Missile-Financial Balance: Russia is testing a model of air warfare in Ukraine that could be used in a conflict with NATO countries

The new realities of drone warfare

From January to mid-July, Russia has already carried out 12 of the largest combined drone-and-missile strikes since the start of the war. The number of drones involved in attacks has grown particularly sharply. According to military sources cited by Neue Zürcher Zeitung columnist Andreas Rüesch, the number of drones launched by Russia has increased from several dozen a year ago to 200–300 per day in July, while the proportion of UAVs managing to breach air defences has risen from 8% to 14%. According to our calculations based on Shahed Tracker data, the number of drones launched in the first half of 2025 was 2.4 times greater than in the second half of the previous year, averaging 125 per day over six months. Sources in the Ukrainian administration told The Economist that the air defence system around Kyiv is still intercepting about 95% of drones, but the 5% that break through cause serious damage. The Shahed Tracker project, which analyses data from Ukraine’s armed forces on repelled drone attacks, reports that the drone interception rate between August 2024 and February 2025 was consistently 94–97%, but then dropped to 82% in May and 86% in June.

Number of Shahed-type drones launched against Ukraine, June 2024–June 2025

The decline in the effectiveness of Ukrainian air defence against Shaheds is linked not only to their growing numbers but also to their evolution, note experts Dan White and Elena Davlikanova in a joint commentary for the OPFOR Journal blog. Ukrainian air defence systems achieved the best results against the first generation of these drones – the Shahed-136, which Iran began supplying to Russia back in 2022, as well as the Geran-2 drones based on this model, whose production began in Tatarstan in 2023. However, the situation began to change when the upgraded Geran-3 / Shahed-238 entered service with the Russian army

In the new model, the warhead has almost doubled in size (from 52 to 90 kg) and is equipped with more powerful thermobaric warheads. It is also fitted with turbojet engines, allowing the drone to reach speeds of up to 600 km/h (four times faster than the base model), and improved navigation and communication systems that enable it to continue flying even under electronic jamming. Viktor Taran, head of the Ukrainian UAV operator training centre ‘Kruk’, notes that the Shaheds are now capable of climbing to an altitude of up to 5 km, making them unreachable for machine guns and some man-portable missile systems. From this altitude, they conduct dive attacks at angles of up to 60 degrees, leaving very little time for detection and interception, especially at night.

At present, Russia is producing around 170 Shahed drones and their decoys per day (5,100 per month), reports the Ukrainian project Oboronka, citing the Main Intelligence Directorate (HUR). This is about five times higher than last August's production figures, according to Forbes Ukraine, also citing HUR data. Forbes clarified in May that roughly half of this volume consists of decoys and half of actual Shaheds of various types. Russia intends to increase production to 400–500 drones per day in the future, stated Volodymyr Zelensky in late spring. The geography of drone launches is also constantly expanding: whereas previously five launch sites were used (in Kursk Oblast, Krasnodar Krai, and Crimea), their number will soon increase to 12–15, according to The Kyiv Independent, citing a source in the Main Intelligence Directorate.

Shahed attacks come in waves from different directions, making target identification and air defence coordination more difficult. Around half of them are decoy drones without warheads (such as Gerbera-2 and Parody), whose purpose is to overload air defence systems and hinder mobile defence units from targeting strike drones. These units move in off-road vehicles and shoot down UAVs using heavy machine guns and mobile American Avenger air defence systems combined with Browning machine guns, writes Ruesch. Mobile groups also employ Gepard howitzers and APKWS laser-guided rockets. The depletion of these rocket stocks forces the Ukrainian Armed Forces to increasingly resort to helicopters and combat aircraft to repel drone attacks, but this is far more costly. One of the F-16 fighter jets transferred to Ukraine crashed during such an operation.

The economics of missile and drone strikes

Each missile-and-drone strike costs the Russian budget hundreds of millions of euros, according to researchers who based their calculations on the available data regarding the cost of Russian missiles. For example, the massive attack on Ukraine on 29 December last year cost Russia an estimated $700–750 million, according to Forbes Ukraine. The attack involved 158 aerial weapons, including missiles of various types and strike UAVs. The attack on 2 January, involving 99 aerial weapons, was estimated by Forbes Ukraine at $620 million.

However, the real cost of an attack may be higher, writes the Ukrainian portal Defence Express. In its calculations, Forbes Ukraine relies on known export contract prices: for example, the price of a Kalibr missile was estimated based on a 2006 Russia–India contract for 28 Klub-S 3M-14E missiles, which put the price at $6.5 million each. However, prices have almost certainly risen significantly since then. The cost of decoy drones is relatively well known and is up to $10,000. While Forbes Ukraine (along with several other experts) often estimates the cost of producing a basic Shahed drone at $50,000, experts interviewed by The Kyiv Independent suggest that production scaling may have allowed Russia to reduce this cost to around $20,000. On the other hand, leaked documents from February 2024 on Russia–Iran cooperation indicate that at the beginning of the war Russia was paying between $193,000 and $290,000 for each Shahed-136 purchased from Iran.

The price of an Iranian reconnaissance and strike drone Shahed-107 is $460,000, while the most advanced Shahed-238 costs between $900,000 and $1.4 million, reports the Institute for the Study of War (ISW). The production cost of the Geran-3 (Russia’s equivalent of the Shahed-238) is unknown; however, in May the portal Aviation of Russia noted the high production cost of this drone 'due to the complex engine, which could limit the capacity for mass strikes.' In total, Russia annually purchases drones from Iran worth $4.5 billion, according to leaked documents. Thus, the real cost of an attack involving Shaheds depends on many unknown factors, but from the available data one can conclude that the minimum 'drone' cost of an attack involving 100 UAVs (half of which are decoys) may start from $2.5 million if the simplest modifications are used, and will rise exponentially depending on the number and quality of 'advanced' drones, each of which may cost from $100,000 to $1.5 million.

However, missiles are also used in these attacks. A group of experts from the Centre for Strategic and International Studies (CSIS), which calculated the economic efficiency of Russian strikes, used data from Forbes Ukraine to estimate the cost of Kh-22, Kh-47, and Kh-59 missiles, Defence Express data for the Iskander and Kalibr, and cost estimates for repurposed S-300/S-400 air defence missiles from the Alliance for Defence of Missile Defence and Ukrainska Pravda (see table).

In the largest Russian combined attack carried out on the night of 9 July, the Ukrainian Air Force reported the use of 741 aerial weapons, including 728 Shahed-type strike UAVs, seven Kh-101 / Iskander-K cruise missiles, and six Kinzhal aeroballistic missiles. For further calculations, let us assume that half of the drones used were decoys and that 30% of all launched strike UAVs were the most advanced Shahed-238; in this case, the total cost of the attack could be around $400 million. This is almost half the estimate made by Forbes for the cost of the Russian attack on 29 December ($700–750 million), which involved only 27 Shahed-136/131 strike drones and 87 Kh-101 / Kh-555 / Kh-55 cruise missiles. Thus, through the more active use of drones, Russian attacks are becoming increasingly intense while their cost decreases.

Approximate cost of Russian missiles and strike drones

The economics of air defence

Experts of the Foreign Policy Council Ukrainian Prism note that the intensification of Russian missile-and-drone strikes poses an increasingly complex challenge for the defending side, as the cost of an attack is significantly lower than the cost of repelling it. For example, the launch of a Patriot PAC-3 interceptor missile costs $3.8 million, while a NASAMS AIM-9X missile costs just over $1 million. The launch of an IRIS-T SL missile is estimated at $485,000 by the authors of the blog Norsk luftvern blog, Norwegian experts in air defence. Moreover, to destroy a single ballistic missile, it often takes two or three Patriot interceptors, notes Fabian Hoffmann, a defence policy expert at the University of Oslo, in his blog. In cases where an attack involves a large number of drones and decoy drones, the cost of repelling it can exceed the cost of the attack itself many times over.

The disparity between the Russian missile threat and the ability to counter it continues to grow, as Russia is rapidly increasing the production of not only drones but also missiles. According to HUR data as of June, Russia produces between 840 and 1,020 Iskander 9M723 and Kh-47M2 Kinzhal ballistic missiles per year. Since last December, the production rate of Iskander missiles has increased by 15–40%. Russia also produces 720–750 Kh-101 cruise missiles annually, writes CEPA expert George Janjalia. According to him, the increase in missile production has been made possible by modernising the infrastructure of the Votkinsk Machine-Building Plant, which included opening two additional workshops, purchasing CNC machines from China, Taiwan and Belarus, as well as hiring 2,500 employees. According to HUR, over the past year, ballistic missile production in Russia has increased by at least 66%.

Monthly production volumes of Russian cruise and ballistic missiles, according to estimates by the HUR of Ukraine

Such a rapid increase in the production of interceptor missiles is virtually impossible, believes Fabian Hoffmann. The total global production of Patriot interceptors (PAC-2 and PAC-3 missiles) currently stands at around 850 per year and is expected to reach 1,130 units by 2027 and 1,470 by 2029. However, only about half of this volume will go to Europe. If European NATO countries receive an average of 400–500 Patriot interceptors annually over the coming years, this would enable them to destroy no more than 200–250 Russian ballistic missiles per year, Hoffmann notes. To this, one should add the production of Aster 30 interceptors, which are used in the European SAMP/T system. In 2025, 220–250 such missiles were produced, with 230–270 expected to be produced next year.

Global production of anti-ballistic missiles for long-range air defence systems

To maintain the current level of intercepting Russian attacks, Ukraine requires around 4,800 surface-to-air missiles per year, note the authors of the Norsk luftvern blog. At current prices, this means a minimum of $2.4–19.2 billion spent solely on interceptor munitions, which would be a heavy burden for any country. Hoffmann points out that Aster 30 and Patriot interceptor missiles cost between $2 million and $4 million each, which significantly exceeds Russia’s expenses for producing a conventional ballistic missile. Thus, any strategy aimed at countering large-scale missile attacks through air defence systems alone will be cost-inefficient.

The economic efficiency of defending against Russian cruise missiles is higher than against ballistic ones, writes Hoffmann in another article, since the price gap between offensive and defensive systems is not as large. The IRIS-T and NASAMS systems have demonstrated near-100% effectiveness in Ukraine against Russian missiles, and the volume of cruise missile production in Russia is likely only marginally higher than Western stockpiles of interceptors. Diehl Defence produces about 500–600 IRIS-T SL interceptors per year and will increase this number to 800–1,000 in 2026. For NASAMS systems, Raytheon AMRAAM, AIM-120C-8, and AIM-9X missiles are used, with total production exceeding 3,000 annually.

Counter-strategies: seeking a solution for Ukraine and Europe

The problem Ukraine has faced this year, therefore, has a broader perspective. Essentially, Russia is not only attacking Ukrainian cities today but is also rehearsing scenarios and threats for a potential direct confrontation with NATO countries. Until now, the power and capabilities of combined air attacks have not been recognised by militaries as a distinct form of warfare, nor has the disruptive potential of their specific economic logic been fully appreciated. The search for a solution to Ukraine’s problem is simultaneously a search for an antidote to Russia’s missile threat to Europe – at least to its eastern part.

The most promising directions in combating the new generation of drones, according to the authors of Norsk luftvern, are the use of high-energy lasers, with a cost per shot of only $13, and high-power microwave systems capable of neutralising multiple targets within the beam’s area of effect. The global directed-energy weapons market will grow from $10.24 billion in 2023 to more than double by 2031, they write. Another promising technology, expected to see widespread use by the end of 2025, is the application of AI systems for identifying and targeting aerial threats, reducing the workload on operators and increasing the cost-effectiveness of air defence.

The Gepard self-propelled anti-aircraft systems have also proven highly effective against drones: their ammunition is relatively inexpensive, and production can be easily scaled up, notes Norsk luftvern. Viktor Taran also believes that the Armed Forces of Ukraine should focus on physically destroying drones with mobile fire units, whose primary weapon should be interceptor drones rather than machine guns. In addition, for such a system to function effectively, a wide network of aerial surveillance will be needed to promptly alert mobile units about incoming drones. To achieve this, Taran urges the Ukrainian authorities to begin creating a system for mass civilian participation in the defence of their cities, similar to the one that operated in Britain before the Second World War: at that time, more than a million volunteers took part in the Air Raid Precautions programme, providing daily support to the army and emergency services.

Alongside the search for technical solutions that would both improve the effectiveness of missile defence and reduce its cost, tactical solutions are also possible, Hoffmann believes. As the imbalance between offensive and defensive capabilities grows (especially with the use of ballistic missiles), Western countries should rethink their air defence strategy: rather than trying to keep pace with Russia’s production, they should prepare for a symmetrical response, delivering equivalent counterstrikes on key Russian economic and industrial infrastructure. CSIS experts Benjamin Jensen and Yasir Atalan recommend that Ukraine also develop the ability to carry out symmetrical strikes against Russia. They argue that the most effective way to destroy ‘suicide drones’ is to destroy them while they are still on the ground – in factories, warehouses and launch sites – in order to increase the effectiveness of its air defence system. However, for this, Ukraine requires missiles capable of striking Russian targets as part of combined attacks. This tactic would also be highly effective because, unlike Ukraine, which has psychologically adapted to Russian missile strikes, Russia is far less mentally prepared for large-scale attacks on its own territory and infrastructure.

@ Re: Russia / Evgeny Antonov