Despite the violent upheaval surrounding it, Israel is launching the most drastic cut in its armed forces to date.

The change marks a dramatic shift for the Middle Eastern country, whose security strategy was forged in battle by the invasion by the Syrian and Egyptian armies in the 1973 Yom Kippur War. The Israeli reaction to the 1973 surprise attack was to build a large army and air force that would be able to repel any invader.

Now, after four decades, Israel is finally relieving itself from the trauma of the 1973 attack, realizing that a conventional threat to the country, such as a massive physical breaching of its borders, no longer exists.

The Syrian army, drained by two years of civil war, is not considered as a potent threat. The Egyptian army, although well equipped, is busier managing the country's newly born democracy than preparing for conflict.

“In the new reality, battles of army versus army, like we have experienced 40 years ago, are becoming less and less relevant,” says Defense Minister Moshe (Bogie) Ya'alon.

Under this new mindset, the Israel Air Force's (IAF) commander-in-chief, Maj. Gen. Amir Eshel, has ordered the immediate shutdown of two squadrons of F-16A/B fighters and AH-1 Cobra attack helicopters. The order came without any advance warning to the squadrons' air and ground crews, many of which will be forced to retire. And this may be just the beginning.

The Israel Defense Force's (IDF) plans seek an additional 20 billion shekels ($5.6 billion) in the next five years, but the Israeli Cabinet is unlikely to approve that amount. That would send the IDF back to the drawing board to seek where to make additional cuts.

“It's a revolutionary plan,” Ya'alon says. “In a few years we will see a different IDF.”

Overall, the IAF will retire 1,000 career members of the military in the coming years. “The way it was conducted made us concerned about the amount of consideration given to that decision,” two veteran pilots of one of the squadrons told Aviation Week, speaking on condition of anonymity.

A former IAF commander-in-chief, Maj. Gen. Ido Nachushtan, dismisses those claims: “Whenever you order the shutdown of an operational unit your hand is firm but your heart is always trembling,” he says. “I know that this decision was taken after careful consideration, taking all risks into account.”

The IAF's original plan was to decommission the aging F-16A/Bs when the first Joint Strike Fighters arrive in Israel, currently expected in 2017. Another F-16A/B squadron is still serving as an advanced jet trainer unit until Israel receives Aermacchi M-346 trainers in 2014. The Bell AH-1 Cobras were meant to retire within the next two years as well.

“So the decision was basically to advance the retirement of those aging platforms,” another former IAF commander, retired Maj. Gen. Eitan Ben-Eliyahu, says. “If these were the only cuts the air force will go through, I would say there is hardly any risk in it, but I am afraid we will see deeper cuts.”

“The capabilities of the modern platforms compensate for the decrease in the order of battle,” he adds. “A single F-16I can do in a single mission much more than several older F-16s could do together. The only resemblance between the aircraft is the name and general design.”

Moreover, the IAF's growing unmanned aerial vehicle fleet, consisting of Elbit's Hermes 450 and 900 and Israel Aerospace Industries' Heron 1 and 2, is taking over more and more missions traditionally conducted by manned aircraft.

But with Israel considering its air force as the most agile and versatile service—designed to deal with threats from neighboring Gaza and Lebanon all the way to distant Iran—it is the ground forces that will undergo the more dramatic reform.

Under the new plan, several armored brigades, including hundreds of aging M-60 and Merkava Mk 1 battle tanks, will be shut down in the coming months. An artillery brigade of M-109 howitzers will be retired along with a logistics brigade and an unspecified alignment of air defense. The Israeli navy will be forced to relinquish two missile boats out of its shrinking fleet of 11 surface vessels. And the army will lose 4,000 career service members.

“If we are making a mistake, it will be hard to fix it,” says IDF Chief of Staff Lt. Gen. Benny Ganz, who was forced to absorb a reduction of $800 million in the 2013 defense budget. As an immediate response he ordered a cessation of most of the ground forces' training. “I'm not happy about the cut,” says Ganz, “but we need to dare and move forward with more relevant tools.”

“The cuts plan reflects two trends that coincided,” Nachushtan says, “Israel's fiscal distress, for which the military had to contribute its share and the geo-strategic changes in the region, which reduced the likelihood of a conventional conflict.”

Although designed to counter a symmetric enemy, the IDF has not engaged in combat with a regular army since 1973.

Today, the IDF considers Hezbollah, the Lebanese Shiite militia, as its main military challenge. With 80,000 rockets and missiles deployed in Lebanon, Hezbollah has the ability to shower every corner of Israel with rockets—some of them heavy and accurate—at a rate of 2,000 per day. Previous conflicts with Hezbollah, or with the Palestinian Hamas organization in Gaza, have demonstrated Israel's inability to suppress rocket fire by air force and limited ground maneuvers. Israel today is the most threatened territory on Earth, with roughly 200,000 warheads aimed at it from Lebanon, Gaza, Syria and Iran.

In addition, the IDF foresees an escalation of terror attacks from the Sinai, where the Egyptian army has not succeeded in exercising sovereignty and from the Golan Heights, as Bashar Al-Assad is gradually losing its grip in Syria. Beyond all that looms the threat of Iran obtaining nuclear capabilities, which eventually could draw Israel into a conflict with Iran.

“The nature of war hasn't changed,” said Ganz after presenting his plan. [In the next war] “we will see fewer divisions and more firepower of an invisible enemy. But we will know how to deal with it, eventually with a smaller army but much stronger and better equipped.”

But Ganz's plan is not only about cuts. While it is meant to save 7-8 billion shekels in the next five years, Ganz intends to increase investment in precise munitions, intelligence, command and control, missile defense and cyberweapons.

“Those tools will enable us to maintain a dramatic technological edge on every potential opponent,” Ya'alon says.

Israel's Defense Budget*
Year Total (in billions) U.S. foreign militaryaid portion ($ billion)
shekels (U.S.$)
2014 51.5 (14.3) 3.1
2013 52.5 (14.6) 3.0
2012 54.0 (15.0) 3.075
2011 55.0 (15.3) 3.0
2010 52.0 (14.4) 2.775
2009 50.0 (13.9) 2.55