Barak comeback faces final hurdle in Labor vote

By Dan Williams

JERUSALEM (Reuters) - Former Israeli leader Ehud Barak's plans for a political comeback face a final hurdle on Tuesday with a leadership vote in his Labor party, the lynchpin in Prime Minister Ehud Olmert's embattled coalition government.

Barak, who won a first round on May 28, faces retired admiral and intelligence chief Ami Ayalon in Tuesday's run-off, which will likely dictate who takes over the defense ministry in an Israel reeling from the failures of last year's Lebanon war.

Opinion polls predict a close finish between Barak, who is remembered for peace diplomacy with Syria and the Palestinians when prime minister in 1999-2001, and Ayalon, a political newcomer seen as a fighter against graft.

Both candidates have called for Olmert to resign after a commission of inquiry rebuked his handling of the July-August offensive against Lebanese Hezbollah guerrillas.

But neither Barak nor Ayalon is expected to take centre-left Labor, Olmert's biggest coalition partner, out of the government immediately given surveys showing that more than 80 percent of the party rank-and-file want to stay on for now.

Ultimately, both may see advantage in provoking an election before the next vote is due in 2010. But for now polls indicate the right-wing Likud party led by former prime minister Benjamin Netanyahu would beat Labor and Olmert's centrist Kadima party.

Ayalon has been endorsed by outgoing Labor chief and defense Minister Amir Peretz, who finished third in the first round. Barak has the support of most of the party's ministers.

Olmert's closest circle is likely to undergo a milder reshuffle on Wednesday, when Vice Premier Shimon Peres, a former prime minister and Labor leader who now belongs to Kadima, seeks election by parliament to Israel's ceremonial presidency.

Polls suggest the 83-year-old elder statesman is the people's choice for head of state, but the position is filled through a secret parliamentary ballot in which back-room deals often hold sway and which have in the past yielded surprises.

Running against Peres are Colette Avital from Labor and Reuven Rivlin of the right-wing Likud.

Peres ran for president in 2000 and lost to Likud's Moshe Katsav, whose term officially ends next month. Katsav took an early leave of absence in January after police launched an investigation into rape allegations, which he denies.