"the most effective strike is the one that didn't occur". In 1999 Peretz resigned from the Labor Party to form his own party, One Nation. The party won two seats in the Knesset in the 1999 elections, and three in 2003. As Labor's fortunes changed with the Likud Party in government, and Israel's social programmes being dismantled by the market-oriented reforms of finance minister Benjamin Netanyahu, Peretz became increasingly popular with Israel's working-class. By the start of 2004 he was being talked of as a "white knight who will rescue Labor from oblivion". After protracted negotiations with then-Labor Party leader Shimon Peres and other party leaders, One Nation merged with Labor in the summer of 2004. Labor Party leadership After the merger, Peretz ran for the leadership of the Labor Party on a platform of ending the coalition with Likud, led by Prime Minister Ariel Sharon, and reasserting Labor's traditional socialist economic policies. Peretz narrowly defeated Peres, the incumbent leader, in the election on 9 November 2005. Peretz won 42% of the vote compared to 40% for Peres and 17% for former defence minister and party leader Binyamin Ben-Eliezer. After winning this election, Peretz resigned from his Histadrut post to focus on winning the election for prime minister. The party withdrew its support for the government on 11 November and all Labor Party cabinet ministers resigned. This action resulted in Prime Minister Ariel Sharon calling a new election for 28 March 2006. Shortly thereafter, Sharon and much of his Cabinet left Likud to form a new party, Kadima. During his period as Labor Party leader, Peretz nominated an Arab Muslim Israeli, Raleb Majadele, to be Minister of Culture, Science and Sports. His nomination was a breakthrough in the relationship between the Arab-Israeli population and the Israeli government. This nomination was criticised by the right-wing party of Yisrael Beiteinu headed by Avigdor Lieberman. Prior to his entry into government Peretz promised that he would not enter government with Avigdor Liberman's Israel Beytenu party, which has a platform of removing Arabs from Israel by redrawing Israels boundaries, however his party did not protest when on 23 October 2006, Liberman signed a coalition agreement with Kadima, making them a junior coalition partner, leading the Israeli newspaper Haaretz to say that "Amir Peretz has let his voters down in every possible way." Minister of Defense Peretz was criticised for abandoning the social agenda that