Half of Iran's revenue was spent on arms imports in the mid-1980s. In order to dedicate half its budget to military expenditures, Iran was forced to reduce such essential imports as food, for which it spent about US$4 billion annually from 1983 to 1987. Rationing of essentials such as meat, rice, and dairy products after the beginning of the war resulted in long lines at shops and an active black market. Sometimes the need occurred, as in the spring of 1987, to add nonfood consumer items to the rationing list. These austerity measures gave rise to the possibility of political instability.
Because of the war, trade had to be rerouted through the Soviet Union and Turkey, which increased transportation costs. The war also caused Iran to deplete its foreign reserves and to depend on foreign suppliers for needed goods. Military equipment accounted for about 25 percent of total imports by the mid-1980s, and the budget for FY 1987 showed that funds for the war exceeded financial allocations to all other economic sectors. The total cost of the war from its beginning in 1980 until early 1987 was more than US$240 billion (based on a total of US$200 billion by the end of 1984 and a cost of US$20 billion for each year thereafter). If lost oil revenues were taken into account, the cost of the war through 1987 would be even higher.
Data as of December 1987