[ I posted this as a dailykos diary last night, but with so many diaries there, it's easy to miss. There's some good discussion in the comments thread there, though. ]

I'm writing this as an attempt to lay out for Americans, something that most Israelis grew up with and know intuitively, and most Americans have never even thought of, let alone seen reported on.  This is an inward-looking narrative.  In the western world, we tend to see Israeli politics portrayed mostly through the lens of the Arab-Israeli conflict.  I'm going to try to leave as much of that as I can out, to focus on a dynamic inside Israeli Jewish society that you rarely hear about.

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Israel was founded by European Jews who came mostly in the first half of the 20th century, and especially between the two world wars, during the British Mandate of Palestine.  There they set up institutions to educate, defend, entertain, employ, administer, provide social welfare for their growing community - institutions which became the State of Israel in 1948.  These Zionist pioneers, as they called themselves, were not a random sample of European Jews - they were mostly the young, healthy, adventurous, hardworking, driven ones who chose to go to Palestine to build a home they were convinced the rest of Europe's Jews would need.  They were mostly socialist, idealist, and built many communal settlements to work the land, and wrote many treatises on their social philosophies.

Until World War II, most European Jews viewed themselves as integrated or integrating into Europe, and the Zionists as a fringe.  By the time they learned how dreadfully wrong they were, it was too late.  Of the 9 million European Jews the pioneers were building a home for, only 3 million were left.  But another group needed this new home just as badly: Arab Jews living in Iraq, Egypt, Syria, Morocco, and elsehwere in the Arab world.  For example, until the 1930s, Baghdad was one of the greatest centers of Jewish population and culture in the world.  But in many of these places, oppression, riots, and pogroms picked up steam in the 30s and 40s, and by the time Israel became independent, pressure to emigrate there was high.  Within its first decade, Israel's Jewish population was half European - aka "Askhenazi", and half "Mizrachi" & "Sephardi" Jews from the Arab world.

(leaving aside the fine distinctions between various terms for non-European Jews, I'm going to use the de-facto term "Sephardi" to refer to them all - which is technically incorrect, but in common use)

As a crude summary,

• The pioneers built a home for their relatives and countrymen, who shared their culture... and most of whom were killed before they could come over.  Instead, their distant cousins, who they did not know and whose culture was foreign, came to take advantage of the refuge.
  
  
• The Sephardim came to the promised land that had been set up for them; acountry dominated by their richer, better educated, and culturally foreign Ashkenazi cousins.  Their new protectors and leaders saw them as backward and primitive, while they tried their best to fit in.

At first, the Sephardi looked up to their Ashkenazi protectors, and tried to emulate their superior ways - the consensus, accepted by both groups, was that Ashkenazi culture was superior, because after all, they were the strong powerful ones who made this state possible.  The Sephardi were Arabs, ethnically and culturally, and grew up referring to themselves as Arabs, but in this new country, "Arab" was a synonym for "enemy" - literally.  Further, they mostly came from authoritarian political systems, ruled by kings or distant colonizers, and even though in Israel they could vote, the concept of voting for challengers was not one that came naturally.  Yet despite their attempts to fit in, the Ashkenazi held on to all the levers of political and economic power.  In such a small and closely-connected country, advancement came through who you knew.  Ashkenazi knew the right people, Sephardi did not.  They were re-settled in "development towns", which remained poor, and made little progress.

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Those institutions I mentioned earlier, the ones set up by Ashkenazi pioneers that eventually became the State, are another important piece of the puzzle.  And foremost among those institutions was the Labor movement, and the Histadrut, its labor union federation, founded in 1920.  In the political wilds of Mandate Palestine, where the British military administration tried to keep things stable and mediate between two separate nations (Jewish and Arab), the Histadrut became far more than a labor union - it took on the role of the Jewish nation's government.  Histadrut membership dues were the equivalent of taxes, and with that money, the Histadrut set up schools, a health care system, and industries to both bolster the working class and build the state.  Bank HaPoalim, one of Israel's major banks today, was the Histadrut bank.  Davar, one of the leading Israeli daily papers until the 1980s, was originally the Histadrut paper.  Kupat Cholim, the Israeli health clinic network, started as the Histadrut health plan and remained an arm of the Histadrut until the 1980s.

It's not much of an exaggeration to say that the State of Israel was built out of a labor union.  Mapai, Ben Gurion's political party that governed Israel for its first two decades, and became the core of today's Labor party, was the political arm of the same pioneer Labor movement that created the Histadrut - and also the Hagana, the mainstream defense force that became Israel's military in 1948.  It was Histadrut's dominance of all of the institutions of state that made Mapai the unassailably dominant political party in Israel's first few decades - even when founding Prime Minister Ben-Gurion left Labor and formed new parties to run against it in 1965 and 1969.

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So let's put these two threads together: In the 1950s and 1960s, massive immigration from the Arab world led to half of Israel's Jewish population being Sephardi.  They were disconnected from the institutions of economy and politics with which Ashkenazi Jews ran the country.  They lived in the big cities and smaller development towns; they did their compulsory military service, under Ashkenazi captains and generals; they voted mostly for Mapai, the party of Labor Zionism that created this refuge for them and protected them, but they were excluded from meaningful participation in its policies and were left off its lists for Knesset.  Ashkenazi got the good jobs, the nice homes, the better neighborhoods.  Resentment slowly built up.

In 1959, resentment flared up in riots in Haifa, many targeting Mapai social clubs.  In 1967, Israel won stunning victories over three of its Arab enemies - and Sephardi soldiers and officers were among the heroes.  Their self-image as backward half-Arabs who needed Ashkenazi might to protect them, began to change.  Then came 1973 - Syria and Egypt invaded Israel, taking the Labor leadership completely by surprise.  Confidence in the powers that had protected them for so long, shattered.  And again, Sephardi soldiers and officers were prominent among those who successfully defended the state from destruction.

A tectonic shift in Israel politics, 1974-1977, lead to the first major earthquake.  In 1973, Ariel Sharon, the Israeli general most directly responsible for turning the tables on the Egyptian invasion, formed the Likud party.  Its core was Herut, a right wing party with roots in a minority movement among the Zionist pioneers (their movement also had schools, a defense force, and so on, but their institutions were mostly disbanded or absorbed into Labor-founded institutions in 1948).  Herut had been getting 8-17 seats in the 120 member Knesset in most elections.  In 1973, the brand-new Likud got 39 votes to Labor's 51.  In 1977, Likud got 43 seats to Labor's 32.  It was the first time in Israel's history that a party other than Mapai/Labor got to lead the government.

Although Likud did not start as a Sephardi party, resentment against Ashkenazi domination led Sephardi into the Likud in droves.  This first big comeuppance for Labor sealed the deal.  What started as a right wing secular party became an expression of opposition to Ashkenazi rule, and developed in the 1980s into the mainstream secular Sephardi party.  Labor had become an oxymoron.  If Israel had been populated mostly by Ashkenazi Jews, it would have been what it was before 1948: the party of the mainstream Labor movement.  Instead, it became the labor party of the dominant half of Israeli Jewish society - a working class party that was inadvertently elitist.  Paradoxically, the urban poor of the development towns - the very people most likely to vote for a Labor or center-left party in most western Democracies - was voting for and joining the major right wing party.

Americans are familiar with the concept of poor working class people voting for the right wing party whose economic policies hurt them, but whose social and foreign policies are harsher.  Do not be fooled - this resemblance is superficial!  The rift I'm describing is an ethnic rift, a tribal one.  It also doesn't match the rural/urban divide in American politics.  The more "rural" Jewish Israeli population stems largely from the Kubbutzim and Moshavim of the pioneer days.  They are Ashkenazi and, except for those with right wing views on foreign policy, tend to vote for Labor.  It's the urban working class Sephardi who vote Likud.

Through the 1980s and 1990s, Labor and Likud traded power back and forth as the two roughly equal major political parties.  Labor remained to the left, and Likud remained to the right, but the biggest reason for their balance of power was that they represented the two big chunks of the population: mainstream secular Ashkenazi and mainstream secular Sephardi.  A new Sephardi religion party, Shas, also emerged in the 1980s as a balance to the Ashkenazi religious parties.

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And now we come to Amir Peretz, Labor's new leader as of two weeks ago.  He was born in Morocco, and came to Israel with his family in 1956.  They settled in Sderot, a development town in the south of Israel that in recent years has become notorious as the target of occasional Palestinian missile strikes from the Gaza strip.  Peretz became a captain in a paratroopers brigade, and was wounded in battle in the 1973 Yom Kippur War.  He entered politics in the 1980s, first as mayor of Sderot from 1983-1988, and then as a member of the Knesset.

In other words, Amir Peretz is an archetypal member of the Sephardi generation that rose to power in the first earthquake: A Mizrachi Jew who emigrated to Israel in the 1950s, helped defend Israel from catastrophic invasion in 1973, and rose to political prominence in the 1980s.  He is, in almost every sense, one of them.

In one very significant respect, though, he was different: He chose the Labor party.  Sderot is a Likud town, and his predecessor was a Likud mayor - as is today's mayor of Sderot.  His friends and peers joined the Likud, but he bucked the trend.  And in 1995, he became chairman of that granddaddy of Labor Zionist institutions of power, the Histadrut.  Like many Israelis, I remember one of the dominant themes of Israeli news since the late 1990s: Peretz calling a general strike.  Or, negotiations with Peretz to end a strike.  Or, negotiations with Peretz to avert an impending strike.

In the Labor party political spectrum, Peretz is a back-to-the-roots sort of guy.  He joined Labor because he was a socialist, even as the party was gradually moderating its socialist roots and becoming a left-leaning social Democratic party like Tony Blair's Labour.  He spurned the Likud because he believes their economic policies hurt the working class, and the resources they divert to build and defend settlements in the occupied territories divert from investing in solving Israel's social problems.  He also strongly believes that occupation is morally corrosive for Israel, regardless of its military and political aspects - a view common among Labor party activists.  Ha`aretz writes,

In 1999, at odds with an increasingly centrist Labor, Peretz formed his own political party, which won 2 seats, and increased to 3 seats in the 2003 election.  In 2004, he merged his party with Labor, and this November, he challenged Shimon Peres for leadership of the party and won.  So now we have this Moroccan, a hero to the Sephardi working class, displacing the most prominent Ashkenazi of the founding generation who still remains in government.  This former Labor mayor of a Likud stronghold, who rose to head one of the Labor movement's key institutions and used it to challenge Labor's elite and fight for his people, and has now been selected by that same Ashkenazi Labor membership to lead their party.  An article quoted one Sderot resident saying: "What happened here is an earthquake. We need to say things in the clearest way: It is a Land of Israel vs. the other Land of Israel. It is the struggle of the Mizrahi vs. the Ashkenazi

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Peretz has declared, as Ha`aretz reports, that "he will lay to rest the ethnic demon once and for all".  There has never been an Israeli political leader in as good a position to do so.

What does that mean for the Likud?  You may recall that, after decades of parity with Labor, Likud sufferred a crushing defeat in 1999, getting only 19 seats.  The worst result in Likud's entire history, before 1999, had been 32 seats.  They made a comeback when Labor Prime Minister Ehud Barak turned out to be unable to govern effectively, and alienated Israeli Arabs to boot, and Ariel Sharon siezed the opportunity to bring Likud back to power.  But Sharon, though ruthless, is a bold pragmatist, and this time, his pragmatism put him at odds with his party's ideological core.  Ever since his decision to withdraw from the Gaza strip, Likud activists have been in open revolt.  Sharon was able to survive as leader in part because his governing coalition was being enabled by Shimon Peres' Labor Party.  When Peretz took over, he pulled Labor out of the coalition, forcing Sharon to deal with his own party - and Sharon chose, probably wisely, to leave it.  With Sharon out, is the Likud back on track to collapse?

If Amir Peretz can unite working class Sephardim with the Labor movement in politics, as they have been economically, I think so.   The reaction in his hometown highlights the political ambivalence he has created for Sephardim.

How will they resolve these competing impulses? While many residents say they'll continue to vote Likud, they clearly identify emotionally with Peretz's victory.  And when Likud Foreign Minister Silvan Shalom spoke in Sderot recently, residents heckled him until Peretz asked them to stop.

There's an election coming in March.  Recent polls show that if the election were held today, the Likud, without Sharon, would win only 15 seats.  That's...  about what the old right wing party, Herut, used to get.  If Peretz succeeds in undercutting Likud's decades-long role as the mainstream secular Sephardi party, then Herut may be Likud's future as well as its past.  And Labor will become what it should have been all along, the party of the Israeli labor movement - all of it, Ashkenazi and Sephardi.

I wish him luck.