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With small-scale models and a presentation by astronaut Julie Payette, the Canadian Space Agency marked yesterday the successful installation of Dextre, the country's latest robotics contribution to the International Space Station.

But for all the video footage beamed from space of the deployment of Dextre, the good news came at a time of anxiety in the space sector.

Industry Minister Jim Prentice has until the end of the week to announce whether Ottawa will allow the sale of Dextre's maker to an American aerospace and weapons contractor, Minneapolis-based Alliant Techsystems.

Mr. Prentice won't even say whether he will extend the deadline at the request of lawmakers, space analysts and stakeholders who worry about Dextre's builder, the space division of MacDonald, Dettwiler and Associates Ltd. of Richmond, B.C., falling into the hands of Alliant, which boasts it is the largest U.S. manufacturer of ammunition.

At stake is the future of Radarsat-2, the state-of-the-art observation satellite MDA built and owns, thanks to $445-million in Canadian taxpayers' money. Launched in mid-December, Radarsat-2 can see in sharp detail through clouds and night skies and could play a key part in Canada's territorial claims in the high Arctic.

"The loss of this crowning technological achievement will be a major blow to Canada," said Walter Dorn, a professor at the Department of Defence Studies at the Royal Military College of Canada.

This has further stoked talks that Canada is losing ground. Canadian space funding is lagging. The nation's space agency doesn't have stable leadership. Its astronaut corps has been shrinking. The federal government hasn't shown interest in further major projects.

All this has chipped at the legacy of a nation that was a pioneer in space robots and satellites.

"We sat on our laurels. Meanwhile, other countries have gone forward," former CSA manager Andrew Eddy said. "We had a technology niche and it's eroding."

Mr. Eddy heads Athena Global, a think tank that prepared a strategic report for several Canadian aerospace firms, including MDA, in 2006. The report found that Canada's space budget was the lowest of all G8 nations, both in absolute terms and relative to its GDP.

Canada's investment has also declined more than in any other G8 nation in recent years, dropping from 0.037 per cent in 1995 to 0.022 per cent in 2005. Only Japan has also decreased its spending and not by such a large amount.

In a tight-lipped appearance before a parliamentary panel last week, Mr. Prentice invoked confidentiality rules in refusing to comment on his vetting of the MDA sale. He would say only: "I will ensure the interests of Canadian taxpayers are protected."

However, beyond the issue of the sale of MDA, Mr. Prentice was equally non-committal when asked about government funding for long-term projects such as Radarsat Constellation, the follow-up program to Radarsat-2.

"In the time after the shuttle program winds down, there are a number of critical decisions that will need to be made," Mr. Prentice said, referring to the 2010 deadline for the retirement of the space shuttle fleet.

Mr. Prentice also played down his encounter this month at a shuttle launch with Emanuel Montenegrino, a Tory-connected lobbyist hired by MDA. "I spoke to him very briefly and only socially," the minister said.

Mr. Eddy said the space agency has been struggling to get funding for major Crown projects - those that cost more than $100-million.

Former CSA president Marc Garneau, who left in 2005 to become a Liberal candidate, said he obtained $110-million to initiate work on Radarsat Constellation, a three-satellite project that would provide complete coverage of Canada's land and oceans by the time Radarsat-2 program ends in 2012-13.

But further commitment hasn't come. And the federal government also nixed a proposal to join the European ExoMars project.

Space is a tough business where there are only a small number of large, high-risks projects that are prone to delays and cost overruns, a challenge for both the private sector and for a space agency with a near-constant annual budget of about $300-million.

In addition, the CSA keeps changing presidents. After a long interim on the heels of Mr. Garneau's departure at the end of 2005, a new president, Laurier Boisvert, was appointed last spring, but he abruptly quit after eight months.

The agency's acting head, Industry Department civil servant Guy Bujold, has already committed to another job by Oct. 1.

"When you combine the absence of positive signal from the Harper government with the very high, lucrative demand from the U.S. military and intelligence community, it becomes easier to understand why MacDonald Dettwiler would act as it has," said Michael Byers, Canadian research chair in international law and politics at the University of British Columbia.

Under a deal struck in 1998, the Liberal government of the time bankrolled MDA's work on Radarsat-2 in return for free access to photographs taken by the satellite. MDA now stands to earn $1.3-billion from the sale of its space division.

"If you look at the structure of that deal, all the government investment was upfront and all the private-sector commitment was at the tail end of the deal. And so the government created a situation where there was residual value in that Canadian company and no guarantee that it wouldn't be sold off," Mr. Eddy said.

The space agency has its own strategic goals but the Radarsat-2 episode raised questions about whether it is too myopic to have the CSA report to the Industry Minister. Critics note that space applications are used in wide-ranging areas ranging from natural resources and the environment to national security and Arctic sovereignty. They say a national policy needs to be outlined to guide the space agency.

Currently, the agency has its own goals and strategies but they are an array of options, with various government departments pushing their own shopping lists, said Mr. Garneau. "The space agency itself doesn't have the authority to decide on priorities."

Until Mr. Prentice announces his decision, the mood is sombre. Two MDA engineers quit in protest and another testified to a parliamentary committee on behalf of 12 employees opposed to the sale.

Liberal MP Roger Valley, who attended the shuttle launch that took Dextre into orbit last week, said several Canadian aerospace workers were worried. "What I heard repeatedly through the day, from employees of different companies involved, they're all concerned that if this sale goes through it could affect the Canadian Space Agency's abilities in the future."

MOST Canada's first space telescope, launched June 30, 2003

Chris Hadfield

Nov 12, 1995

Only Canadian to visit Russian space station Mir.

Also the first Canadian to perform a spacewalk, in 2001.

Roberta Bondar

Jan.22, 1992. First Canadian woman in space.

Oct. 5, 1984

Marc Garneau is the first Canadian in space.

Nov. 13, 1981

The Shuttle Remote Manipulator System ( SRMS), or Canadarm was first launched. It has been used on more than 50 shuttle missions.

Hermes

Experimental communications satellite launched Jan. 17, 1976.