How the Iran war is rewriting the economics of power … and why Pakistan must read the signals first

The 2026 war in Iran is the most consequential military laboratory since the Gulf War and like that war, the lessons it is generating will be misread by precisely the institutions that most need to understand them.

Just over four weeks into Operation Epic Fury, Iran has launched over 500 ballistic missiles and more than 2,000 drones across the region. Oil prices threaten to breach $200 a barrel. The Strait of Hormuz is effectively closed to unapproved shipping. The United States has deployed a reverse-engineered copy of its adversary’s cheapest drone in its first combat use. And Pakistan is no longer merely watching. It is transmitting ceasefire proposals between Washington and Tehran, offering Islamabad as the venue for talks, and positioning itself at the centre of the most consequential diplomatic moment in the Middle East since the end of the Cold War.

The question is whether the same institutional agility now evident in its diplomacy can be applied to its defence procurement.

The unit economics of war

Eisenhower warned of the military-industrial complex in 1961. Today, more than 65 years on, it is worth identifying the specific component of that complex whose product is being tested in Iran: the interlocking ecosystem of Western defence contractors, procurement bureaucracies, and strategic consultancies whose revenue depends on selling air-superiority-first, high-cost, low-volume warfare.

This ecosystem does not merely sell hardware. It sells an entire theory of war, bundled with the platforms that make that theory appear necessary and the sustainment contracts that make those platforms inescapable. Its pricing model has now been tested in real time.

In FY2025, the US produced 22 Tomahawk cruise missiles for the entire year, according to Pentagon budget documentation. This followed 34 in FY2024 and 68 in FY2023 — a trajectory that The Centre for Strategic and International Studies (CSIS) described as burning through 15 years’ worth of stockpile in five years. The February 2026 emergency production agreement between Raytheon and the Pentagon, targeting over 1,000 missiles per year, was an implicit admission that the production base had atrophied to the point of strategic vulnerability. An estimated 400 Tomahawks were expended in the first three days of Epic Fury alone — approximately 10 per cent of the entire US inventory.

Now consider the other side of the ledger. The Shahed-136 drone, produced at scale for between $20,000 and $80,000 per unit depending on variant, has been manufactured at rates exceeding 400 per month at Russia’s Alabuga facility alone. CSIS analysis published on March 10 found that drones constituted approximately 66pc of all Iranian strikes in the first week — not as supplementary weapons but as the backbone of the strike architecture. The UAE alone absorbed 1,440 detected drones and 261 missiles, accounting for roughly 62pc of all recorded strikes.

The cost-exchange ratio is the number that should keep procurement officials awake. A Patriot PAC-3 MSE interceptor costs between $3-4 million. A Shahed, averaging $50,000, runs at roughly one-seventieth the price of the interceptor designed to stop it. Ukrainian interceptor drones cost $2,000 to $4,000 per unit — and Ukraine produced over 100,000 of them in 2025. When the US military deploys the Lucas drone — its reverse-engineered Shahed clone — in combat, the message is unambiguous: the adversary’s cheapest weapon is worth copying. The playbook has no answer for that.

The May 2025 proof of concept

The India-Pakistan conflict of May 2025 validated the same logic in a South........

© Dawn Prism