Iran says it is planning to raise its military budget by two hundred percent, which would essentially triple its defense spending. This should raise eyebrows in the region and could lead to an arms race. Reports say that Iran’s government spokesperson Fatemeh Mohajerani declared on Tuesday, October 29, the goal of this major raise in the budget.
“A considerable raise that amounts to 200% has been witnessed in the country’s defense budget,” Mohajerani said. It was a short statement and led to a great deal of speculation about what Iran’s government actually intends to do. The report of the increased military expenditure plans was picked up by Reuters and has been reported by DW, Al-Arabiya, and many other media. It’s worth looking more closely at what the Iranian government said and what this might mean for Iran and the region.
Tasnim News in Iran noted that the government spokesperson had slammed Israel in the comments in which the budget discussion came up. Mohajerani also discussed threats to Iran from what Iran labels “terrorists” in Baluchistan province. “The terrorist group in the southeast of the country killed 10 of our border guards during a planned action at the same time as the Zionist regime attacked,” she said.
The Iranian spokesperson said that Iran’s budget is also focused on education and developing various economic initiatives such as tax-free zones. “The Ministry of Interior is organizing in this regard and the departure of unauthorized citizens, as well as the construction of a wall on the border,” Mohajerani said. Iran also sees its involvement in BRICS, alongside economies such as Russia and China, as an alliance that will increase Iran’s power and help its economy.
When the issue of the defense budget came up, the spokesperson said, “We considered a 200 percent increase in the defense base in the next year’s budget.” The wording of the statement leaves it open to change. Mohajerani quickly moved on from discussing the defense budget to discussing Israel’s threats to Iran. “The Iranian people are not war-seekers and are peace-seekers. Iran is looking for peace, and our busy foreign minister is looking to explain our positions correctly and minimize threats and tension,” she said.
Iran has increased its defense budget in the past, but not by nearly as much. Radio Free Europe reported in 2022, “Iran increased its military spending by 11 percent, making it the 14th largest military spender last year. It was the first time in two decades that Iran ranked among the top 15 military spenders.”
The 2022 reports said that this amounted to $24.6 billion in spending. “The budget allocated for the country’s Revolutionary Guard, or IRGC, grew by 14 percent compared to 2020 and now accounts for 34 percent of Iran’s total military spending,” Iran International noted. The 2022 reports were based on the data of the Stockholm International Peace Research Institute (SIPRI).
Despite the changes in the budget, the World Bank estimates Iran defense spending at around two percent of its overall GDP. While this has slightly increased, it actually is not that much.
Since the 2022 report it appears the budget fluctuated. The 2023 budget was less than in 2021. SIPRI concluded that “Iran was the fourth largest military spender in the Middle East in 2023 with $10.3 billion. According to available data, the share of military spending allocated to the Islamic Revolutionary Guard Corps grew from 27 per cent to 37 per cent between 2019 and 2023.”
A report at Global Voices in 2024 said, “In 2024, Iran’s defense budget is set to reach USD 16.7 billion — a 20 percent increase from the previous year and comprising 25 percent of the national budget according to recently published data by Iran Open Data Center. This substantial rise in military expenditure comes at a time when Iran’s economy is struggling with soaring inflation and declining purchasing power.” The Emirates Policy Center published an article in 2023 noting, “Even with Iran’s economy hitting rock bottom, its military sector still got a significant slice of the pie (21 percent) in the Iranian New Year budget, showing the regime’s commitment to its military and armament agenda.”
While there is no doubt Iran’s military spending has increased and that Iran seeks to position itself as a world power based on that spending, it is not clear if Iran can actually increase its spending by 200 percent. However, if spending fluctuates by billions of dollars a year, the ability to increase by such a large percentage is easier. For instance if there is a fifty percent decline in spending from, say $20 billion to $10 billion, then a two hundred percent increase brings the spending to $30 billion. This means the numbers could be deceptive.
What comes after this spending?
What matters more is what comes out of this spending. Iran wants to increase the accuracy of its range and the overall number of its ballistic missiles. It will want to invest in military aspects of its space and nuclear programs. It will also invest heavily in drones.
It may seek to modernize not only its air defenses but also its navy and air force, which have lagged behind for many years. Iran’s backing for proxies in Lebanon, Iraq, Yemen, and Gaza also requires outlays of hundreds of millions of dollars, or perhaps billions, depending on how much Iran seeks to invest in all these places.
The Iranian increase in defense spending comes as it has reconciled with Saudi Arabia and the Gulf. It also comes as it moves to work more closely with Egypt and Turkey. Will those countries view the spending as a threat, or will they assume the spending is only a threat to Israel. There are many things in play and Iran’s reference to spending increases will raise eyebrows across the region.
