Will Labour stand a chance?

Observations on Israel

Only 64,000 Israelis voted in the Labour leadership contest, and the winner, Amir Peretz, was backed by just over 27,000 of them. A relatively small number of people - akin to the crowd at Charlton Athletic on a rainy Saturday - managed to cause a dramatic upset and inject some life into Israeli politics. The vote has not reflected social-democratic undercurrents in Israel; it has created them. News has made the reality instead of reality making the news.

The split in Israel's ruling Likud party is not all down to Labour's new leader and its withdrawal from Ariel Sharon's coalition government. The political process that prompted this transformation began in 1984, when the then Labour leader, Shimon Peres, established his government of national unity with Likud and adopted extreme monetarist policies that reflected his admiration for Ronald Reagan and Margaret Thatcher. Since then, it has become clear that the old distinctions between the parties no longer reflect political and socio-economic reality.

"Labour" has become an empty title for a party of the middle classes, especially university-educated managers. On issues such as low wages, less taxation and less public spending, Likud and Labour have been in complete agreement. In the general elections of 1992, 1996, 1999 and 2001, there was little debate on economic policy.

It has been the joint policy of Sharon and Peres to maintain security for the Israelis without losing US support - a continuation of the strategy of David Ben-Gurion, Israel's first prime minister and former Labour leader. Sharon founded the Likud party, but he hailed from the Labour movement. Cruel and corrupt, he is now an unlikely darling of the international community. His policy of disengagement from the Gaza Strip and the dismantling of Jewish settlements was aimed at securing two crucial sources of support for his leadership of Israel: the American and Israeli elites.

Hence the huge potential of Sharon's new National Responsibility party. He hopes his freshly acquired reputation as a peacemaker and favourable public opinion polls will enable him to form a government following an election in March. At the time of writing, 14 Likud members of the Knesset (MKs) had joined Sharon's new party, which as a result can count on hefty state funding for its election campaign. The new party is reluctant to accept Peres, who was toppled as Labour leader by Peretz. However, at least one senior Labour MK, Haim Ramon, is joining Sharon, and his party can be sure of a share of the Labour vote.

Most of the 29 MKs that remain in Likud have some of the characteristics of the "nationalist centre", a category that includes both Peres and Sharon. Their undeclared leader, the former minister of finance Binyamin Netanyahu, is a fundamentalist right-winger. He and his followers believe they can rally public opinion in the US for their expansionist policies. Yet some of these so-called followers bear no personal loyalty to Netanyahu, and their most prominent spokesman, Uzi Landau, is fully prepared for a confrontation with Washington for the sake of Eretz Yisrael (Greater Israel).

So three principal blocs will compete in an election early next year: Sharon's National Responsibility, with or without Peres and his Labour allies; the extreme right led by Netanyahu, with or without religious and ultra-nationalist factions; and a social-democratic party led by Peretz.

Peretz is unlikely to topple Sharon in the general election, but a good performance - 28 members of the Knesset or more - will put him in an ideal bargaining position, especially on socio-economic issues. The Jewish-Arab left and Arab parties, meanwhile, will play a marginal role.

Haim Baram is a writer and journalist based in Jerusalem

This article first appeared in the 28 November 2005 issue of the New Statesman, Apartheid