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Once again, as they do every year, the chiefs of the defense establishment are feeding us horror stories. Once again they are threatening that if the defense budget is not increased, and certainly if it is reduced, they will simply not be able to provide us with security.

According to reports after the cabinet meeting in which the finance minister demanded that the defense budget be slashed by half a billion shekels, the defense minister, Shaul Mofaz, "seethed with anger" and asserted, "I will not lend a hand to this. Its meaning is less security for Israel's citizens."

The chief of staff, Lieutenant General Moshe Ya'alon, declared, "I will not allow the IDF's future to be mortgaged at the expense of rash decisions made now." Truly a cruel picture of people who are fighting with all their might to prevent an existential danger to the country, in the face of officials from the Finance Ministry who are indifferent to Israel's security needs.

The real situation could not be more different. The battle over the defense budget is a rearguard action being waged by senior officers of the General Staff against the changing strategic reality, which requires new modes of thinking about the immense amounts of money that are earmarked for defense. The ratio of Israel's defense budget to the gross domestic product is three to more than 10 times as great as that of all the Western states. Last year, the defense burden in Israel stood at about 12 percent of the GDP, as compared with 1.5 to 2.5 percent in the NATO countries and about 3.5 percent in the United States.

The explanation that is always given for these huge investments is Israel's unique security situation. This may have been true in the past - though it was probably not - but certainly the recent developments in the region have radically changed the picture.

The war in Iraq put an end to the threat posed by the "eastern front," which in practice has not existed for more than a decade but was invoked as part of the demands for increased defense budgets. The Syrian army has been so weakened that it no longer constitutes a threat. The threat of the Iraqi ballistic missiles, against which Israel spent billions of dollars in the past decade, has also vanished.

These developments necessitate a fundamental change in the national security concept, in the approach to force building and in future military procurement - and, as a result, in the defense burden overall.

Of course, we cannot ignore the argument of the military, which holds that serious threats still exist, which obligate an increase in the defense budget. Two types of realistic threat continue to exist: terrorism and the fact that hostile states are acquiring weapons of mass destruction. It is true that the IDF's war on terrorism is far from simple, but the cost it entails is not great. As for the second threat, the only relevant matter is Iran's effort to acquire nuclear arms. All the rest, such as the chemical weapons in the Syrians' possession, is not new and in any case does not oblige significant, new investments.

The IDF's deployment against an Iranian nuclear threat should be based on the creation of an effective deterrent capability, which already exists in large measure and needs only to be improved. The problem is that the IDF is not satisfied with an effective deterrence and with creating second-strike capability. It is wasting huge amounts of money on expensive and unnecessary weapons systems to intercept ballistic missiles - which in any event will not be able to provide the basis for policy in the face of nuclear threats.

The structure and deployment of the IDF partially meet the needs of Israel's past wars. The army is too big and some of its elements are superfluous, while the others need to be streamlined and brought up to date. What was correct as a response to threats of large conventional armed forces, positioned on Israel's border, is no longer necessary. Acquisition of precision-guided munitions systems makes it possible to forgo old and unnecessary systems, which the IDF continues to maintain at a high price.

Contrary to the impression that arises from the outcries of senior members of the defense establishment, the defense budget was not slashed in real terms. The IDF this year received an addition of NIS 2 billion (from which the treasury now wants to cut NIS 500 million, thus forcing the IDF to change its work plan for 2003 for the fourth time) and another addition of $1 billion (about NIS 4.5 billion) in special American aid.

The reason the IDF found itself in some distress this year is a decline in the available budget and in the budgetary flexibility that the chief of staff now has. That is because the IDF has already signed procurement contracts that necessitate large monetary expenditures. Yet this is precisely why the army's chiefs have to decide on substantive changes, which include significant savings in the army's fixed expenses.

There is some hope in the fact that the chief of staff undertook to submit a new multiyear plan to the cabinet within less than two months, which will reflect not only the changing reality in the region but also the anticipated budgetary constraints. The need to formulate a long-term plan containing budgetary constraints may compel the army to make decisions about changes that it would not otherwise make. The IDF's Planning Branch is currently working hard to wrap things up, and it looks as though the budgetary pressures will lead to a new defense concept that will make the IDF a smaller, more efficient army, and ultimately a less expensive one to run.