As an island nation, Israel needs to protect its civilian shipping

First of all, Israel is not an island nation geographically, being part of a continent. But there is little overland trade and almost all of Israel's supplies (except the lightweight ones which can be flown) come by ship.

As an island, Israel is located rather badly. Instead of open ocean, there are two narrow seas, the Red and the Mediterranean, that connect with the outside world. But the worst is their ends, the narrow straits of Bab el-Mandeb at one end and Gibraltar at the other.

This creates a possibility for Israel's adversaries to cut off Israel's vital supplies by mounting a sustained attack on civilian merchant shipping that connects Israel with the outside world. Being a small nation, Israel is dependent on materials that come from overseas, much more than on exports that are shipped in the opposite direction. These last can wait in case of emergency, but supplies cannot.

As an example of what can happen, consider Japan in the years 1942-1945. For some reason Japan's leaders decided that the US would not begin unrestricted submarine warfare in case of war. The only important thing about this reason was that it proved to be wrong. American submarines did attack Japan's merchant shipping and by the end of the war sank 8 million tons of it, more than half of the total. The result was starvation and the breakup of defense industries in Japan. 

Israel's enemies did not have submarines during the War of Independence, did not have time to use them in the Six Day War, but tried to block the Bab el-Mandeb  straits in 1973.

Now, 38 years later, there exist many possibilities to attack Israel-bound ships very far away from their destination. These include attacks from land, from the surface, from the air and from underwater. The last kind is especially deadly, being what did not succeed against Britain in WWII but succeeded against Japan.

Retaliating in kind against such attacks may not be enough, because the potential adversaries depend on outside supplies less than Israel does.

This leaves only one option: active protection of merchant shipping in case of large scale hostilities.  It does not seem that the Israeli Navy is as big as it should be for this mission, judging by comparison with nations that did suffer in the past from attack on their shipping, such as the UK and Japan. These nations use a part of their resources for the so-called ASW which stands for antisubmarine warfare. There is a combination of traditional and new threats that can endanger merchant shipping. Among these piracy near the coast of Somali was much in the news, but technically this is likely the easiest problem to deal with.

There are now voices in Israel asking for money to be taken away from the defense budget and used elsewhere. It is quite possible that the wide public is not aware that vital shipping may be at risk in case of war, not because this is a new concern but because there isn't much experience in Israel in dealing with it.

This raises the question of how can one prepare for something that has never happened before, at least in one's own experience. Even more, there may be a need for resources that are badly needed for other purposes. This can be done and there are examples of nations building exactly the right tools that turned out to be critically important in conflicts that did not even begin when the equipment was designed and built.