Saturday, April 09, 2011

The Economics of Iron Dome:

There has been much discussion about the economics of Israel's Iron Dome missile defense system. Some "experts" point out that each Iron Dome missile costs far more to manufacture than Hamas' cheep rockets, the Qassam and the Grad, and of course they are right.

But they fail to grasp a number of issues that explains Israel having green-lighted the Iron Dome system in the first place. You can say many things about the Israelis, but 'stupid' is not one of them:
1) Hamas rockets are in fact cheep, perhaps about a thousand dollars each on the high end, but they or their components are almost all smuggled into Gaza from Iran, from many miles away and through many obstacles, which cost quite a bit of money WELL beyond its manufacturing cost, while Israel's Iron Dome is produced domestically.
2) Iron Dome does not target ALL missiles shot at Israel. Its radar is connected to a computer that instantly calculates the trajectory of each missile fired and only engages those missiles on a trajectory to hit population centers. Those calculated to hit open fields are not engaged. Thus, Hamas fires about 10 rockets, mostly poorly aimed, and only about one rocket in ten needs to be engaged... therefore Hamas is firing around ten missiles to every single missile that Israel is firing to protect its population centers. Israel also saves money by avoiding having to repair damage that otherwise would have been caused by missile impacts in built-up areas, each impact could easily cause over $100,000 in damage. In reality, with that scale in mind, Hamas will be spending about the same or even more than Israel... mathematically speaking in terms costs/savings.
But here is the kicker:
3) In addition to all of that, and perhaps most importantly from an economic perspective, Israel will very quickly be in a position to export (as it always does) the Iron Dome technology to friendly foreign countries that require the same kind of protection, such as South Korea and India. These lucrative exports could ultimately pay for all of Israel's Iron Dome expenses, and will ultimately turn a profit, in addition to creating many jobs in Israel. Over time, Israel will actually make money from all of this, whereas Hamas will simply drain (as usual) the meager resources of the people of Gaza in a fruitless hate campaign (while hiding behind civilians) consisting of bombarding open fields, and getting pounded in return.

Intelligence, or basic morality are not something Hamas is known for, and these missile campaigns will rapidly become a losing proposition for them. In fact, they already have, by providing Israel with the opportunity to present the world with a truly marketable technological successes story, better than any Israeli sales pitch possibly could have. A real game-changer.

4) With far greater protection in hand (however imperfect), the pressure on Israel to mount a large military campaign in Gaza is reduced, since the Israeli government will not feel as compelled to mount a massive incursion in the absence of Israeli casualties. That alone could save many millions of dollars.

All in all, the Iron Dome is a winner from an economic perspective, far from the economic drain that cynics have portrayed it to be. And the fact that it will save lives, is of course, the ultimate justification.

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