(Update below)

Time reports: Seven months ago, Israel and the United States postponed a massive joint military exercise that was originally set to go forward just as concerns were brimming that Israel would launch a strike on Iran’s nuclear facilities. The exercise was rescheduled for late October, and appears likely to go forward on the cusp of the U.S. presidential election. But it won’t be nearly the same exercise. Well-placed sources in both countries have told TIME that Washington has greatly reduced the scale of U.S. participation, slashing by more than two-thirds the number of American troops going to Israel and reducing both the number and potency of missile interception systems at the core of the joint exercise.

“Basically what the Americans are saying is, ‘We don’t trust you,’” a senior Israeli military official tells TIME.

The reductions are striking. Instead of the approximately 5,000 U.S. troops originally trumpeted for Austere Challenge 12, as the annual exercise is called, the Pentagon will send only 1,500 service members, and perhaps as few as 1,200. Patriot anti-missile systems will arrive in Israel as planned, but the crews to operate them will not. Instead of two Aegis Ballistic Missile Defense warships being dispatched to Israeli waters, the new plan is to send one, though even the remaining vessel is listed as a “maybe,” according to officials in both militaries.

A Pentagon spokesperson declined to discuss specifics of the reduced deployment, noting that planning for the exercise was classified. But in an e-mailed statement, Commander Wendy L. Snyder emphasized that the Israeli military has been kept informed of the changes. “Throughout all the planning and coordination, we’ve been lock-step with the Israel Defense Force (IDF) and will continue to do so,” Snyder said.

U.S. commanders privately revealed the scaling back to their Israeli counterparts more than two months ago. The official explanation was budget restrictions. But the American retreat coincided with growing tensions between the Obama and Netanyahu administrations on Israel’s persistent threats to launch an airstrike on Iran. [Continue reading…]

Update — Laura Rozen reports: Late last year, Israeli Defense Minister Ehud Barak asked US Defense Secretary Leon Panetta to cancel the exercise, which was originally scheduled to take place this past spring, defense sources previously told Al-Monitor. Panetta agreed to the request only if the exercise was rescheduled, not canceled entirely. So the Pentagon was deeply annoyed when Israeli officials left the false impression that the US was responsible for the war game being postponed. “It was Barak,” a US official told me.

Update: The Pentagon disputed the interpretation offered by Time for the scaled back exercise in a statement late Friday afternoon, noting Austere Challenge-12 will still represent “the largest ever ballistic missile defense exercise” between the United States and Israel.

“The exercise was originally scheduled for May, however at the request of the Israeli Ministry of Defense and Israeli Defense Forces, the exercise was moved to late Fall of this year,” Ltn. Col. Wesley P. Miller IV, a Defense Department spokesman, told journalists in a statement sent out late Friday afternoon, several hours after guidance had been sought on the Time report. [Continue reading…]