Blood from a drone: Iran’s deadly arsenal

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The Economist. Hello and welcome to the Intelligence from the Economist. I'm Jason Palmer.

1:08

And I'm Rosie Blore. Every weekday we provide a fresh perspective on the events shaping your world.

1:19

On the fringes of India's biggest cities are some of its buildings with the biggest footprints. A data center boom is going on and we ask who stands to benefit?

1:30

And if playing interminable games of Monopoly is also one of your childhood traumas, imagine a life sized version. Last week I took a crack team of intelligence producers to try it and discover why adults are embracing live action games.

1:42

Spoiler alert.

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Mayfair eluded us. But first, Nearly two weeks into the war and the display of American and Israeli firepower has been fast paced and overwhelming, Iran's response too has been fiercer than some expected. Overnight, Iran attacked two foreign tankers in the Persian Gulf. It continued to strike energy infrastructure across the region, and its Revolutionary Guard Corps threatened Western financial institutions after a bank in Tehran was hit. As well as deploying ballistic missiles, Iran's retaliation relies on another weapon too, a vast arsenal of cheap, precise and deadly drones.

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Iran has fired more than 2,000 Shaheed type drones at Israel, at Arab countries, indeed as far afield as Cyprus throughout this conflict, and they've been incredibly important.

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Shashank Joshi is the Economist Defense Editor.

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They struck some important American facilities, American consulates, embassies, military bases They've killed American troops, they've even destroyed some of America's most valuable military radars in the region. Now, over long distances on their way to Israel, they've typically been shot down. But at short range they have proved very effective, very dangerous, and a really formidable threat in this conflict.

3:12

So what exactly is a Shaheed drone?

3:41

So Shahid is the name that Iran has given to these strange delta wing shaped drones. And we, we probably know them best from Ukraine where they've been thick and fast in Ukraine skies because Russia basically bought them off Iran. They license produced these inside Russia. They called them the Garan. They've improved upon them in Russia. Then they've churned out absolutely masses of them every single month and fire them at Ukraine in huge quantities. And they for me, epitomize the way in which the boundary between what you would once have considered a drone, a kamikaze drone, a missile, a cruise missile, an aircraft, between all those things has just blurred. Now the drones that Iran is using, I'm fairly certain are manufactured in the country. They've got a long history of doing that. They're capable of doing it, but they are seeing assistance from Russia in terms of how to use these to maximum effect.

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So why are they being used so frequently?

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Now, a Shaheed type drone, it travels more slowly than the ballistic missiles that we talked about last week. They carry smaller warheads, they're far, far more basic in many ways, but they're much, much cheaper. So Russia in producing them, probably spends about $55,000 for each Shaheed drone. Maybe that goes up to more than $100,000 per unit if you add in various bits and bobs to make it more advanced. But these are fundamentally very cheap compared to a ballistic missile. And so that low cost allows Russia or any country like Iran now to churn out huge numbers of these per day. They're also a bit easier to launch. You can launch them from a variety of different places from the back of a truck. A ballistic missile maybe needs a silo or it needs a big transporter you can spot them from easily and therefore bomb them. These things can be launched from a much more flexible variety of sites. And unlike a ballistic missile, they fly low, they can skim the ocean, and for any traditional radar, that's a bit of a nightmare.

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So they're harder to spot and there are far more of them. Is there any way to defend against these?

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There's loads of ways to defend against them. The problem is, how do you defend against them in cost effective and sustainable Fashion. Now, if you take a Patriot or a Thaad system, the big air defence systems, very high end we've spoken about before, these are taking out your big, big ballistic missiles, zooming in, arcing up high, sometimes into space, and then zooming back down at massive speeds. Those will very happily take out a shahed for you if you point them at the right shahed and fire an interceptor missile. The problem is you are taking out a $55,000 Shaheed with an interceptor that costs much, much more. Now sometimes maybe that's worth it, but what you really want to do is try and use cheaper means. There's a lot of ways to do it. Currently you can get a plane up in the air, you can fire an air to air missile at the shahid. After all, as I said, it's a bit like an aircraft. So you would expect, just like you would take out aircraft, you might take out a shaheed. You've also got a bit more of an economical method which involves laser guided rocket pods mounted on warplanes. And these can shoot down shahids at closer ranges. So you wouldn't fire it so far away, but that's much more cost effective. You can also use maybe a burst of your cannon, but at that point you're getting pretty close to this drone. It's pretty hairy if you're shooting it down with your cannon. Israelis in their wars with Hezbollah in Lebanon have tried other messes. They've tried repurposing old anti aircraft cannons on the ground and pointing them up and they actually prov fairly successful depending on the height the drone is flying at. There are also lasers you could use. Israel has something called Iron Beam, but that's only at a fairly early stage. The technology is quite nascent and lasers interestingly need very clear weather to be effective. That is a bit of a problem in the Gulf where you often have sandy, dusty conditions and your laser beam isn't always working perfectly in those circumstances.

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You say that these drones have been used a lot in Ukraine. What can we learn from the experience there of them?

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Ukraine has by far the most extensive experience of defending against these things. In fact, interestingly, Russia, having pioneered the use of these at scale, is now sending and sharing some of its tactics with Iran, the originator of these systems. So there's an interesting transfer of knowledge and in the same way Ukrainian knowledge is now flowing to the Gulf. Volodymyr Zelenskyy, Ukraine's president, has said he is going to help the Gulf states. I think there's already expert advisory teams in countries like Jordan, the technology is active. And interesting things about the Ukrainians is they've gone through that learning journey of how the hell do we shoot these down without wasting all of our interceptors and spending huge sums of money? And what they've basically hit on is a really interesting method that uses a drone to kill a drone. They are using FPV interceptor drones, and FPV stands for First Person View. These are small racing drones. There are other sorts. Some of them have fins and a bit bigger. But the concept is basically you send a very fast, very maneuverable, and hopefully very cheap drone, very up to go and intercept the Shaheed, and it can maneuver more quickly than the Shaheed can and basically either ram it or blow up near it. And some of the most recent drones Ukraine is using for this purpose have AI guidance. So you get them close to the Shaheed and autonomous guidance takes over and does that final stage of intercept. We're also seeing Ukraine do some very clever things that are actually quite relevant to the Gulf, which is that Russia often sends its Shaheeds on these big long runs over the Black Sea, skimming the sea. And so Ukraine has put some of these interceptor drones on uncrewed boats that then pop up and go intercept when they're over the water. This is working really well. If you look at the statistics. In January, Ukraine destroyed, I think, over 1700 shaheds. That was about half the total that month. That's a record. That was half of the total launched by Russia. Of those, about 70% were taken out using FPV interceptors. And actually, skill's very important there because a handful of units were responsible for a bulk of those kills. You need very well practiced, very skillful people operating these things. Now, that's not the only way to tackle these drones. And tactics change all the time. There's a constant game of cat and mouse. But the point is, the Ukrainians are so far ahead in that game that they have huge amounts of the expertise necessary for this problem today.

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And are the Ukrainians now going to lend their tech and skill to those fighting Iran?

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They're doing it already. But it's very clear that Zelenskyy sees an opportunity here to. To leverage this expertise for something he wants. I think that's made some people in the Gulf a little bit irritated, actually. But he's in a position where he's watching these Gulf countries use up more Patriot interceptors in this war than he's had throughout the entire conflict at his disposal. So he is willing to, yes, give this technology to the Gulf. But I think naturally he'd be looking for Gulf investment in Ukrainian production. Gulf has money, Ukraine has tech. It's an obvious marriage of skill and cash. And I think he also would like to say to Western partners, I'm happy to share this with you guys, but I need weapons, I need aid. And he has struggled in recent months to get America to sell him the big interceptors for missiles that he needs. So I think the Ukrainians are looking at this as a big opportunity for defense industry and for the munitions they need to replenish their war. But as Donald Trump famously said, Ukraine has none of the cards. I think we're clearly seeing. Ukraine does in fact have plenty of cards.

9:51

Shashank, thank you very much.

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Thank you.

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And Iran looks set to dominate our thoughts, our lives and our economies for some time to come. Later today on the Insider, our video offering, editor of the Economist, Zanny Minton Beddoes, will be asking if the war could trigger a global economic crisis. Do watch. You'll need to be a Subs.

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11:20

There's one place for the newest drops in wellness and performance and the biggest sale of the year. It's the drop by GNC curating the best of what's new, handpicked by the pros who know what works. And right now, get it all. Buy one. Get one 50% off during the semi annual LiveWell sale. From crushing workouts to leveling up your nutrition and everything in between, get the best deals on the latest innovations. All the newness is all on sale right now during the LiveWell sale on the drop by GNC.

11:55

As you'll have heard many times on the show, the soundscape of India is ever present. Not just the traffic, but also the construction. One kind of building is showing up more and more though data centers. India needs more of these vast sheds full of blinking servers and investors both foreign and domestic are proving happy to pony up for them.

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All sorts of people benefit from this big push by new data centers. Probably the chief one is India's legions of data users.

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Gavin Jackson is our South Asia business and economics correspondent.

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The people are streaming videos that have lower latency. All those hundreds of millions of people who want the latest YouTube video, and they want it now and they want it quickly. People will have WhatsApp videos on their phone just constantly. They'll just be WhatsApping with their family all day. WhatsApp is where I do journalism now.

13:17

So let's wind back then. Tell me what the data center boom looks like in India.

13:39

It looks like huge shiny sheds going up in industrial parks on the outskirts of major cities. They've got all kinds of pipe work on the top keeping them cool, and not very many people going through their security gates to get in. Their capacity reached about 1.3 gigawatts last year. They're called JLL, a property firm. Now, that means India is still a minnow compared to the US and China, but this figure is triple what it was in 2020. Big international players are often teaming up with local groups. That includes the likes of Amazon, Meta, Google, or the hyperscalers, as they're called.

13:44

So really, this is just the wider world cashing in in part on the India data boom becoming a data center boom.

14:18

Partly so. India produces around a fifth of the world's data, but only has about 3% of its data center capacity. So meeting that demand by the big international players means locating closer to the Indians who use them. But also partly it's a data sovereignty angle. There's mandates for financial institutions to house client data in country, and some speculation that rules can change in the future to keep more data within India.

14:25

So the government is backing this. This is not just a free market effect.

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Tax breaks incentives are a big part of the story and the budget. The finance minister announced that foreign owners of data centers will enjoy a tax holiday until 2047. That's more than 20 years from now. A handful of states in southern India are also competing for this investment in data centers. They offer all kinds of different incentives from cheaper electricity rates to help finding land. Most of them have big IT industries and they want to keep some of the infrastructure close to those and want to attract more of it as well. For the moment, most of the boom is what people here call the Tier one cities. So you're talking places like Mumbai, Hyderabad, Chennai, big cities. These are huge By European standards, 20 million people sort of thing. Increasingly, there's a few data centers popping up in what they call the tier 2 cities, where they're more about again bringing data closer to the People who are using it, but smaller than that, the villages, towns. No, this is mostly in the outskirts of India's megacities, especially in Mumbai and Chennai. They have subsea cable, so Mumbai connects to Europe and Chennai connects over to Singapore. So that's mostly one reason why they're based there as well.

14:55

But for the workers in those megacities, at least there is a temporary promise of good work.

15:59

Construction generates a lot of jobs, and that's good for India. India needs good, well paid jobs. That's its big development challenge. But once they're running, they tend to mostly run themselves. So Nvidia boss Jensen Huang suggested that data center boom could lead to as many jobs as the Internet, and that's almost certainly overinflated. The Internet has done all kinds of things for India, whereas data centers are largely just big sheds full of servers.

16:06

The other thing about data center booms in India, as elsewhere, is how much they lean on the environment in a country that has resource issues already.

16:30

Yeah. So the big companies I spoke to, they say this kind of worry is overblown. India is a good place to put renewables. It's very sunny. It's also often quite windy. So if you locate in the right spot, you can mostly power them from renewables. Now, that's a bit cheeky, because higher power demand means that lots of India's coal plants may stay open for longer, even if they're not directly powering the data centers themselves. Just because if electricity demands higher, that demand has to be satisfied. A lot of India, a lot of the time is water starved. There's the monsoon when often there's too much water, but in between that, it often requires extracting water from the ground, and that gets used up over time. Now, again, the company suggests that isn't so much of a problem because power is cheaper than in somewhere like America and water is more expensive. What you do is you run it air conditioning off solar power instead of trying to cool it with water. So that's what they argue. I've not been able to verify that. I mean, people are much, much more concerned about development than the environment. If these things bring jobs, they're happy about it. If you're an Indian environmentalist, you know data centers are pretty far down your list of concerns. This is happening. India is a massive country with a lot of people who consume a lot of data, and it is inevitably going to grow to be a huge producer and a consumer of data.

16:40

Gavin, thanks very much for your time.

17:58

Thank you very much for having me.

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Hi, welcome To Monopoly lifestyle, give us a cheer. I recently went with a team of producers to play a game of giant Monopoly. There was a host who was dressed like an iron, which has always been my favorite token. But the biggest difference from the board game is that at each property, you didn't just have to fork out cash. You also had to solve a challenge against the clock.

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There we go. That is like that.

18:50

Okay, great.

18:51

We built our house.

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Sausage, cabbage, tomatoes. Where's tomatoes?

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There was another challenge where we had to do a twister like activity with foods being read out from a menu and we had to step on them. Prawns, melons, sausages. And you had to kind of turn around and find them and stand on. Thankfully, unlike a real game of Monopoly, it only lasted 80 minutes and we didn't win. But it was fun. And that game is one of a growing number of tabletop pastimes that are moving out of the home and into specialized destinations devoted to competitive socializing. Puzzles and games are now the fastest growing part of the toy market. Last year, sales grew by 30% in value, compared to an overall rise in the toy market of 7%. That's partly because the social experience of play has spurred an increase in gatherings at places like board game cafes and games nights at pubs. But there's also a whole host of new entertainment outlets. Escape rooms have proliferated, and across the world, there are thousands and thousands of scavenger hunts where participants solve clues and find particular items within a physical location. Adults are particularly keen. About 70% of the players at Monopoly Life Size are over 18, and even more than that in escape rooms. There are, of course, historical precedents for this kind of gaming for adults, but most of those, like amusement arcades, casinos, betting shops, typically involved gambling. Now we've moved from games that are about financial reward to ones that are really about social bonding. Part of the appeal is, of course, nostalgia, a return to thinking about childhood and the experience of playing games. But it's also about a wider trend of the gamification of leisure. In the past, we might go to a play or film and we'd very much be passive recipients as a member of the audience. But now you see people going to musicals dressed as cast characters. You go to sing along films or interact with actors at theatrical performances. You might say that the rise in game playing has done something to fill a gap left by a decline in activities earlier generations of young adults particularly enjoyed. I'm thinking here sex, drugs, alcohol. The experience economy is also geared towards those who want to generate instagram or TikTok. Content Businesses Spy an opportunity Competitive socializing attractions are filling vacant retail outlets and high streets. And appealing to adults means that you can sell tickets during the school day and late at night. And of course, adults pay higher prices for tickets. A Monopoly board game can be handed down through the generations, and it costs half as much as a single ticket to life size Monopoly, where 24 players can compete at any one time. Giant Monopoly has already toured in America and Saudi Arabia. Now there are plans to open in Mexico and perhaps the Middle East. Its creators are clearly inspired by the game's own goal, how to be the wealthiest player, build an empire. And believe it or not, this is

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not the end of my game Playing for this weekend's episode of the Weekend

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Intelligence, I tried to solve a slightly

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different puzzle, why adults are buying toys for themselves. And no, not that type of toy. On Saturday you can hear my journey, which took me from Reading to Nuremberg, where I conversed with plushie avocados and singing polar bears.

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You'll need to be a subscriber to listen to that.

22:55

Oh my

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goodness.

23:08

That's it for this episode of the Intelligence. We'll see you back here tomorrow.

23:16

Hey, this is Adam Grant, host of ted's podcast Rethinking with Adam Grant. Let me share with you why smart finance leaders turn to Bill. They know that clarity isn't just helpful, it's strategic. As the intelligent finance platform, Bill uses AI to automate the busy work for nearly half a million businesses so they can focus on intentional growth, eliminate the friction and start scaling with the proven choice. Visit bill.compenven to talk with an expert about automating your business finances and get a $250 gift card as a thank you. That's bill.com proven terms and conditions apply. See Offer page for details at Schwab

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