Iran and Israel on the Brink of All-Out War: All You Need to Know

In recent months, the likelihood of a war between Iran and Israel was largely dismissed by many analysts. However, recent events, particularly the assassination of Ismail Haniyeh, the leader of Hamas's political office in Tehran, have significantly heightened concerns about the potential for a broader conflict between the two countries.

On August 4, Israeli Prime Minister Benjamin Netanyahu declared that Israel is currently engaged in a "multilateral war" with Iran and its proxies. Reports indicate that both Iran and Israel are ramping up their military preparations, including bolstering anti-aircraft and missile systems and introducing new military innovations. Their respective military allies are also taking steps to strengthen the defense capabilities of both Iran and Israel.

Coordinated operations targeting key figures of the "Axis of Resistance" - an informal alliance between Iran and pro-Assad militia groups in Syria, Shia militias in Iraq, Yemen, and Hezbollah - across Lebanon, Syria, Iraq, and possibly Iran have dealt a significant blow to the Islamic Republic and Hezbollah. 

In response, officials from the Islamic Revolutionary Guards Corps (IRGC) and resistance forces, echoing the words of Iran's Supreme Leader Ali Khamenei, have expressed their readiness for "revenge." Khamenei himself has stated that the incident on Iranian territory has intensified their resolve.

On the other side, Israel has made it clear that it holds Iran responsible for the recent escalation, particularly since the October 7 Hamas attack. Israeli officials, including Defense Minister Yoav Gallant, have issued explicit warnings, stating that any aggression will be met with unprecedented retaliation.

The increasingly hostile rhetoric and military preparations suggest that both sides are bracing for a possible war. This escalation has caused significant concern among citizens in both countries, raising the question: Are the conditions now set for a large-scale war between Israel and Iran?

For years, the Islamic Republic has identified Israel as its number one enemy, with senior Iranian officials even setting a timeline for "the end of the Zionist regime." This enmity goes beyond rhetoric, as Iran has developed various strategies and amassed weaponry to align with its stated goals of maintaining security and countering Israeli threats.

Israel, on the other hand, has focused on maintaining its technological and military superiority to safeguard its security, particularly against Iran’s nuclear and missile programs. Israel’s approach emphasizes advanced technology, such as its fleet of F-35 fighters, which number over 25 within a total air force of more than 600 aircraft, and sophisticated missile defense systems like the Iron Dome and David's Sling. These systems grant Israel a significant advantage, particularly in air combat and missile defense, further bolstered by substantial U.S. military support.

In contrast, Iran, with a military budget approximately $10 billion less than Israel's, has not ignored these challenges. It has focused on developing its own deterrence strategy, which includes an arsenal of over 3,000 ballistic missiles and hundreds of combat and surveillance drones. Iran’s investment in asymmetric warfare - leveraging "resistance" forces and regional allies—adds to its capability to threaten Israel significantly. The involvement of groups like Hezbollah, believed to possess between 120,000 and 200,000 missiles, further complicates the security landscape.

In the event of a conflict, Israel's air superiority could enable preemptive strikes on Iranian nuclear and missile facilities. However, Iran’s geographical expanse, with its military and nuclear sites dispersed across the country, would require Israel to conduct extensive and complex operations, potentially stretching its resources and capabilities. 

Reuters has reported that this dispersion poses a significant challenge to Israel's ability to neutralize threats swiftly, contrasting with Israel’s own compact geography, which, while allowing for rapid mobilization, also leaves it more vulnerable to concentrated attacks.

While Israel enjoys clear battlefield superiority due to its advanced air force and defense technologies, Iran's asymmetric capabilities - such as missile strikes and proxy warfare - could level the playing field. 

The unpredictability of Iran's strategies means that even with its initial advantages, Israel could face significant challenges, leading to a prolonged and costly war that would be difficult for either nation to decisively win.

Some political and military analysts believe that Iran and Israel may avoid entering a full-scale war due to their fragile economic situations, which could worsen if hostilities escalate. However, in the short term, war can sometimes be used as a tool to divert public attention from economic problems and suppress popular discontent. While this strategy might offer temporary relief, in the long run, especially for Iran, it could fuel popular movements and uprisings.

Foreign Policy magazine reports that Iran, under severe sanctions, is grappling with inflation exceeding 40%, a sharp decline in the value of the rial, and a significant drop in oil export revenues. The magazine warns that a prolonged conflict could bring Iran's economy to the brink of collapse, leading to worsening poverty and increased social unrest.

Just last week, the Tabnak website reported the possibility of Iran's inflation rate rising to 63%. Additionally, Iran's stock market and foreign exchange markets have been experiencing significant volatility due to the looming threat of war. Issues such as frequent power outages have compounded these problems, creating serious challenges across various sectors of Iran's economy. As a result, some experts believe that Iran may struggle to endure a prolonged and extensive war.

Although Israel's economy is stronger than Iran's, it has not been immune to the economic fallout from the ongoing conflicts in which it is currently involved. While Israel's inflation rate remains below 3%, the enormous costs of the war - estimated at $54 billion - and the disruption of some trade routes have exerted pressure on the country's economy.

According to The National, the Israeli shekel has depreciated by about 8% in recent months, and GDP growth forecasts have been downgraded from 3% to around 2.5%. Rising defense spending, which accounts for more than 6% of GDP, could further slow economic growth and increase the burden on taxpayers. Additionally, key sectors like technology and tourism are at risk of a sharp decline in economic activity. Projections indicate that Israel's economic situation is likely to deteriorate further.

Given these economic challenges, both Iran and Israel face significant risks in escalating to a full-scale war, as the economic consequences could be devastating for both nations.

Nasser Kanani, the spokesman for the Iranian Foreign Ministry, has emphasized that while Iran does not seek tension, "we reserve the right to punish the aggressor." However, recent reactions from regional players, including Turkey, Jordan, Iraq, Saudi Arabia, and Egypt, reflect a growing concern over the potential for a large-scale war. Both Tehran and Tel Aviv have spent years preparing for and trying to prevent such a conflict.

In recent years, Israel has actively worked to diminish the influence of the Islamic Republic in the region through military strikes and international sanctions. Conversely, Iran has bolstered its deterrence capabilities by developing advanced weaponry and supporting the "Axis of Resistance," a coalition of regional allies. These strategies have fortified the defense and military industries of both nations, leaving them in a state of heightened readiness for a potential confrontation.

The prospect of a full-scale war has sparked anxiety among the populations of both countries. In Iran, while some factions see war as an opportunity to potentially overthrow the Islamic Republic, a significant portion of the population views the possibility with indifference, preoccupied with daily economic struggles. However, there is also widespread concern about the potential worsening of economic conditions, increased poverty, and social unrest.

In Israel, concerns similarly center on economic pressures, disruptions to daily life, and the broader impact of war on people's livelihoods. Analysts, including those from Al Jazeera, note that despite both nations having resilient economies, "the capacity of both countries to withstand a long and severe conflict is limited."

It's important to recognize that Iran's economy, despite its fragility, is somewhat accustomed to the conditions of a war-torn country. Iranian officials frequently speak of a "resistance economy," emphasizing self-reliance and domestic capacities rather than dependence on trade with Western nations. While this might suggest that war wouldn't dramatically alter Iran's economic situation, it doesn't imply that the Islamic Republic could effectively manage the dollar's exchange rate or curb long-term social unrest.

Given these dynamics, the likelihood of limited conflicts and escalating tensions is high. However, the transition from these conflicts to a full-scale war will depend on various regional factors. Due to the significant costs and unpredictable consequences, the probability of a full-scale war remains lower than that of a more contained conflict.