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The Israel Defense Forces must undergo a management revolution, learn to address economic repercussions and streamline its activities. These are the most dramatic recommendations of the Brodet Commission, charged with reviewing the defense budget. Its report was made public yesterday, after sensitive sections had been censored.

The 190-page report is the most comprehensive ever publicized on the functioning of the IDF, its structure and budget, with particularly harsh criticism of the way in which the IDF and the Defense Ministry handled military and budgetary business to date.

The commission accuses the IDF of manipulating data presented to the government to increase its budget. The commission also accuses the IDF of failing to grasp the economic repercussions of much of its activities, which resulted in wasteful use of ammunition during the Second Lebanon War.

The commission found that the IDF ignores large parts of its spending - the budget for construction of the separation wall, the disengagement and pensions - as though these items were unrelated to the IDF; it operates on the assumption that all budgetary demands would be met, and there was no need be become more efficient.

The IDF does no economic quantification, the panel found, and consequently no economic-strategic expression is ever given to IDF decisions such as the decision to reduce army training days and how to deal with erosion in the supply of tanks and armored personnel carriers.

The commission terms the demands presented by the army after the Second Lebanon War excessive, saying there is no way the state can meet them and simultaneously maintain economic growth. Its members say economic growth is the most important component of Israel's military and civil strength, and growth must not be jeopardized to increase defense budgets.

The commission accepts, however, the IDF's assertion that it needs a one-time addition to its budget following the war. Accordingly, the commission endorses a changeover to a five-year budget plan and a budget increase of NIS 46 billion over a decade.

Treasury Budgets Director Kobi Haber responded yesterday that he opposes the recommendation to increase the military budget. That decision is a macroeconomic one that is not within the authority of the commission dealing with defense, he said.

The Brodet Commission said there are three areas in which minimum budgets must be set by the army.

Two of the areas - training and renewal of supplies (tanks, planes and amoured personnel carriers) - have been sharply cut by the military over recent years, jeopardizing the army's readiness as evidenced in the Second Lebanon War.

The third area is investment in research and development.

The commission says the defense budget must include a reserve to be available to the military in emergencies such as war, without requiring a request for huge budget increases.

The commission found that the military's economic management, and the entire decision-making process among the military, treasury and the Prime Minister's Office to be deficient. It therefore recommends the establishment of a permanent economic forum to advise the defense minister.

Since the commission expects the military to operate according to sound economic principals, it demands that the military become more efficient to the tune of NIS 30 billion over the next decade.

Immediate supervision of the efficiency steps and ensuring their execution is to be undertaken by the Prime Minister's Office National Security Council.

Recommended steps include reducing he number of career soldiers and civilian IDF employees by 1.5 percent to 2 percent every year over the next decade; raising of the retirement age to 57, to be applicable to currently serving personnel - effective immediately, inclusion of all pension costs in the military's budget to ensure the military sees these as part of its budget costs and so has the incentive to manage this huge sum.

The commission also wants the law changed so existing veteran benefits go principally to former combat soldiers and wants 500 Defense Ministry employees laid off over four years, and the cessation of non-military activities such as reinforcement construction in communities near Gaza and of policing activity.

The commission also decided on substantial cuts in one of the most sensitive Defense Ministry departments - The Rehabilitation Department. It recommends limiting entitlement to Rehabilitation Department benefits to those directly injured in military or security activity. All other beneficiaries are to be handled by the National Insurance Institute.