Israel's military edge may suffer if the government slashes its budget by hundreds of millions of dollars and cuts off funds needed to develop new weapons systems, a senior military official said on Thursday.
The official, who asked not to be named, said defence cuts over the past few years as part of a government belt-tightening policy had caused cut backs in military training, weapons development and military supplies.
"Our superiority has been achieved by a qualitative edge in manpower and a qualitative edge in technology," he said.
"If the budget cuts continue, we will have a problem with manpower in that good people will leave and we will have a problem with the capability of our weapons systems," he said.
Defence spending has dropped from nearly 40 billion shekels in 2002 to 35 billion shekels ($7.7 billion) out of this year's total budget of 210 billion shekels. This includes 26 percent of some $2 billion in US military aid.
In all defence spending comprises about 7 percent of GDP from close to 10 percent in 1990, giving defence the biggest chunk of the state spending.
Critics argue the Defence Ministry gets too much of the budgetary pie at the cost of spending on social welfare.
The Finance Ministry aims to cut as much as another 2 billion shekels from defence in the 2005 state budget which will be debated in cabinet in mid-August.
But the official said another 1.5 billion shekels was needed in 2005, which he said was reasonable given that Israel has emerged from a three year recession and was on a growth path.
He said the military had cut as much fat as it could with efficiency steps such as cutting personnel by 2,400, reducing spare parts purchases and research and development costs as well as reducing training sessions for reserve soldiers.
Intense political infighting and strikes by public sector labour unions opposed to spending cuts of some 10 billion shekels led to a delay in passage of the 2004 budget.
Israel has been forced to cut the budget to keep the deficit from spiralling out of control.
The official argued that while the army had still maintained its effectiveness by thwarting dozens of militant attacks, hefty cuts to the defence budget could eventually lead to security lapses.
"We won't be able to keep our reserve force up without it being harmed since they are not being trained properly," he said, adding the army was also suffering from ammunition and spare parts shortages due to budget cuts the past few years.
Finance Ministry officials believe that with Iraq no longer a threat, defence spending can be cut. But the military rejects that argument, saying the view is short-sighted, complacent and will hamper investment in new weapons systems.
"Now it is calm. But can someone tell me what will be in five years in Iran or what will happen when the Americans leave Iraq?" he said. "We have to be prepared. We can't predict anything - especially in this neighbourhood."
He said that high defence spending in past decades has turned Israel into the region's most powerful military force and that maintaining this edge should be a national priority.
"It was a factor in the decision of some Arab leaders to go towards a direction of peace," he said referring to peace treaties signed with Jordan and Egypt.
The official also said that reductions in defence ultimately also hurt the economy since the military invests heavily and has had to move some of its purchases off-shore to cut costs.
"If we don't invest in R&D and new weapons systems our defence industry won't be able to develop and we will have less jobs," he said, noting defence comprises 17 percent of exports excluding diamonds.
He also said the military needs to offer competitive salaries to high quality personnel to avoid them leaving for the more lucrative high-tech sector where a number of successful companies have been started by retired senior army officers.