The Iran war has laid bare a simple truth about American power: Washington is burning through million‑dollar missiles to shoot down drones that cost a fraction of that – and it can’t afford to fight this way indefinitely.
Now the Pentagon is betting that a new “Drone Dominance” competition can flip that equation by flooding the US military with hundreds of thousands of cheap, expendable drones by 2027, in a two-year programme worth roughly $1.1 billion in its initial phase and embedded in a wider drone budget line of more than $50 billion.
Phase 2 of the contest, which concluded two weeks ago at a test range in Michigan , saw dozens of start‑ups and defence firms put their systems through live‑fire trials, with a handful chosen to supply mass‑produced one‑way attack drones at scale.
On paper, it is being sold as an innovation showcase that will “unleash” American drone dominance in accordance with US President Donald Trump’s Executive Order 14307, which outlines the “urgent need for the department to procure, integrate and train with low-cost, high-performing drones manufactured in the US”.
But in practice, it could be the clearest sign yet that US strategy is shifting towards the same model of cheap, disposable drone warfare pioneered by Iran. The cost curve that broke the old model For William D. Hartung, a senior research fellow at the Quincy Institute for Responsible Statecraft who has spent decades tracking the US arms industry and Pentagon budgets, the Iran war has simply made visible a structural absurdity that was already prevalent into America’s war campaign.
“The Iran war has exposed the bankruptcy of the current American approach to building weapons,” he tells The New Arab . “It's not sustainable to shoot down $35,000 drones with $3 million interceptors, or ballistic missiles with $12 million interceptors.”
The numbers from the US-Israel war with Iran are stark. The Pentagon has publicly given a $29 billion price tag for the Iran war so far, with other internal estimates reaching somewhere between $40 and $50 billion once longer‑term impacts are included.
At the same time, Iranian‑made or Iran‑supplied one‑way attack drones have cost tens of thousands of dollars per unit, while the interceptors used against them - from Patriot‑class missiles to naval surface‑to‑air systems – can run into the millions per shot.
“Drones aren't really all that technologically advanced,” Hartung argues. “It's not like nuclear weapons or fighter projects. Many people can make them, and if you're just using them to destroy a single target, they don't even have to be that sophisticated.”
Analysts argue that the very accessibility of the technology has eroded what used to be Washington’s main advantage – a near‑monopoly on high‑end airpower. Iran’s cheap drones versus expensive targets Nowhere has this shift been more visible than in the Gulf and wider Middle East where, since the start of American and Israeli strikes on the Islamic Republic on 28 February, Iranian drones have been able in multiple instances to slip through layered air‑defence networks that include US‑supplied radars, Patriot batteries and advanced command‑and‑control systems.
In the opening days of the war, around 1-2 March 2026, Iranian missiles and drones destroyed a THAAD‑linked AN/TPY‑2 radar at the Muwaffaq Salti air base in Jordan and heavily damaged a long‑range early‑warning radar in northeastern Saudi Arabia, temporarily blinding key parts of the US‑aligned missile‑defence network.
Days later, in the early hours of 2-3 March 2026, at least one suspected Iranian one‑way attack drone breached Saudi air defences over Riyadh’s Diplomatic Quarter and slammed into the US embassy compound , collapsing part of the roof above the CIA station housed inside and damaging what officials describe as the agency’s main presence in the region.
Each of these attacks involved relatively cheap, expendable platforms imposing disproportionate costs on high‑value targets and forcing the US and its allies to spend heavily on repairs, reinforcements, and replacement interceptors.
Analysts have described this as a “cost‑exchange ratio” that increasingly favours the drone operator: some estimates put the ratio at close to 190:1 in favour of the attacker when low‑cost drones are used against high‑value ships and air‑defence systems.
In the Iran war, that imbalance has been magnified across Washington’s entire campaign. Drone Dominance: Innovation or new product line? Drone Dominance appears to be Washington’s attempt to fix this problem by embracing “attritable” systems – drones cheap enough and numerous enough that commanders can afford to lose them.
Public announcements from the Department of War point to a rapid ramp‑up in spending, with the Pentagon requesting around $75 billion for drone and counter-drone technologies in its FY2027 proposal in April, in what officials have described as the largest single year-over-year increase of any defence program.
The companies competing range from Silicon Valley‑style start‑ups promising AI‑enabled swarms to established defence manufacturers that already supply small drones and munitions to US and allied forces.
Some have pre‑existing partnerships with Israeli drone makers or Israeli‑founded defence‑tech firms, reflecting how tightly integrated the US and Israeli drone ecosystems have become over the past decade.
Hartung, whose books include 'Prophets of War: Lockheed Martin and the Making of the Military‑Industrial Complex' and 'The Trillion Dollar War Machine', is deeply sceptical that programmes like Drone Dominance will transform this underlying political economy. He describes the current push as an attempt to create an “ecosystem” of smaller firms that can, in theory, out‑innovate the big primes - but one he expects will be short‑lived.
“What’s going to happen, undoubtedly, is the smaller Silicon Valley firms are going to get swallowed up by the bigger ones with money from the venture capital sector,” he tells TNA . “There’ll be this little moment where you see maybe innovative ideas and maybe some cheaper systems, but it's going to get engulfed and devoured by these other companies.”
In his view, the “new” tech players are less a corrective to the military‑industrial complex than a new generation of would‑be primes, seeking the same privileges and influence as the Lockheeds and Boeings they claim to disrupt. A new arms race in the Middle East For Gulf states and other US partners in the region, Washington’s pivot carries mixed implications.
On the one hand, a shift towards more affordable drones and more layered counter‑drone systems could eventually make it cheaper to defend vulnerable infrastructure - from pipelines and desalination plants to high‑rise skylines - against Iran‑linked attacks.
On the other, the Middle East is already emerging as a testing ground for new generations of loitering munitions, AI‑assisted targeting, and counter‑drone technologies fielded not only by the US but also by Israel, whose AI-powered war technologies have contributed to its genocidal campaigns in Gaza and Lebanon.
Gulf monarchies, aware of both the risks and opportunities, have begun to diversify their arms relationships, signing deals with Ukraine, South Korea and other emerging defence producers for drones and air‑defence systems alongside their traditional purchases from the US and Europe. But the basic dynamic remains one of asymmetric vulnerability.
“If I were the leader of a Gulf state,” Hartung reflects, “this region‑wide war is not serving my interests, because things are vulnerable. I mean, the skyscrapers in Dubai, the pipelines in Saudi Arabia – full‑out warfare is not going to serve anybody's interests.”
Ultimately, he argues, no amount of innovation in attritable drones or AI software can resolve the underlying contradiction exposed by the Iran war. The US can’t keep fighting prolonged conflicts in which it spends vast sums to counter relatively cheap threats while its contractors grow ever richer and its adversaries learn ever faster.
“They're selling this old concept with new software,” Hartung says. “The idea that technology is going to save us is just a myth.” Agnese is a journalist at The New Arab, with previous experience in breaking news and OSINT investigations across the Middle East Follow her on X: @AgneseBoffano Edited by Charlie Hoyle