Security officials in Tel Aviv informed the daily newspaper Yediot Aharonot Sunday that BMD funding would take top priority among all the pressing needs for modernization and upgrades of the regular Israeli Defense Forces, the newspaper's ynet.com Web site reported Monday.

"The budget requests for the IDF's routine activities have to fit in with requests for the equipment necessary to deal with countries in the third line of defense, mainly Iran," one official told the paper, according to the ynet.com report.

Yediot Aharonot is famous for having some of the best connections with the IDF establishment in the Israeli media. If confirmed, its report could mean that Israeli Defense Minister Ehud Barak -- a former chief of staff and prime minister -- has resolved a fierce dispute over prioritizing BMD funding reported the previous week by the newspaper Haaretz.

Haaretz Friday cited Israeli defense industry officials as claiming the government's previous indecision had threatened to dangerously delay an ambitious, comprehensive BMD upgrade program called "Iron Dome."

Haaretz said a failure to set up a clear financing system to fund the program could starve Israeli defense contractors of necessary funds to do the work quickly and thereby prevent them from meeting the 20 months from now deadline for completing the Iron Dome project.

Haaretz said that without moves to confirm the short-term funding, the budget for the program could run out by the end of this year. The paper noted that last week officials at Rafael, the Israeli authority for development of weapons and military technology, told Haaretz the system could be made operational within 18 months.

Haaretz cited sources as saying Israel Aircraft Industries, the major corporation that was to produce the radar system essential for Iron Dome's success, was never even given a formal order to develop it.

Former Defense Minister Amir Peretz, a trade union leader with no experience of defense industry or large-scale business or government administration, may have been responsible for the mess. Haaretz said he had previously approved more than $20 million months ago for Rafael to develop Iron Dome. But Haaretz cited one defense industry "senior official" as saying that the program was still only "advancing at a very slow pace, which contradicts the Cabinet's resolutions on quickly setting up active defenses for towns and cities near the Gaza Strip and the border with Lebanon that have in past years come under repeated rocket attacks."

Peretz was forced to resign after a disastrous, relatively brief stint as defense minister, following the publication of the Winograd Commission's investigations into his bungles during Israel's short, mismanaged and humiliating failure to oust Hezbollah from its strongholds in southern Lebanon last July. The failure cost the IDF much of its fabled deterrent capacity against neighboring Syria, which has been upgrading its armed forces with Russian-purchased Iskander missiles and other weapons.

The Yediot report, however, suggests that Barak, who has unrivaled administrative experience in running the Israeli military, is now acting energetically to put Iron Dome back on track.

Israeli leaders recognize that the greatest danger the Jewish state faces is a nuclear ballistic missile strike against Tel Aviv, where two-thirds of the country's 6 million people are concentrated. The Syrian investment in large numbers of short-range ballistic missiles intended to be fired to disrupt Israel's mobilization in the event of war compounds and complicates the nature of the ballistic missile threat facing the small country.

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