By Dr Majid Khan (Melbourne)
“War is a racket. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in live”, Maj Gen Smedley Butler
There is a grim arithmetic at the heart of modern geopolitics that rarely makes it into mainstream headlines: armed conflict is extraordinarily profitable for a select group of actors. When the United States and Iran exchange threats, conduct proxy battles, or edge toward open warfare, financial markets move, contracts are signed, and weapons stockpiles are replenished at public expense.
The United States defense industry is the largest in the world, with annual expenditures consistently exceeding $800 billion in recent years. Companies like Lockheed Martin, Raytheon Technologies, Northrop Grumman, Boeing Defense, and General Dynamics collectively generate hundreds of billions in revenue annually, a significant portion of which is tied to Middle East deployments, arms sales to Gulf allies, and the constant replenishment of munitions consumed in ongoing conflicts. When tensions between Washington and Tehran spike, the share prices of these companies reliably rise. This is not coincidence it is market logic operating in a system where war preparedness and war itself are indistinguishable from business cycles.
The 2020 assassination of Qasem Soleimani offers a precise illustration. Within hours of the strike, defense stocks climbed sharply. Raytheon, which manufactures the Hellfire missile used in the drone strike, saw a notable uptick. Lockheed Martin, which produces the MQ-9 Reaper drone that carried out the assassination, similarly gained. These companies lobby aggressively in Washington, donate generously to political campaigns on both sides of the aisle, and employ thousands of former military and intelligence officials through what critics call the revolving door between the Pentagon and the private sector. The result is a structural incentive to maintain conflict rather than resolve it because resolution means fewer contracts.
Beyond the headline defense contractors, the Iran tension has generated enormous revenue for the private military and security industry. Firms providing base security, intelligence analysis, logistics, and training to Gulf allies and US forces have grown substantially as regional deployments expanded. Erik Prince, founder of the controversial firm Blackwater, once estimated the private military sector at over $100 billion annually. American oil and energy companies also stand to gain from a weakened Iran, since Iranian oil exports suppressed by sanctions keep global prices at levels more favorable to US shale producers. The sanctions regime itself maintained and tightened under multiple administrations functions as a form of economic warfare that simultaneously punishes Iran and advantages American energy competitors.
No analysis of US-Iran war economics would be complete without examining the Gulf Cooperation Council states, particularly Saudi Arabia and the United Arab Emirates, who serve as the primary intermediaries in the American arms pipeline to the region. Since the 1979 revolution transformed Iran into an adversary of both Washington and Riyadh, the Gulf monarchies have poured trillions of dollars into American-made weapons systems. Saudi Arabia has consistently ranked as the top purchaser of US arms year after year, spending in excess of $100 billion on American weaponry over the past decade alone. The existential fear of Iranian regional dominance whether through nuclear capability, Houthi proxies in Yemen, Hezbollah in Lebanon, or Shia militias in Iraq makes the Gulf states reliable and enthusiastic customers.
This arms trade serves multiple American economic and geopolitical interests simultaneously. It funds American defense jobs, recycles petrodollars back into the US economy, strengthens the dollar’s role in global trade, and keeps American military technology dominant in the region. Successive administrations, regardless of their rhetoric about human rights or regional stability, have approved massive arms deals to Gulf States because the economic and strategic logic is overwhelming. When the Obama administration concluded the Iran nuclear deal, the Gulf States’ anxiety actually accelerated arms purchases they wanted insurance against what they perceived as American diplomatic softness toward Tehran. Paradoxically, peace negotiations can trigger as much arms buying as open conflict.
The UAE presents its own unique profile in the war economy. As a financial hub, Dubai has for decades served as a transshipment point for goods entering Iran in violation of US sanctions. Simultaneously, the UAE has positioned itself as a major purchaser of advanced American and French weaponry, including the F-35 fighter jet deal that was negotiated during the Trump administration and became a subject of prolonged diplomatic wrangling. The Emiratis are adept at playing both sides of the US-Iran tension maintaining back-channel relationships with Tehran while formally aligning with Washington. This strategic ambiguity is not diplomatic inconsistency; it is a calculated economic and security posture that maximizes the UAE’s leverage and commercial opportunities regardless of how the larger confrontation evolves.
Israel occupies a singular position in the US-Iran conflict economy. As Iran’s most explicitly threatened adversary, Israel has used the specter of an Iranian nuclear weapon to secure extraordinary levels of American military aid currently approximately $3.8 billion per year under a ten-year memorandum of understanding. Israel’s own defense industry, anchored by companies like Elbit Systems, Rafael Advanced Defense Systems, and Israel Aerospace Industries, has leveraged the Iranian threat narrative to drive significant export sales globally. Israeli drone technology, missile defense systems, and cyber capabilities many developed in direct response to Iranian threats have found eager customers in Europe, Asia, and Africa. The Iranian threat, in other words, has been a powerful marketing asset for the Israeli defense sector.
War’s economic beneficiaries extend well beyond defense contractors and arms dealers into the financial sector itself. Commodity traders and hedge funds that specialize in energy markets have generated enormous returns from the volatility that US-Iran tensions inject into oil prices. Every naval incident in the Strait of Hormuz, through which approximately 20 percent of the world’s oil supply passes, triggers immediate price spikes that benefit traders with long positions in crude. The 2019 attacks on Saudi oil infrastructure, widely attributed to Iran or its proxies, produced one of the largest single-day oil price jumps in history. For financial institutions positioned correctly, such events are not disasters they are profit opportunities.
Cybersecurity is another industry that has grown substantially in the shadow of US-Iran hostilities. Iran is considered one of the world’s most capable state-level cyber actors, and its operations against American banks, critical infrastructure, and government systems conducted partly in retaliation for the Stuxnet cyberattack on Iranian nuclear centrifuges that was widely attributed to the US and Israel have driven billions of dollars in defensive cybersecurity spending by American corporations and government agencies. Companies like CrowdStrike, Palo Alto Networks, and a constellation of smaller cybersecurity firms have benefited directly from the cyber dimension of the US-Iran conflict, winning government contracts and private sector business on the strength of threat assessments that prominently feature Iranian capabilities.
The reconstruction industry waits in the wings as perhaps the most patient profiteer of all. Wherever American military intervention or its proximate conflicts have produced devastation Iraq, Syria, Libya American and allied construction and infrastructure firms have positioned themselves to win rebuilding contracts funded by international donors, multilateral banks, and the devastated nations themselves. Bechtel, Fluor, and a host of subsidiary and partner companies have a long record of accomplishment in post-conflict reconstruction that dates to post-World War Two Germany and Japan. Should a direct US-Iran conflict devastate Iranian infrastructure, or should regime change follow military action, the reconstruction of Iran a country of 90 million people with vast oil reserves and significant industrial infrastructure would represent one of the largest economic opportunities of the 21st century. The business of breaking countries and the business of fixing them are, in the end, conducted by many of the same hands.
