The most recent battle in the cabinet over the defense budget ended in a typical compromise: The Finance Ministry was able, after many years of fruitless attempts, to get the Defense Ministry to agree to effective mechanisms of transparency and control.For its part, the Defense Ministry prevented the adoption of a recommendation from the Trajtenberg Committee to impose significant cuts and divert resources to the social sphere – such as free education for children aged three and four. But the essential question has not yet been answered: Is the current defense budget enough to meet the growing strategic threats to Israel in a variety of arenas? My answer to that question is clear: There is a definite need to increase the military budget, in a way that will reflect the dramatic changes that have occurred in the Middle East since July 2007, when the cabinet approved the recommendation of the Brodet Committee regarding the defense budget.This article was translated from the Hebrew by Moria Dashevsky. The writer is a former chairman of the Knesset Foreign Affairs and Defense Committee.In the first half of 2007, when the Brodet Report was formulated, the US still dominated in Iraq; Iran had not yet made a technological breakthrough toward a nuclear weapons capability; the Lebanese government was tied to the West and did not hide its disapproval of Iran and Hezbollah; Egypt was an island of stability and its policy orientation was pro-American; the Sinai Peninsula did not pose a challenge to Israel in the fields of intelligence or operations; and the Gaza Strip was ruled by the Palestinian Authority led by Mahmoud Abbas.Only five years have passed, and the trend has reversed. The US military withdrawal from Iraq paved the way to a massive struggle for the control of the country.From this chaos, Iran’s “dhimmis” may emerge as winners, and Israel may find itself again facing threats from the east. Preparing for this development requires a significant investment of resources.Regarding the nuclear issue, Iran currently has enough enriched uranium to enable it to assemble a number of nuclear warheads in a short period, once it decides to enrich the material in its hands to the level required for a bomb.From now on, its status will be similar to that of North Korea; as the latter obtained nuclear weapons, it acquired immunity from military action. In the meantime, Iran is avoiding a collision course, but the activities currently taking place at the previously secret site in Fordo, near the holy city of Qom, are evidence of Iran’s determination.Assuming that sanctions will not divert Tehran from its quest for nuclear weapons, and assuming that the US will not initiate an attack on Iran’s nuclear facilities, the ultimate dilemma could land in the lap of the Israeli leadership.Any decision Israels’ leaders make, whether accepting a nuclear Iran or taking aggressive action, could exact a high economic price.The developments in Lebanon reflect a significant deterioration in the possible scenarios for conflict in the north. Sa’ad Hariri has been exiled from his country and the prime minister who took his place, Najib Mikati, takes his orders from Hezbollah. Hezbollah chief Hassan Nasrallah and his allies have a direct influence on the army and on the Lebanese security forces. The likelihood of finding ourselves in a conflict with Hezbollah and facing the Lebanese Army confronting us is very high.Although it is not a large army, and it is neither experienced nor well-equipped, this scenario had not appeared in the IDF’s northern front drills for decades.This directly affects the forces we would have to assign for this battle, the number of days the conflict could last, and many other factors, all of which have financial implications.The developments in Egypt also pose a security challenge, one that Israel has not seen since Anwar Sadat’s visit to Jerusalem 35 years ago. Although it is too early to assess the implications of the victory of the Islamic movement in parliamentary elections on the future of the peace agreement, Israel should view the dramatic turn of events in Egypt as a strategic warning of the potential for a new conflict on the southern front. This requires fundamental changes in Israel’s military buildup, in its intelligence gathering and in the preparedness of the army for a scenario of hostilities between the countries. All these measures have huge financial implications which have been avoided since the ’70s.And we haven’t yet mentioned the transformation of the Sinai Peninsula into a terrorist stronghold; the Hamas takeover of the Gaza Strip; the deterioration of our relations with Turkey; the weakening of the US position in our region; the difficulty in predicting the significance of the revolt against the Assad regime in Syria; and the possibility of “Islamic Spring” uprisings in Jordan and Saudi Arabia.Responsible leadership must draw the necessary conclusions from the picture that is emerging. This leadership must ensure that the army will have welltrained and -equipped forces when the day comes. We have to continue investing in research and development to maintain our qualitative edge, our longdistance capabilities, our advanced weapons and strategic systems.We have to invest all that is necessary in the construction of a multi-layered defense system for Israel’s citizens on the home front. The Treasury’s efforts to enforce increasing transparency and efficiency in the army are welcome and worthy, but they must be accompanied by a realistic understanding of the new Middle East.