Friday's Jerusalem Post quoted Brig. Gen. Haim Eshed, who retired Wednesday, as saying other countries in the region, Iran in particular, were working to improve their capabilities.
"Today we have a relative edge over the rest of the region and parts of the world in certain space capabilities, some of which other countries are trying to copy," said Eshed, who founded the Defense Ministry's Space Division more than 30 years ago.
"If however we do not increase our investments in the next two years, we run the risk of losing our edge."
Eshed's concern centers on the refusal of Prime Minister Binyamin Netanyahu's coalition government to release $420 million pledged in 2010 as part of plan to elevate Israel into what the Post called "a space superpower."
Netanyahu approved the plan for research and development over a five-year period, with an eye on securing export sales.
Eshed, who will now become director of the Israel Space Agency, a state body that coordinates all Israeli space research with scientific and commercial goals, warned if the money is not forthcoming he and other senior ISA official will resign.
Despite Israel's advanced technological achievements, sales of space platforms over the two decades have earned less than $2.5 billion, Eshed observed.
But, he stressed, the international space market is worth $250 billion a year and Israeli aerospace companies could secure at least 5 percent of that.
The government's failure to provide the promised R&D funding means Israel's defense industry, the most advanced in the Middle East, will start to neglect space programs for more profitable ventures, Eshed cautioned.
"The industries currently do not have projects, and if the money does not come in, more projects will collapse as a result and we could lose the qualitative edge we currently have in the world," he said.
The R&D plan, drafted by scientists and economists headed by Eshed and the director general of the Science and Technology Ministry, Menahem Greenblum, aimed to increase sales of Israel space platforms to nearly $8 billion annually.
Ironically, Eshed's warning coincided with the 24th anniversary of the scrapping of Israel's first and only attempt to produce an indigenous fighter jet, the Lavi.
The ambitious project involving state-run Israel Aircraft Industries -- now Israel Aerospace Industries, the country's largest company -- was officials scrapped Aug. 30, 1987.
The Cabinet approved the move by only one vote after the United States, which was funding some 40 percent of the prestige project, decided to cut financing because the Lavi would compete with Lockheed's new F-16.
Netanyahu's government is currently grappling with mounting budgetary problems, which are seen as the likely reason for not releasing the promised funds for the space program.
An unprecedented wave of protests by Israelis across the political and social spectrum demanding more housing, jobs, social services and a higher standard of living has forced the right-wing government to focus on economic reforms and social spending.
That had looked like triggering hefty cutbacks in the defense budget, currently pegged at $13 billion a year.
But worsening security threats, such as Iran and the political upheaval roiling the Arab world, look like keeping defense the largest sector in government spending for the next year or so.
It seems that part of the promised R&D funding was to go to the civilian-run Space Agency, whose chairman, Professor Yitzhak Ben Israel, said June 20 the agency plans to concentrate on advanced communications satellites and micro-satellites.
The ISA has complained for some time that Israel was losing its relative advantage in the space field because of the focus on the military satellites produced by the Defense Ministry space program in recent years.
Israel Aerospace Industries is the lead contractor in the space program. It produces the Ofek series of surveillance satellites launched over the last decade -- three of them are currently in orbit -- as well as the high-resolution TecSar secretly launched from India in 2008.
The key subcontractors are IAI subsidiary Elta, Rafael Advanced Defense Systems, Elbit Systems' El-Op division, Elrisa and Specterlink.