Electronic effects are believed to be important in high--energy radiation damage processes where high electronic temperature is expected, yet their effects are not currently understood. Here, we perform molecular dynamics simulations of high-energy collision cascades in $alpha$-iron using the coupled two-temperature molecular dynamics (2T-MD) model that incorporates both effects of electronic stopping and electron-ion interaction. We subsequently compare it with the model employing the electronic stopping only, and find several interesting novel insights. The 2T-MD results in both decreased damage production in the thermal spike and faster relaxation of the damage at short times. Notably, the 2T-MD model gives a similar amount of the final damage at longer times, which we interpret to be the result of two competing effects: smaller amount of short-time damage and shorter time available for damage recovery.