Egyptian President Mohammed Morsi's termination of the Arab country's old military guard with one swipe and without resistance was one of the most surprising and dramatic developments of the revolution.

The two strongest people in Egypt, defense minister Gen. Hussein Tantawi and chief of staff Sami Enan, had no idea they were about to be ousted. The subsequent reports about their "retirement" and appointment as "advisors" to the president were aimed at preserving their dignity and keeping them calm so they would not cause any damage in the future.

As soon as Tantawi authorized the dismissal of intelligence chief Muwafi in the aftermath of the deadly terror attack in Sinai, he sealed his own fate. That was just the appetizer. When the Muslim Brotherhood saw that Muwafi's dismissal passed without a response from the military, it moved on to the main course – the "night of the long knives."

But in this case, Morsi did not need any knives. He annulled the constitutional amendments that had granted the army far reaching powers over the country and "purged" the senior military leadership, thus beginning the process of removing Mubarak's men from all government institutions and replacing them with Muslim Brotherhood members or officials who are loyal to him.

As it turned out, the terror attack in Sinai shifted the balance of power in Egypt and exposed the Egyptian army's weakness in the face of public opinion.

The dramatic development also caught Israel by surprise. Several Egyptian officials who were "retired" by Morsi had close working relations with their Israeli counterparts over a period of many years. The personnel changes may have an adverse effect on the diplomatic and security relations between the neighboring countries.

On a tactical level, in Sinai, the ties will likely be upheld to safeguard common interests, but they will gradually cool. While newly-appointed Egyptian Defense Minister Gen. Abdel Fattah al-Sissi, the former intelligence chief, maintained working relations with his counterparts in Israel, he is viewed as a critic of the Jewish state. The commander of Egypt's Third Army, who was appointed chief of staff on Sunday, has no apparent reason to establish working relations with Israel.

The Obama administration received a slap in the face from Morsi yesterday. The sacked army chief, Enan, was the US government's "man" in Egypt's military leadership, but Morsi was not impressed. It is becoming abundantly clear that Egypt now has a strong leader who "chopped off" the army's political legs while conducting a military campaign against the Bedouins in Sinai. At the same time, he showed Hamas in Gaza the "red card."

The damage caused to Egypt's pro-West and secular military may eventually jeopardize the peace treaty with Israel. In the meantime, when Morsi was asked what his three main goals were, he replied: Economy, economy, economy. This answer indicates that a significant revision of the peace accord is not likely, but the processes in Egypt are so dynamic, fast and unexpected, that it is difficult to predict what the relationship between Israel and Egypt will seem like in a few months' time.