Amir Peretz, Israeli Trade Union leader has achieved a stunning victory over the Israeli Deputy Prime Minister Shimon Peres in the leadership contest of the Labor Party. This victory could mark a shake up of the Israeli political system.

Shimon Peres, the current Labor party leader, had wanted the Labor party to remain a partner in the current Israeli coalition with Prime Minister Ariel Sharon. Peretz, the newly elected leader, has said the party should pull out of the coalition and work for early elections.

After his defeat, Peres,said during a pres conference, at 3:15 am on Thursday, that he suspected fraud in the primaries, and demanded internal investigation. His statements were made as the party was compiling votes from Wednesday’s contest.

Histadrut labor federation Chairman, Amir Peretz, was officially named on Thursday morning as the new chairman of the Labor Party.

Peretz was supported by 42.35% of the vote; Peres achieved 39.96, while Benjamin Ben Eliezer only achieved 16.18%.

Directly after the announcement, he repeated his statements of intentions of pulling out his party from the Sharon government, which could advance Israel to early elections.

“Certainly, we want to leave Sharon’s government, we will notify him of that”, Peretz said, “We want to turn the party into a power which will take achieve victory in the next elections”.

Shimon Peres had said that he would keep Labor in the government until the next elections scheduled in November 2006, if he wins the elections.

A Labor legislator and Peretz supporter, Yuli Tamir, said that Peretz will discuss the date of early elections with Sharon.

Peres in a winner of the 1994 Nobel Peace Prize, along with the late Palestinian President Yasser Arafat.