As none of the "hypothetical..." threads has been active in the last two months, here's a new one

:
However, the focus of this will be on something different from usual: Not upgrading a military to counter an existing or potential thread, but simply transforming a military from a Cold-War footing into a modern, 21st Century military.
The current year is
1995, and your task is to present a 5-year plan and a follow-up outline on how to do this for the country and military presented below.
I'll have my take on this.
A few points:
The country is small, both geographically and also by population. Thus, as small indigenous defense industry as possible. In small countries the effect of local defence industry is usually counterproductive.
Second, the number 25 000 for combatants is small. Thus focus should be on quality.
Third, while much of the equipment is usable, it's not all relevant for peacetime and international operations. Thus my take on this.
Objective force structure:
*Defence HQ
Just single peacetime defence HQ, with capability of mobile operations in wartime. Defence HQ forms a national intelligence picture and directs the operations.
*Signals Command
Operates nationwide signals network where every unit can plug and play. Co-operation with Police, rescue services and other government authorities. The goal is to create a secure, effective and fast national communications network.
*Special forces battalion
Co-located with Helicopter battalion. Capability to deploy 1 platoon to international operations, 1 platoon in full-time QRA.
*Helicopter battalion
Capability to support peacetime contingencies, operations of Border Guard and 1 special forces platoon. Focus on quality. Perhaps 8-10 AS535 RESCO.
*Ground forces command (Adminstrative)
1 Armor battalion (Leo)
1 Mechanized infantry battalion (Marder and M113)
1 Motorized infantry battalion (Fuchs)
1 Artillery battalion (M109)
1 Combat engineer battalion
Each of the battalion HQ's is capable of acting as battle group HQ. Each can take turn as deployed HQ to peacekeeping operations. Peacekeeping battalion is tailored from companies of Ground Forces Command and will have special equipment pool tailored for peacekeeping. This means light wheeled mine resistant patrol vehicles, more but not as secure communications etc.
*Support Command (Adminstrative)
Capability to support peacetime operations and international operations and to plan for wartime logistics.
*Air Defence Command (Adminstrative)
Squadron of 10 fighters for sovereignity maintenance
ADA Regiment with Gepards, objective of purchasing area SAM system
AD Situations unit with perhaps 1-2 peacetime fixed radars and a number of mobile air surveillance radars. With small country, focus on quality. Additionally AD Situations unit will use intelligence gathered from visual observation posts.
*Border Guard
Ditch MP's, have Border Guards double as MP's for those tasks TDC reservists cannot handle. QRA unit co-located with Helicopter Battalion. Area surveillance units which have wartime task of intelligence gathering.
*Territorial defence command
All the engineer capabilities not needed for peacetime and international operations, ditto for medical and logistics capabilities. Medical and engineer capabilities should have small QRA units usable for international and national emergencies (for example, airline accident, floods).
Security companies with tasks of securing vital locations, contributing intelligence and finally operations against enemy lines of communications. These should have full-time co-operation with local police, adminstration and rescue authorities so they can be used in peacetime contingencies as well. The Security companies should be tailored to use various available former first line equipment, eq. if the unit operates in open terrain, it can use Jagdpanzer.
Finally, FH-70 battalion and MLRS battalion. These units have not much relevance for peacetime or peacekeeping operations but are very useful in conventional war. Thus these should be reserve units.