you're right, also a third world country could have an army that behaves, a democratic process that works, etc. Shavit meant a 'banan republic' a state in which the army leaders are corrupt, the military, the commercial and the political elites are intertwined and corrupt. like in this case.
Bennett, Deri expected to resign from Knesset, remain in cabinet under new 'Norwegian Law’ (Haaretz)
from the article: Has Israel become a third-world country?