TEHRAN – An economic expert has outlined the consequences of a 40-day war on Iran's mother industries and energy infrastructure, while explaining the requirements of economic policy in the current era, IRNA reported. As Iran enters a two-week ceasefire, the country's economy faces challenges after enduring a 40-day imposed war (following an initial 12-day battle).

During this conflict, vital infrastructure, energy arteries, and industrial hubs were directly targeted by destructive attacks from the United States and the Zionist regime. 

In response, a series of specialized sessions titled "Economic Policy in Wartime" is being organized by the Money and Currency Think Tank.

Hossein Doroudian, an economist and faculty member of the Economic Affairs Research Institute at the Ministry of Economy, delivered a detailed assessment of the damage inflicted on production, industry, housing, and employment.

* Production: Beating heart of economy in war and peace

In macroeconomic literature, Gross Domestic Product and the maintenance of its continuous flow are the primary indicators of a country's resilience against external shocks. 

In wartime conditions, preserving this flow transforms from an economic agenda into a security and survival necessity.

Hossein Doroudian emphasized this fundamental principle, stating: Supporting businesses is a permanent agenda for the economic policymaking system and is not limited to wartime, because even in peacetime, production remains our main issue.

Fundamentally, the most important variable and topic for the economy is production. When discussing production in wartime, we must first understand precisely the condition of our production in order to plan for its support.

* Targeted attacks on energy arteries and steel giants

One well-known strategy in modern warfare is the destruction of utility infrastructure (energy supply) and mother industries, thereby causing a cascading paralysis across all downstream industries. 

Utilities include providers of electricity, steam, industrial water, and oxygen, without which industrial machinery cannot operate.

Referring to direct physical damage to the country's industries, Doroudian added: Assuming this trend does not continue, we must examine the consequences of the war on our businesses. The most significant physical damage was the strike on gas production infrastructure in South Pars, which has caused a considerable reduction in gas output.

Another major physical blow was the bombing of two important steel companies, Mobarakeh Steel and Khuzestan Steel. Mobarakeh Steel alone had annual sales of $7 billion. These companies produced slab and sheet and held strategic importance in the country's production chain.

Explaining the concentrated targeting of utility providers in petrochemical hubs, he said: Over 80 percent of our petrochemical industries are located in two regions: Asaluyeh and Mahshahr. Utility supply in these areas is centralized through companies such as Fajr in Mahshahr, and Mobin and Damavand in Asaluyeh (affiliated with the Persian Gulf Holding).

Unlike other petrochemical plants in the country that produce their own electricity and utilities, this centralization meant that enemy attacks on these three main companies inflicted massive economic damage, taking a significant number of industries offline. Additionally, major petrochemical companies such as Jam, Shiraz, Tabriz, Bu Ali, Lavan Refinery, and Tehran Oil Refinery storage facilities were directly targeted.

* Domino effect: Production halt in downstream industries 

In industrial economics, disruption in upstream industries (such as petrochemicals and steel) immediately leads to a crisis in the supply of raw materials for downstream industries due to forward linkages. 

This phenomenon is known as a negative spillover effect or supply chain disruption.

The faculty member explained: Another aspect is indirect damage. Petrochemical companies in Mahshahr and Asaluyeh, although physically intact, cannot produce due to lack of utility supply (gas, electricity, steam, or oxygen).

Consequently, the vast industries within the petrochemical chain that consume plastics and adhesives are entirely affected, including automotive, home appliances, construction, furniture, footwear, bags, and even the food industry (due to severe damage to packaging bottle production)."

Regarding the steel chain crisis, he added: Industries that require steel sheet, such as automotive and home appliances, face severe problems. We have excess capacity in rebar and I-beams, so there is no particular issue there. However, for sheet—a sensitive product—we will need to import (likely from China or Russia).

That said, the Gol Gohar iron and steel development project, as a priority for support, is on the agenda and could bring about 3 million tons of sheet into operation. Although this figure is lower than Mobarakeh Steel's 7 million tons of production, it could be somewhat helpful.

* Widespread destruction of residential, aviation and military infrastructure 

Beyond the industrial sector, statistics indicate heavy damage to public property, defense infrastructure, and the country's aviation fleet during the 40-day battle.

Doroudian detailed the damage in these sectors: In the residential buildings sector, according to official announcements, 45,000 units have been damaged. Of these, damage to 37,500 units is minor (such as doors, windows, and glass being blown out). 4,700 units have intact skeletons but destroyed walls, and more than 2,500 units require complete structural reconstruction or demolition and rebuilding. 

In the aviation sector, apparently 60 of our aircraft have been damaged, though the extent of damage has not yet been reported. 

On the military level, since the enemy's primary targets were our defense systems, radars, and military production chain, we have suffered significant and direct damage.

* Employment crisis: Warning of doubling jobless production Jobless 

The destruction of physical infrastructure and the halt of supply chains ultimately manifest in the most important socio-economic macro indicator: the unemployment rate. Job loss, in addition to reducing effective demand in the economy, brings irreversible livelihood consequences.

The economic expert concluded with a serious warning about the labor market: "According to announcements from the Ministry of Labor, as a result of this war we will lose one million jobs directly and two million jobs indirectly. If we consider last autumn's report, which put the country's unemployed population at 2 million, should these estimates be accurate, our unemployed population will double, and the unemployment rate in the country will effectively increase twofold. These are aspects of damage to the physical and productive process, but their macroeconomic effects must be examined in detail in their proper place."

EF/MA