As only happens in Israel, with an election system that propogates a proliferation of small parties, and increasingly, no majorities, the post-election bartering for formation of a new government is in full force. It's clear, by now, that there will be a Kadima-Labor led coalition, with other small parties joining in. The most interesting debate this past week, regarding this new center-left alliance between Ehud Olmert, the head of Kadima (and of the Israeli government) and Amir Peretz, the head of the Labor Party, was what ministry Peretz--a former head of the Histadrut trade union federation--would receive. It looks now, as if Peretz will become Defense Minister, not Finance Minister, which was his first choice. Soon, American audiences and especially the powers-that-be in Washington will learn the ways of the man from Sderot, an unreconstructed social democrat who has never wavered on his notion that peace in Israel and for Israel is completely intertwined with a more economically populist Israel, where there is an enhanced mininum wage, strong trade unions and defence for workers.

All of the Israeli commentators agreed--Peretz's stubborn insistence that the peace camp embrace a social and economic agenda it had left by the wayside decades ago--helped resurrect a party and a political camp that had lost its way. Peretz was so completely on his message, that he was ridiculed during the campaign by those who sought to keep him down and his party behind--saying that he was naive and inexperienced, especially in regard to foreign policy and national security. How ironic now that Peretz, the civilian union leader will now preside over the mega-defense establishment in Israel, the most inner of the inner-sanctums.

It's even more ironic about why he is about to become Defense Minister and not Finance Minister, his first choice. As in the U.S., whenever anyone talks about raising the minimum wage, the financial powers that be--here, the Federal Reserve; in Israel, the Bank of Israel, raise alarms about hurting the markets. That's precisely what happened when it looked like Peretz could wrangle the Finance Ministry for his own. Stanley Fisher, the head of Israel's national Bank, and a former Citigroup and IMF official, expressed his concern to the Israeli media about the negatives of raising the minimum wage. (Israel's minimum wage is currently about $760 a month).

Yet,Peretz wouldn't relinquish pushing for an increase in the minimum, even as he prepares to become the new civilian leader of the Israeli military, according to reports in today's Israeli business journal, Globes, Peretz has already received an agreement from Olmert to raise the minimum in increments, though not to the $1000 a month that Peretz desires.

But, even more ironic--one of the criticisms lobbed against Peretz during the campaign was that he didn't have enough experience to be Prime Minister. A successful term as Defense Minister will catapult him toward a strong position in the next election when he is sure to run for Prime Minister as head of Labor. The fear of the bankers--not to hand the financial reigns to the Labor Party leader and trade union leader--may backfire. For in another few years, he could be the one setting the appointments for Israel's central bank as leader of the country.

At a time when the Democrats are chasing after a coherent foreign policy, trying to look strong on national security, the example posed by Peretz is a useful one. He ran on a populist platform of security through social and economic justice. He wasn't afraid to seem soft on national security (he is a founding member of the Israeli peace movement, Peace Now) and he wasn't cowed by those who said that raising the minimum wage or arguing for the weakest in society was not in vogue among the social elites. He stayed his course and he got his party back in the game. And a seat at the helm of Israel's pentagon to top it off.