Makran IFV and modernized T-72. IRGC Ground exhibition, June 27, 2020. Image by Mohammad Mohsenifar for Fars Media Corporation via Wikimedia Commons. CC BY 4.0

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.

However, Iran is not alone in prioritizing military spending amid economic challenges; this pattern mirrors developments across the world, as countries from West Asia and other parts of Asia, to Europe and the US ramp up their defense budgets in response to escalating conflicts and rising security threats.

Regional and global dynamics

The surge in Iran's defense spending cannot be analyzed in isolation. The escalating Israeli war on Gaza and Lebanon, as well as rivalry with countries like Saudi Arabia plays a pivotal role in shaping Tehran’s defense priorities. Israel, which recently assassinated Hamas’s Ismail Haniye in Tehran, and has increased its threats against Iran, has seen its military budget grow by 24 percent in 2023, reaching USD 27.5 billion. This has largely been driven by its devastating campaign on Gaza, which has seen the country drop over 70,000 tons of explosives on the strip in six months — double the explosive power of the Hiroshima and Nagasaki bombs combined. More recently, Israel has also unleashed a devastating bombing campaign on Lebanon, killing nearly 2000 people according to the Lebanese Minister of Health.

Meanwhile, Saudi Arabia remains the largest military spender in West Asia, leveraging its vast oil wealth to secure its regional dominance. Iran, however, faces a greater challenge to keep up expenditure as it is also dealing with severe economic sanctions and inflation, making such military investments a larger burden relative to its economic capacity.

The military buildup in these countries reflects the broader context of the US–Iran confrontation. Both the United States and Israel have maintained aggressive postures toward Iran, citing concerns over Tehran’s nuclear ambitions and its influence in proxy conflicts across the region.

While Israel and Saudi Arabia increase their defense spending, Iran is also driven by the increasing threats posed by US military presence in the region. The US maintains a network of military bases across West Asia, from Qatar to Iraq, posing a persistent strategic challenge to Iran’s ambitions. This dynamic fosters an arms race in which each actor justifies increased military spending by pointing to the threats posed by the others, resulting in a self-reinforcing cycle of militarization.

The IRGC’s expanding role

A large portion of Iran’s growing defense budget is allocated to the Islamic Revolutionary Guard Corps (IRGC), a powerful entity that exerts both military and economic control within the country. The IRGC's influence extends far beyond conventional military operations; it controls a vast network of businesses and industries, including construction, telecommunications, and oil. This financial independence allows the IRGC to bypass traditional government budget allocations, further deepening its grip on the country’s resources.

According to SIPRI, Iran — the fourth largest military spender in West Asia in 2023 — has seen the share of military spending allocated to the IRGC grow from 27 to 37 percent between 2019 and 2023.

Beyond official spending, the IRGC’s economic activities generate additional unreported revenues, making it difficult to assess the full scale of Iran’s military funding. This financial network reflects Iran’s strategic emphasis on defense despite its fragile economy, with inflation running at 35 percent and prices of basic goods skyrocketing.

A global militarization trend

Iran’s military buildup fits within a broader global trend of rising military expenditures, particularly in regions experiencing escalating conflicts. In Europe, military budgets have surged since Russia’s invasion of Ukraine in 2022. Germany has significantly increased its military spending, allocating a special EUR 100 billion fund in 2022 to modernize its military​.

According to a report by Greenpeace in 2023, “Over a decade, Germany has increased its real military spending by 42%.” The pattern seen in Europe — where economic challenges, high inflation, and energy crises coexist with soaring military budgets — closely mirrors the situation in Iran. Both regions are diverting significant resources to the military at the expense of social spending, revealing a global prioritization of military security in an increasingly volatile world.

East Asia is also seeing an increase in military spending driven by growing tensions. China, the world’s second-largest military spender, with a USD 296 billion budget in 2023, has seen a 6 percent increase from 2022 according to SIPRI. Meanwhile, military budgets in both Japan and Taiwan increased by 11 percent in the same period as tensions in the South China Sea and the Taiwan Strait increased, especially with increased US military presence in the region aimed to counterbalance China's rise.

Rising instability

The surge in military spending across West Asia, Europe, and East Asia among others reflects a world heading toward greater instability, partly driven by the failure of the UN and its institutions to provide the peace, diplomacy, and conflict prevention they were designed to uphold.

Countries are preparing for potential conflicts that span multiple regions, creating an environment in which security is increasingly defined through military power rather than diplomacy. As Nan Tian, Senior Researcher at SIPRI, noted, “States are prioritizing military strength but they risk an action–reaction spiral in the increasingly volatile geopolitical and security landscape.”​

This shift comes at a time of economic challenges, where social spending is often sacrificed for military investments. The interconnected nature of these conflicts points to a world that is drifting further toward conflict rather than cooperation.