power, it's a massive use
Speaker 1: of missiles. It's a massive use of American force, which
Speaker 1: leads to the question of how long does this go on?
Speaker 2: Becca, What are the plans to replace weapons that have
Speaker 2: already been used in this conflict? Is production ramping up
Speaker 2: and how quickly could that happen?
Speaker 1: Production is ramping up, but I wouldn't say that it's quick.
Speaker 1: More recently, there have been efforts to try and scale
Speaker 1: missile production. Missiles and munitions are very volatile in terms
Speaker 1: of their procurement, and the thing that usually ends up
Speaker 1: on the cutting room floor had traditionally been munitions. I think,
Speaker 1: you know, Ukraine was a wake up call for the
Speaker 1: United States and that it needed to get after this problem.
Speaker 1: So we did see some efforts there. More recently, we
Speaker 1: have this announcement of a potential supplemental for munitions to
Speaker 1: try and ramp up supply of some of the most
Speaker 1: critical munitions, including those air defense interceptors that have been
Speaker 1: used like Patriot THAD, as well as the standard missile series.
Speaker 1: But those are going to be longer term efforts. When
Speaker 1: they're saying that they're going to ramp production, we're looking
Speaker 1: at you know what, the White House says, quadrupling it,
Speaker 1: but that's not until the twenty thirties. So it's going
Speaker 1: to take a while for that to happen, in part
Speaker 1: because it's a lengthy endeavor and there's a lot of
Speaker 1: bottlenecks that exist in the munition's production process.
Speaker 2: And what about on the Iranian side, how is Iran
Speaker 2: thinking about replacing munitions as they run through them?
Speaker 5: Jerry, it's very difficult to tell from the outside what
Speaker 5: they're able to produce. Most of their production facilities at
Speaker 5: this point in the war are going to be in
Speaker 5: places where you can't see them easily from the satellite,
Speaker 5: maybe you know, underground, buried in a mountain, disguised as
Speaker 5: something else, and it's going to be much easier for
Speaker 5: them to replace the cheaper, lower an ammunition they're using
Speaker 5: like the head, you know, sort of these small cruise missiles,
Speaker 5: which you know are just a small step up from
Speaker 5: being a remote control airplane with an artillery shell strap
Speaker 5: to it. Missiles are obviously much more difficult to produce
Speaker 5: in terms of materials, in terms of the expertise the
Speaker 5: machinery that you need to do that and get them
Speaker 5: to work well. So it's makes me as very unlikely
Speaker 5: that Iran will be able to generate more missiles while
Speaker 5: the war is going on.
Speaker 2: It seems like what you're both describing is that the
Speaker 2: US is using missiles like Patriots that take lots of
Speaker 2: time millions of dollars to produce to shoot down drones
Speaker 2: like the show Heads that are cheap and quick to produce.
Speaker 2: I'm wondering whether that poses a sustainability challenge for the
Speaker 2: US here or gives Iran a leg up.
Speaker 5: It's a sustainability challenge in the sense not that the
Speaker 5: US is going to run out of munition, even air
Speaker 5: defense missiles full stop. It's more that they would have
Speaker 5: to confront strain on their inventory that would post them
Speaker 5: to pull from other places that are very important to
Speaker 5: the US military es, such as the Indo Pacific, where
Speaker 5: you have China, which is the world's largest conventional billistic
Speaker 5: missile inventory, with US bases obviously in Korea, Japan, Guam
Speaker 5: under threat from those missiles. So that would be the
Speaker 5: danger for the US side that they start having to
Speaker 5: rob Peter to pay Paul in order to keep their
Speaker 5: air defenses in the Middle East robust.
Speaker 2: After the break, Bloomberg's Global Defense editor Jerry Doyle and
Speaker 2: Bloomberg Economics Defense lead Becca Wasser on what we know
Speaker 2: about the economic cost and the opportunity cost of the
Speaker 2: war so far. Becca, I'm hoping you can help us
Speaker 2: put the overall cost of this war into context. How
Speaker 2: much has this been costing the US already, even in
Speaker 2: its first few days.
Speaker 1: So I haven't crunched the numbers yet, but some smart
Speaker 1: analysts in DC already have, and we are looking at
Speaker 1: billions billions of dollars just in pure operational cost alone.
Speaker 1: We don't have numbers of what has been expended yet,
Speaker 1: and once we do, I think we're going to see
Speaker 1: an enormous cost. But I think it's worth remembering that
Speaker 1: the human cost of war is probably the greatest cost.
Speaker 1: Already we are seeing civilians in Iran taking the brunt
Speaker 1: of this conflict. We are also seeing human loss of
Speaker 1: life throughout the Gulf and elsewhere in the Middle East
Speaker 1: as well. And we've also seen now seven US service
Speaker 1: members killed, which is very, very notable for the United States. So,
Speaker 1: you know, we have the financial costs, but war is
Speaker 1: not just about financial cost and even in an attritional war,
Speaker 1: materiel is not going to be the most decisive factor
Speaker 1: at the end of the day. The decision to end
Speaker 1: a war is often political, and sometimes it's more on
Speaker 1: the human cost that actually brings folks to the table.
Speaker 2: I mean, on how long might it take for those costs,
Speaker 2: those costs of human lives and those billions of dollars
Speaker 2: that have already spent on this war to filter into
Speaker 2: the political arena and make a difference in terms of
Speaker 2: how the administration is thinking about continuing this war.
Speaker 5: To a certain extent, some of the war is already
Speaker 5: funded through the Pentagon Defense Department budget that was approved
Speaker 5: last year for twenty twenty six. Additional cost like the
Speaker 5: you know, fifty billion dollars for additional munitions and operation.
Speaker 5: That stuff is it's going to have to be paid
Speaker 5: for somehow, and I'm sure that senators and representatives in
Speaker 5: Congress are going to make hey one way or the
Speaker 5: other about who's paying for it.
Speaker 2: I mean, this obviously is not the only conflict that
Speaker 2: the US has waded into this year. Right We've seen
Speaker 2: Trump Mountain Operation to top of the leader of Venezuela.
Speaker 2: He's made noises about Greenland and Cuba, which is currently
Speaker 2: under an oil blockade. So politics and costs aside from
Speaker 2: a perspective of troops, personnel, weaponry, you know, how many
Speaker 2: more battles can the US military sustain? And is that
Speaker 2: something that weighs on Trump or the US right now?
Speaker 5: I mean I can say that, you know, twenty five
Speaker 5: to thirty years ago, the US military was sort of
Speaker 5: the idea that it was designed to fight two wars
Speaker 5: at once, much as it did in World War Two,
Speaker 5: sort of fighting in the Pacific and fighting in Europe.
Speaker 5: That's not really the case anymore. Sort that shifted to
Speaker 5: we're going to be able to fight one war at
Speaker 5: a time and deter another war.
Speaker 1: And I think all of this speaks to a longer
Speaker 1: readiness challenge for the US military. Already, we're seeing such
Speaker 1: wear and tear on equipment, we are seeing forces, you know,
Speaker 1: overseas or out at sea for extended deployments. We're seeing
Speaker 1: a ton of weapons being used that aren't quickly and
Speaker 1: easily replaced, and that just means that the United States
Speaker 1: might be less prepared to deal with unforeseen crises, to
Speaker 1: mount another operation, say against Cuba or elsewhere, or even
Speaker 1: in the long term, be able to deter and if needed,
Speaker 1: defend against potential aggression in the Indo Pacific if something
Speaker 1: were to pop off with China.
Speaker 2: I mean, as we talk about other conflicts, you know,
Speaker 2: the Russia Ukraine war is waging on. Ukraine has been
Speaker 2: seeking US missiles for its defense, and it recently came
Speaker 2: up with a proposal for a swap of sorts to
Speaker 2: help the US defend against Iran. I'm wondering if you
Speaker 2: could talk about what they're offering and how that fits
Speaker 2: into this conversation.
Speaker 5: So Ukraine has sort of helped develop this theory of
Speaker 5: layered air defenses for protecting against the drone that that
Speaker 5: until the Iran War we hadn't really seen at large
Speaker 5: scale anywhere else. What Zelensky has proposed publicly is that
Speaker 5: Ukraine would help out with some systems at eight users
Speaker 5: to intercept Jones cheaply. They can provide that sort of
Speaker 5: hardware and that sort of equipment, but also the expertise
Speaker 5: they have and sort of arranging and layering drone defense,
Speaker 5: because this is some things is a problem that they've
Speaker 5: printed every day for years and gotten pretty good at solving.
Speaker 5: And Ukraine has also in exchange, asked for more airfense missiles,
Speaker 5: specifically Patriot Pac three missiles, which are being burned through
Speaker 5: in the Middle East right now.
Speaker 2: We talked at the top about the Iran war becoming attritional,
Speaker 2: So I want to wrap up this conversation by asking Becca,
Speaker 2: from where we sit today, which side is positioned to
Speaker 2: outlast the other in this war?
Speaker 1: If you're judging by pure hardware alone, the answer is
Speaker 1: probably the United States, based on it's much larger military,
Speaker 1: it's much larger arsenal, and everything that it could bring
Speaker 1: to bear in this conflict. But at the end of
Speaker 1: the day, war is not just about the number of
Speaker 1: missiles that you have or the capabilities. It really does
Speaker 1: come down to will and will to fight, and for
Speaker 1: Iran this is an existential one. So you can imagine
Speaker 1: that even if the US could outlast Iran, in terms
Speaker 1: of weapons and capabilities a number of forces. Iran is
Speaker 1: going to continue this for as long as they possibly can.
Speaker 5: It sort of depends on what the operational goal is
Speaker 5: for the US. Is it regime change. If that's the case,
Speaker 5: then by that standard, maybe Iran ends up on top.
Speaker 5: If their campaign continues and they're saying that the goal
Speaker 5: is for Iran to be completely disarmed, then maybe you
Speaker 5: could come up with some sort of a theory of
Speaker 5: victory for that Iran runs out of weapons or its
Speaker 5: stockpiles are destroyed, then maybe you can say the US
Speaker 5: wins that scenario. Melli Becka was saying, it's sort of
Speaker 5: appearing victory. You know that the US would have burned
Speaker 5: through a tremendous amount of hardware. It would have suffered,
Speaker 5: you know, casualty both dead and wounded. It would have
Speaker 5: inflicted quite a bit of destruction and death on Iran,
Speaker 5: destabilized the region, and sort of destabilize the oil markets.
Speaker 5: If it comes to a scenario where the US stops
Speaker 5: bombing because around that shooting, then it really hard to
Speaker 5: view that in any terms other than sort of a stalemate.
Speaker 5: And then it's about rebuilding and trying to repair all
Speaker 5: the damage not just in the Middle East but around
Speaker 5: the world.
Speaker 1: Yeah, and I think if you look at the historical
Speaker 1: record of protracted conflicts, you have these intense periods of
Speaker 1: fighting followed by bouts of reconstitution and where you're trying
Speaker 1: to rebuild your forces before restarting the fighting again. And
Speaker 1: that's a really scary thing to think about because that
Speaker 1: puts the US and Iran potentially in a cycle of
Speaker 1: conflict for a very long time and very much invokes
Speaker 1: the idea of some of the forever wars that Trump
Speaker 1: campaigned against and said that he wouldn't get involved in
Speaker 1: in the Middle East.
Speaker 5: I think it's also important to look again at the outcome.
Speaker 5: What is a goal that the US is trying to
Speaker 5: bring about with this military action. You can be completely dominant,
Speaker 5: you can destroy the other guy's military completely, but if
Speaker 5: you aren't achieving an effect in whatever effect it is
Speaker 5: you're going for, then you're just fighting.
Speaker 1: Operational success is not the same as strategic success.
Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder.
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