SDEROT, Israel, Mar 24: Few things symbolise Moroccan-born Amir Peretz's struggle to break the ethnic mould and become prime minister of Israel as much as the hardscrabble town he calls home.
Nestled between the Negev Desert and the Gaza Strip, Sderot lies at Israel's margins, physically and economically.
Joblessness is high in the dusty frontier town, hit frequently by rockets fired from nearby Gaza.
Peretz was four when he arrived here with his family from Morocco, part of a wave of Jewish immigrants from Middle Eastern or North African countries -- known as Sephardim -- who have long felt sidelined by Israelis of European origin, known as Ashkenazim.
An avowed socialist with a bushy moustache, Peretz broke through one glass ceiling in November by toppling Polish-born elder statesman and Nobel peace laureate Shimon Peres to take the helm of the centre-left Labour party.
But since then, Labour has been plagued by high-level defections and disarray, putting a spotlight on an ethnic divide within Israeli society largely unseen by the outside world.
Since it was founded in 1948, Israel has never elected a Sephardi to be its prime minister even though Sephardim make up roughly half the country's Jewish population.
''The prejudice is very deep inside,'' said Ami, a Moroccan-born Israeli playing backgammon at a Jerusalem market.
Michael, standing nearby, said he hoped Peretz's candidacy could change attitudes. ''Maybe he will open the door,'' he said.
Peretz rarely talks about what he has called Israel's ''ethnic demons''. Asked in a recent interview whether Ashkenazim were leaving Labour because he was Sephardi, Peretz said: ''I hope that the ballots will show otherwise.''
BUTT OF JOKES
Labour hoped the choice of Peretz would expand its appeal to largely underprivileged Sephardi Jews, who have seen the party as an elitist and out-of-touch bastion for Ashkenazim.
Sephardi Jews have traditionally split their votes between the right-wing Likud party and the ultra-Orthodox Shas party.
After a brief surge in support following Peretz's leadership victory, however, Labour has struggled to woo new backers.
Labour veterans have criticised Peretz's inexperience and said his old-school socialism is a recipe for economic failure. When Peres defected to the centrist Kadima party -- formed by Ariel Sharon before his stroke and now led by interim Prime Minister Ehud Olmert -- Labour lost some Ashkenazi backers. Labour does not expect to do more than to come in a distant second in the March 28 election.
Peretz's mannerisms, accent and union-boss background are the butt of jokes on one popular Israeli television show, and turn off some Israelis, including many within the Russian community, the country's most influential electoral bloc.
''They say he looks like Stalin and they don't like him because he's from Morocco,'' laments Yehodit Uliel, who runs Peretz's campaign in Sderot.
Former Israeli Foreign Minister Shlomo Ben-Ami, a long-time Labour member who like Peretz was born in Morocco, said ethnic bias was ''in the background all the time'' in Israeli politics.
But he said it would be a mistake to attribute Peretz's troubles to Ashkenazi bias alone. ''It is too easy to blame the ethnic issue when you have a candidate that doesn't respond to the essential requirements for the job,'' Ben-Ami said.
Shmuel Sandler, a political scientist at Bar-Ilan University, said Israeli voters might trust Peretz on social issues but not on the national security challenges posed by the victory of Islamic militant group Hamas in Palestinian elections in January, and world tensions over Iran's nuclear programme.
''People wonder: Would Peretz be able to move the United States to act against Iran?'' Sandler said. Largely unknown on the world stage, Peretz speaks little English.
'THERE IS NO WORK'
Peretz's immigrant father toiled in a kibbutz factory and his message resonates strongest with Israelis who feel current economic policies have widened the gap between rich and poor.
''There is no work. There is no economy,'' Peretz supporter Saal Simon said outside Labour's headquarters in Sderot, a few blocks from Peretz's modest home.
Many Israelis, especially new immigrants and low wage earners, have failed to benefit from a technology-led boom that financial analysts attribute to free market reforms and big cuts in government spending.
Sderot's deputy major, Shai Ben-Yaish, said Israel's biggest problems were social and economic. ''Our weakest point isn't Syria, Egypt, Jordan or even the Palestinians. Our problem is our own people.'' But Ben-Yaish, 37, said some residents of Sderot were turning their back on local son Peretz. And even within the Moroccan community, there were divisions.
''I wish him luck,'' said Moroccan-born Meir Malka, an official in Beit Shemesh, a town with a large immigrant population. ''But I'm not going to vote for him.'' Malka said he will vote for Olmert because he favours a pullout from parts of the occupied West Bank.
''Being Moroccan doesn't mean I will vote for a Moroccan,'' the 55-year-old said.