Like most other industrialized nations, excessive government spending on social programs (favored by politicians to keep themselves in office) has caught up with Israel. So, despite a booming economy, cuts have to be made and at includes the military taking 5-10 percent a year cuts for the next three years. Rather than try to fight it, and likely lose, the military leadership will use the cuts as an opportunity to shrink and restructure the military to make it stronger. This often works but not always, especially when so many interest groups will be opposing the changes. Taking the military budget from the current $16 billion to something closer to $12 billion will involve a lot of changes.
The Israeli military has already undergone several reorganizations since 2000. After the Palestinians began their terror campaign in 2000 (to try and sweeten the terms of a peace deal), the Israelis developed new tactics and turned much of the military into a counter-terrorism organization. The Palestinian terror effort was defeated within five years, but the army suffered a major embarrassment in 2006 when Hezbollah pushed its cross-border terrorism a bit too far. This revealed that the Israeli military had become good at counter-terrorism at the cost of many of its conventional warfare skills. The Israelis still defeated Hezbollah but the details revealed that the Israelis could have done it better. So in the last seven years there’s been a rebalancing to make the military capable of dealing with the continuing terror threat, as well as the prospect of more conventional combat in Lebanon (or with any of the other neighbors). The Arab Spring uprisings in 2011 crippled most Arab armed forces, causing damage that may take a decade or more to repair. There’s still an Arab military threat to Israel, just not as much of it.
The new reorganization will disband air force squadrons using elderly aircraft (so that the more modern planes can keep their pilots well trained). Reserve army units, some of them existing out of habit or tradition more than need or relevance, will be disbanded or shrunk. There will be changes in training and administration that will require less manpower and money.
The problem with these reorganizations is that you never know if they will work (or exactly how well) until there’s another crises or war. That said, the Israelis tend to learn from past mistakes and have a pretty good track record (compared to all other nations) when it comes to military reform.