In 2000 Peres ran for a seven-year term as Israel's
President, in a ceremonial head of state position, had he won, as was expected, he would have been the first ex-Prime Minister to be elected President. He lost however, to Likud candidate
Moshe Katsav.
Following Ehud Barak's defeat by
Ariel Sharon in the 2001 direct election for Prime Minister, Peres made yet another comeback. He led Labor into a national unity government with Sharon's Likud Party and secured the post of foreign minister. The formal leadership of the party passed to
Benjamin Ben-Eliezer, and in 2002 to Haifa Mayor Gen.
Amram Mitzna. Peres was much criticized on the left for clinging to his position as foreign minister in a government that was not seen as advancing the peace process, despite his own dovish stance. He left office only when Labor resigned in advance of the 2003 elections. After the party under the leadership of Mitzna suffered a crushing defeat, Peres again emerged as interim leader. He led the party into coalition with Sharon once more at the end of 2004 when the latter's support of "disengagement" from Gaza presented a diplomatic program Labor could support.
Peres won the chairmanship of the Labor Party in 2005, in advance of the 2006 general elections. As party leader, Peres favored pushing off the elections for as long as possible. He claimed that an early election would jeopardize both the September 2005 Gaza withdrawal plan and the standing of the party in a National Unity government with Sharon. However, the majority pushed for an earlier date, as younger members of the party, among them
Ophir Pines-Paz and
Isaac Herzog, overtook established leaders like
Benjamin Ben-Eliezer and
Haim Ramon, in the party ballot to divide up government portfolios. It turned out that elections could not be held in June, as planned, when a scandal erupted over possible fraud in registering party members. The investigation of this scandal delayed elections until
November 9 2005.
Irrespective of before or after the delay, Peres continually led in the polls, defying predictions that rivals would overtake him. His bitter exchanges with opponents began when former Prime Minister Barak began backing the holding of primaries early that year, as
Amir Peretz and Haim Ramon, two staunch anti-Barak Knesset members vowed to support Peres at any cost to defeat Barak. In a bizarre change of events, Peretz soon declared his own candidacy, a move viewed by Peres as the greatest betrayal.
Though Peres continued to trade nasty barbs with Barak in the newspapers, his feud with Peretz soon superseded that, especially when Barak pulled out of the race in early October. One of Peretz's main charges against Peres was that he neglected socio-economic affairs as a member of the Sharon government, and did not fulfill his statement that Labor had joined the coalition with only the intent of seeing through the Gaza Withdrawal. Peres lost the leadership election with 40% to Peretz's 42.4%.