New Labor Chief Upends Israeli Politics

Peretz Upsets Peres, Leads Party Out of Government

By Guy Leshem

Published November 18, 2005, issue of November 18, 2005.

TEL AVIV — Surging out of the gate after his upset win in last week’s Labor Party leadership primary, union firebrand Amir Peretz scored a rapid series of tactical victories this week and appeared poised to remake Israeli politics into a competitive sport for the first time in years.

Peretz, 53, a political maverick who heads the powerful Histadrut trade union federation, unseated veteran statesman Shimon Peres after waging a grassroots campaign that called for quitting Ariel Sharon’s coalition and moving the party to the left. Within a week after the primary, Peretz had gotten his shocked party to agree to bolt the government, while simultaneously lining up opposition parties on the right and left for a vote to dissolve the Knesset and call early elections. Initial polls showed Labor under Peretz surging by as much as one-third, to 29 Knesset seats from its current 21, if elections were held now. In response, alarmed Likud leaders began attacking Peretz furiously.

Few seemed more shocked by the events than Peretz himself. “I was basically the only one who believed that reshuffling the political cards is possible,” Peretz told the Forward in his first post-victory interview for the foreign media. Still, he said, “I was surprised when I got the first results of the vote. I was aware of the atmosphere among party members.” Referring to Peres, he said he “ran against a man who enjoyed vast support, one who knows how to put up a fight. I knew that we had impressive popular support, but I was not sure that the timing was right for a change of this magnitude.”

Peretz’s victory puts a working-class, Moroccan-born Sephardic Jew with a high-school education at the helm of a party long seen as the voice of Israel’s Ashkenazic elite. Though strongly dovish on Palestinian affairs, his strategy calls for emphasizing social and economic issues in the upcoming election battle against Sharon and the Likud.

The strategy marks a reversal of Labor’s traditional approach of packing its leadership with ex-generals who can counter the Likud’s hawkish security policies. By contrast, Peretz calls himself a “social general.” He promises to restore welfare cuts and reverse the widening income gaps that have turned Israel from one of the West’s most egalitarian countries to one of the least equal in less than a quarter-century.

“The fact that a social general could be nominated for prime minister is overwhelming,” Peretz said. “Especially when it comes from a party with a long tradition of nominating army generals like Yitzhak Rabin, Haim Barlev and Ehud Barak. This ethos was embedded in the Israeli society for decades. Even for me it is not easy to believe that during the Sharon government’s years the people have opened their eyes and realized that the real threat to Israel is not the security issue but rather the social gaps.”

Peretz’s victory has touched off a scramble within the ruling Likud, which has been sharply divided over the prime minister’s Gaza disengagement policy. The leader of the party hawks and Sharon’s main rival, Benjamin Netanyahu, served as Sharon’s finance minister and led a round of admired economic reforms that critics say hurt the poor. Peretz emerged as Netanyahu’s nemesis two years ago, rallying the unions against the new economic policies with crippling, nationwide strikes. Just three weeks ago, Peretz accused participants in an Israel Manufacturers Association conference of eating caviar “at the expense of the poor working class.”

Now, with Peretz leading Labor, Netanyahu is seen as vulnerable. He came under intense pressure from Likud allies this week to drop his challenge and close ranks behind Sharon. A poll in the daily Ha’aretz showed Peretz edging out Netanyahu as a choice for prime minister, 22% to 17%. Sharon topped them both at 41%.

Netanyahu responded by lashing out at Peretz, saying he constitutes a “genuine danger to Israel’s society and economy.” Netanyahu told a World Likud gathering that the new Labor leader’s policies would lead to a dramatic rise in unemployment, curbed growth, tax increases and deepening poverty.

The Tel Aviv Stock Market reacted with similar alarm, dropping 2% Sunday in response to what analysts called “Peretz shock.”

Peretz said the business reaction is overblown. His campaign backers included several top business figures, among them industrialist Benny Gaon of Koor Industries fame, high-tech millionaire Ofer Kornfeld and Guy Spiegelman, a high-tech entrepreneur who heads the Labor Party academic forum. Peretz said he will broaden the circle of support in the months ahead.

“As a leader of the second largest party I can lead a coalition of parties that can unite all the various sides acting within the Israeli political arena,” he said. “We will create a new economic cycle: The economy will serve the people. It will work for peace, and that will make the economy even stronger, which eventually leads to better living standards. Economics is not just about the stock market. It is firstly about the well-being of people.”

Born Armand Peretz in Morocco in 1952, he came to Israel with his family at age 4 and was raised in the Negev development town of Sderot, where he still lives. A rare 1960s activist in the conservative town, he is remembered as the only local teen with a Che Guevara poster on his wall. After high school he entered the army and rose to officer’s rank, but his military career ended when he was badly wounded at age 26. He spent a year in the hospital, then went home and tried his hand at farming. At age 30 he was convinced to run for mayor of Sderot and won. In 1988 he won a Knesset slot in Labor’s first open primaries, pitching himself as a working-class Sephardic outsider.

In the Knesset, Peretz joined the so-called Octet, eight dovish Young Turks grouped around Haim Ramon, Yossi Beilin and Avraham Burg. In 1994 Peretz and Ramon mounted an insurgency within the Histadrut, ousting the union’s veteran Labor Party leadership and deeply angering the party establishment. Ramon returned to the mainstream in 1995, joining the Cabinet after Rabin’s assassination. Peretz stayed on at the Histadrut, increasingly popular on the street but alienated from his party.

In 1999 he quit Labor altogether and formed his own party, Am Echad, which won three Knesset seats that year. His chief deputy was a defector from Shas, the Sephardic ultra-Orthodox party. He led his faction back into the Labor Party a year ago, after a lengthy negotiation in which his main ally was none other than Shimon Peres.

One of the first phone calls Peretz received after his primary victory was from Dalia Rabin, daughter of the late prime minister Yitzhak Rabin. She invited Peretz to join her on the stage at a memorial gathering in Tel Aviv on the 10th anniversary of Rabin’s assassination this month. Peretz accepted, and in his speech he declared his commitment to Rabin’s legacy, even endorsing the unpopular 1993 Oslo accords between Israel and the Palestinians.

Despite his dovish views, however, “my position is that social issues come first — even before the peace negotiations,” Peretz told the Forward. “The world, with all due respect, will have to wait. I want a permanent agreement with the Palestinians. I acknowledge their right to have an independent state. As a union leader I have a lot of experience in negotiations. I know that I will have to put a decent offer on the table. When the other side stands to lose something of value, he tends to become more reasonable. Eventually we will surprise the world. It is not that complicated to resolve the situation and to reach a common ground.”

Peretz’s Tel Aviv speech won praise from Palestinian Prime Minister Ahmed Qurei and a tongue-lashing from Likud leaders and even from some of his own party allies. But Peretz claims he is ready to turn the pyramid upside down:

“The less the security issue is a political issue, the easier it will be to deal with. Politicians dread taking a courageous step toward promoting the peace negotiations. If they understand that there is a consensus within Israeli society regarding the right path toward peace, it will be easier for them to make decisions.”

As for his critics within Labor, he said: “Anyone who does not accept my leadership may find himself another party. I received the support of the majority of the party members. Now is the time for them to let me lead the party in the right direction. From this angle, we enjoy a huge advantage over the Likud. They are torn apart and need to rebuild their party from rubble.”

Peretz gleefully quotes Foreign Minister Silvan Shalom’s claim that he poses the main threat to the Likud in the next election. He believes he wields a huge electoral potential as a leader who represents Israel’s most important demographic sectors — the poor, Sephardic Jews, peace supporters and even Shas traditionalists.

With that coalition, he said, “the foundation for victory has been laid. The polling trends have turned. We have made the leap in a scale that has not been seen within the Labor Party in years. People have internalized the change and it will grow deeper with time.”



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