JERUSALEM -- Israel's new Labor Party leader, union boss Amir Peretz, said Thursday he will move quickly to pull the party out of the governing coalition, setting the stage for early elections.
Peretz captured the party leadership early Thursday with a shocking victory over party stalwart Shimon Peres in a nationwide primary. The takeover of Labor, a bastion of the European-born elite, by the Moroccan-born Peretz was hailed as a watershed moment in Israeli politics.
Peretz promised to "separate" Labor from Prime Minister Ariel Sharon's government and return to the opposition. He is much more dovish than Sharon in dealing with the Palestinians and also has opposed the cuts in social spending by the current government.
"The ability of the Labor Party to become an alternative to the rulers can be fulfilled only if we return to ourselves. The dependency on the Likud distorts the identity of the Labor Party," he said.
Peres led Labor into a coalition with Sharon's hard-line Likud Party this year to provide the support necessary to withdraw from the Gaza Strip. Withdrawal opponents in Likud had threatened to stop the plan, and without Labor, the pullout would have likely failed.
With the withdrawal completed, Peretz says there's no reason for Labor to stay in a government he accuses of pursuing unfettered capitalism.
Sharon called Peretz to congratulate him, and Peretz proposed a meeting next week to discuss early elections. The next elections are scheduled in November 2006, but with Likud still divided, a Labor defection could force Sharon to call an early vote.
The surprise victory by Peretz, 53, reflected deep discontent with the country's European-descended elite, which founded Labor and has dominated the party from the outset. Peretz, who grew up poor in an outlying Israeli desert town, has now wrested control of that elite's most hallowed institution.
Politicians and commentators deemed the upset victory as Israel's biggest political development since 1977, when Labor first lost power after 29 years of unchallenged rule. "It's not an upheaval, its a revolution," political commentator Daniel Ben-Simon said.
Peretz could face a difficult time returning Labor, which has embraced free-market policies in recent years, back to its socialist roots. Peretz tried to reassure his opponents Thursday that the economy would be in good hands under his watch.
"I don't intend to damage the free market and competition. But I intend that the free market in Israel will be a market that will serve people and the competition will be fair," he said.
Peretz may also struggle in selling his peace policies to security-conscious Israelis. The union leader, best known for organizing crippling nationwide strikes, has held no leading political role and can boast no storied military career.
This background could put the already flagging party at a disadvantage against the popular Sharon, a retired general, in national elections.
Interior Minister Ofir Pines-Paz of Labor cast doubt Thursday that senior party officials, led by Peres, would agree to leave the government. If early elections were called, eight senior members, including Peres, would lose their jobs as Cabinet ministers.
The defeat was a major embarrassment for the 82-year-old Peres, who had enjoyed double-digit leads in opinion polls, and cemented his image as a perennial loser. While Peres, a Nobel peace laureate, is widely revered abroad, he has had trouble connecting with Israeli voters and failed in five previous elections for prime minister.
After trailing badly in polls, Peretz took the prize with slightly over 42 percent of the vote, to just under 40 percent for Peres. Former party head Binyamin Ben-Eliezer placed third with less than 17 percent.
In his first remarks following the defeat, Peres said he had nothing to be embarrassed about and defended Labor's presence in the government. "To my taste, I would prefer to spend the next year not electioneering but continuing to build peace and to build the economy," he said at an economic conference on Thursday.
As of late Thursday, Peres had yet to speak to Peretz and officially concede defeat.