Israel’s Peres Voted Out as Party Chief

In a dramatic upset, Israel’s elder statesman Shimon Peres lost a hard-fought contest for the leadership of his left-leaning Labor Party, officials said early today.

The stunning defeat for the 82-year-old Peres could lead to the dissolution of the government of Prime Minister Ariel Sharon, with which Labor allied itself early this year. The victor in the Labor primary race, union leader Amir Peretz, has pledged to pull out of the ruling coalition.

Israel Radio reported that with more than 95% of the votes counted, Peretz had prevailed by a thin margin. Peretz, a rough-hewn figure who portrayed himself as a champion of workers and the poor, was said to have garnered 41.5% of the vote to Peres’ 40.7%.

Party officials said a formal announcement of Peretz’s win was expected later in the day.

Even before the result was announced, Peres called for an investigation of possible election fraud. He did not directly accuse Peretz of wrongdoing but suggested that the challenger’s union supporters might have committed foul play on his behalf.

Peretz, 53, did not immediately respond either to the accusations or the declaration of his victory.

Peres has served as a deputy premier in Sharon’s government for the last 11 months. He threw Labor’s support behind Israel’s withdrawal from the Gaza Strip, crucial backing without which the pullout proposed by Sharon would probably have been blocked by furious opposition from the right wing of the prime minister’s conservative Likud Party.

Peretz argued that Labor had lost sight of its core mission: safeguarding the interests of the socially downtrodden. He said that Sharon’s coalition had failed in that goal, and that Labor could thus no longer serve as an ally.

The defeat for Peres, and the expected dissolution of the alliance with Sharon, appeared likely to trigger early elections. Voting had not been scheduled to take place until November 2006.

Peres, a Nobel Peace laureate, occupies a peculiar place in Israeli politics. Though lauded overseas for his tireless efforts to bring about a peace settlement with the Palestinians, he is derided at home as a perpetual also-ran. And though he has served as prime minister, he also has lost five elections for the top job.

The challenge from Peretz had at first been read by those in Peres’ camp as negligible, but as the party leadership vote neared, the union leader began notching more and more support.

Peretz’s victory comes as an unpleasant shock to the eight senior members of Labor who hold posts in influential government ministries. They will have to give up their posts if Peretz abandons the coalition.

Peres became vice premier as part of Labor’s 10-month-old alliance with Likud, and the primary was closely watched for how it might affect Sharon’s government, buffeted by dissent within the prime minister’s party.

Peres was the main force behind Labor’s decision to join the coalition and was expected to keep the party there for the time being if he had won.

Labor, which controls 21 of 120 seats in parliament, agreed in December to join Sharon to keep his government afloat long enough to carry out Israel’s withdrawal of settlers and troops from Gaza and the northern West Bank. The new coalition government was approved in January.

Peretz argued that Labor should return to the opposition and fight free-market policies put forth by the Sharon government, most notably former Finance Minister Benjamin Netanyahu.

Even if Peres had prevailed, the government remained in jeopardy. Labor leaders had said they would remain only if Sharon increased spending on social welfare as part of next year’s budget, which must be approved by Dec. 31.

The prime minister also is facing a faction of Likud hard-liners who are determined to punish him for this summer’s Gaza withdrawal.

Sharon’s aides have warned that he might call early elections and run as head of a new party if foes in Likud continue to defy him, as they did this week by voting against a trio of Cabinet nominees he put forward. One of those nominees, Ehud Olmert, was later approved as finance minister in a separate parliamentary vote.

Israel’s Channel One television reported in the wake of that humiliation for the prime minister that Sharon had decided to break away and call for elections next spring.

In national elections, the once-dominant Labor Party has weakened and is considered by most analysts a longshot to beat Sharon.

In other developments, a top Hamas leader said Wednesday that the militant Palestinian group would not rule out future negotiations with Israel, as long as such talks helped achieve Palestinian aims.

“The national goal is to liberate our land, to release our detainees, to stop the Israeli aggression,” Mahmoud Zahar, the Hamas leader in Gaza, said in an interview with Israel Radio. “If that means we need to speak to the East or the West, we are ready.”

Hamas, which denies Israel’s existence and has carried out dozens of suicide bombings and other attacks on Israelis during five years of violence, plans to compete in Palestinian parliamentary elections in January.

Israeli leaders oppose Hamas’ participation in the vote.