'Peretz looks you in the eye. He will take care of the small people'

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Like a figurehead on a ship's prow, the picture of Labour leader Amir Peretz was facing outwards from the front of the laden shopping trolley Moroccan-born Yacov Camari was pushing excitedly through the packed central market. "Bibi [Netanyahu] betrayed us and now we're going to betray him," he said with relish. "He screwed us and now we're going to screw him."

Having voted for Likud in 2003, Mr Camari, 60, is now determined to vote for Labour - and its planned $1,000 a month minimum wage - tomorrow. He reflects what his new party is confident will be a mass defection from the traditional working-class base of Jews from Arab countries which swept Menachem Begin's Likud to power more than a quarter of a century ago.

To follow Mr Peretz through the souk of this far northern town, long exposed to the Katyusha rockets that Hizbollah likes to fire over the border from Lebanon, was to conclude his party may well be right. From the moment that he climbed down from his battlebus to a screeched north African ululation of welcome, Mr Peretz had the kind of reception no previous Labour leader could have expected in this hitherto Likud heartland.

Many voters here appeared anxious not only to take revenge on Mr Netanyahu and his neo-Thatcherite welfare-cutting policies but also to accept Mr Peretz's message that Kadima, the new party founded by Ariel Sharon was no better; most of its senior figures, Acting Prime Minister Ehud Olmert included, sat in the Cabinet which approved the Netanyahu budgets. Victoria Bendayan's voice rose to a crescendo as she derided the Likud leader's recent apology for the - in his view necessary - hardship suffered by poorer Israelis.

"How dare he ask for forgiveness? I will never forgive him," said Mrs Bendayan, 59, who came from Morocco in 1955, also voted Likud three years ago and used to work in the kitchen of a local kibbutz until she was laid off. "I've had enough of him. I lived here through all the Katyushas, and I'll be here till I die. I worked for 30 years. And now I'm living on 1,400 shekels [£ 172] social security a month."

Having just met Mr Peretz, she judged him - using the Hebrew idiom of unqualified praise - as "Number Ten". She added: "He looks you in the eye. He will take care of the small people."

Mr Netanyahu is one reason for what could be a remarkable flight from Likud straight to the left. The others are Mr Peretz's relentless emphasis on social justice and the fact that he himself was a poor immigrant from North Africa.

His problem is that the gain may be matched by a shift to Kadima among Labour's traditional base, the Ashkenazy, or European, middle-class Jews. This has been fuelled by the spectacular defection to Kadima by Labour veteran Shimon Peres, and arguably by Mr Peretz's Sephardic origins in a poor southern development town. The many excuses for not voting Labour on Tuesday were recently summed up in a memorable headline on a Haaretz column. "They say he's inexperienced. What they mean is that he's a Moroccan from Sderot."

Yet while early hopes of a Peretz landslide have evaporated, he appears to be gaining ground in the last stages of the campaign, staking a claim to be a serious coalition partner. Aides are optimistic that the current showing of 21 seats could rise thanks to Labour's superior activist organisation on the ground.

This is despite - or perhaps even because of - his refusal to retreat from his call for negotiations with the Palestinians, while acknowledging that "the situation has changed" with Hamas's election victory, and its refusal to recognise existing agreements. "We must not keep weakening Abu Mazen. [Palestinian president Mahmoud Abbas]" he told The Independent. "We can find in Abu Mazen a partner because all the supporters from the Fatah need him more than they ever did. And the Hamas also needs him in order to be seen as more moderate"

If Mr Abbas - still locked in a stand-off with Hamas ahead of a Palestinian government being announced - "knows how to navigate the situation correctly, he will be able to bring back an agreement that will go to a referendum." In the mean time, Israel should work with moderate Palestinian forces and Arab countries to ensure that "if Hamas doesn't recognise Israel, they will make the Hamas irrelevant."

"Everyone knows that Hamas was elected because of the social problems and not because of the issue of Palestinian relations with Israel. We have to be smart [and] send a message that we don't have a war with the Palestinians; we have a war with terror."

Above al,l Mr Peretz has been impressively consistent - and among leaders of the big parties unique - in his determination to confront what he calls the "two genies" of Israeli politics: the anti-Arab "nationalistic" one, and ethnic divisions within Israeli society itself.

"These genies are weakening Israeli society," he said. "I want to see that the Arabs and the Jews fight together against the phenomenon of hungry kids. I want the fight for the old people coming from Russia and the old people coming from Morocco to be a shared fight. I do everything I can to kill these genies. And we have to wake up on Wednesday and see if the genies are still alive or not."