You're reading the Defense Monitor newsletter.
You're reading the Defense Monitor newsletter.
You're reading the Defense Monitor newsletter.
Get briefed with weekly intelligence on the companies, geopolitics and finances of the future battlefield.
Get briefed with weekly intelligence on the companies, geopolitics and finances of the future battlefield.
Get briefed with weekly intelligence on the companies, geopolitics and finances of the future battlefield.
Bloomberg may send me offers and promotions.
By submitting my information, I agree to the Privacy Policy and Terms of Service.
Welcome back to Bloomberg's Defense Monitor, a weekly rundown on the companies, geopolitics and finances of the future battlefield. Sign up now if you're not already on the list.
Remember how we chatted last week about the potential impacts of a war in Iran? Now the war -- or at least "major combat operations" -- is underway, and the consequences are plain to see.
The biggest, of course, is loss of life. Iran has reported hundreds of dead, the US military said six service members were killed in an Iranian strike, and countries around the region said there were dozens more casualties.
Waves of drones and missiles hit American bases, as well as oil infrastructure, airports and civilian buildings. The US and Israel destroyed large numbers of missile-related facilities, ships, headquarters and other targets.
Friendly air defenses shot down three US fighters over Kuwait.
The dollar surged. So did oil. Markets did not, particularly outside the US, with some obvious exceptions, as you'll see in the snapshot below.
No one knows what will come next, as Tehran uses cheap drones to exhaust defenses and the US continues to hunt launch and production sites inside Iran. Whoever runs out of missiles last may finish first.
That means both sides are doing some frantic calculations, as you can see in the Breakout....
| Lockheed Martin Corp | $676.70 | +3.4% |
| Boeing Co/The | $229.74 | +1.0% |
| Northrop Grumman Corp | $768.02 | +6.0% |
| RTX Corp | $212.16 | +4.7% |
| L3Harris Technologies Inc | $378.48 | +3.8% |
Missile defense is a numbers game.
Crunching numbers to get trajectories. Masticating them until there's a firing solution. Grinding them down into launch orders. Even where to place missile batteries is an actuarial exercise: How valuable is this target relative to the cost of defending it, and what about unintended consequences like missile debris?
In the Gulf, the calculations going on right now in command centers around the region are far simpler. Who will run out of missiles first: us or them?
Although the US and its partners in the region have, collectively, a much larger arsenal than Iran, the question is more complex than it looks. Iran's waves of cheap drones may be eroding stockpiles of much more expensive air and missile defense systems.
"Attrition strategy makes operational sense from Iran’s perspective," said Kelly Grieco, a senior fellow at the Stimson Center think tank in Washington. "They are calculating the defenders will exhaust their interceptors and the political will of Gulf states will crack and put pressure on the US and Israel to cease operations before they run out of missiles and drones."
Iran had about 2,000 ballistic missiles after last year’s conflict. But only a few hundred of the more than 1,200 projectiles it has launched since Saturday have been ballistic weapons. Most were Shahed-136 drones, rudimentary cruise missiles that cost about $20,000 each. By contrast, a Patriot PAC-3 missile costs about $4 million and is meant for shooting down much more complex targets.
More than 1,000 PAC-3s have most likely been fired, based on how many Iranian attacks have been engaged. At this rate, magazines may run dry in days; Qatar, for instance, will run out in about four days at the current rate of use, according to an internal analysis seen by Bloomberg News.
If Iran’s missiles outlast the region’s defenses, its attacks will become much more damaging. If they don’t, there still might not be a decisive outcome in a conflict that has killed scores, stranded thousands and snarled global trade.
"Iran's inventory of missiles and drones may draw down, and the regime itself might be able to remain intact, if in chaos," said Ankit Panda, a senior fellow at the Carnegie Endowment for International Peace. "This seems to be a likely outcome based on the first 60 hours of this war."
The briefing
- France will produce more nuclear warheads and work with European allies to station French nuclear strike fighters in other countries, President Emanuel Macron said. Discussions on a European nuclear deterrent had been underway since last spring.
- OpenAI's models are deployed inside the US Department of Defense's classified network, the company's chief executive officer said, adding that there was an agreement with the government to require "human responsibility for the use of force."
- Ukraine President Volodymyr Zelenskiy has offered his country's expertise in defending against drone attacks in the Gulf as Iran sends waves of retaliatory strikes around the region.
The big picture
Iran's retaliatory strikes have caused damage, death and injuries around the region through a combination of one-way attack drones and ballistic missiles. US and Israeli aircraft have been conducting airstrikes in Iran, including attacks that killed Iranian President Ali Khamenei, since the weekend.
Intelligence, surveillance, reconnaissance
- Eight years after a fatal accident killed 44 sailors on an Argentine submarine, the trial is beginning against naval officers prosecutors say were responsible for the implosion, Agence France-Press reports.
- Beijing has condemned US strikes against Iran but isn't likely to risk a rupture with Washington as it pursues trade talks, the New York Times reports.
- Amazon Web Services operations were disrupted after strikes in the United Arab Emirates and Bahrain damaged data centers there, according to the Wall Street Journal.
On the radar
- Thales SA announces earnings, March 3
- Dassault Aviation SA announces earnings, March 4
- AeroVironment Inc. announces earnings, March 4
- Renk Group AG announces earnings, March 5