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Benjamin Netanyahu is flourishing. The Hamas victory breathed new life into him. He hurried to call Hamas "the new tyrant," using a Hebrew word usually only used for Haman and Hitler, comparing Hamas to the Nazis. Who better than him knows that the strategy of fear-mongering works. On the eve of disengagement he frightened us with talk of a swarm of missiles on Israeli cities and a wave of terrible terror attacks. It's true some Qassams fell in Sderot, but that ended and a new wave of terror hasn't arrived. But then came the Hamas victory.

He was completely against the disengagement, saying "today Gaza, tomorrow Jerusalem" - and there's nothing worse than betraying Jerusalem, even though every sane Israeli knows that the fate of Jerusalem has already been decided: the Arabs will get the Arab neighborhoods, and the Jewish Quarter and the Western Wall go to us.

At the Herzliya conference, Netanyahu said "Israel's borders must include the Jordan Valley, the Judean desert, metropolitan Jerusalem, the settlement blocs and the territories overlooking the Tel Aviv metropolitan area and the coastal plain," adding that he intends, if elected, to move the fence east to include as many Jewish settlements as possible. A year ago, he was even more extreme (and more honest) when he said Israel should annex all the territory of the West Bank that is not populated by Arabs.

That's why Netanyahu is not fit to be prime minister. He is not fit for a period when most of the nation longs for a solution to the conflict. His formula is "forever live by the sword" or as his good friend Reuven Rivlin said, "even if we go back to the 1967 borders we won't solve the conflict."

Unlike Netanyahu, Olmert is fit to be prime minister. The public opinion polls show that he will get more than 40 seats in the Knesset. True, up until a few years ago, Olmert held extreme right-wing views, just like Netanyahu, but as the saying goes, even the righteous can't fill in for the newly repentant. He was the pioneer who beat Sharon to the disengagement initiative, and now he is ready for a two-state solution that will involve major and painful withdrawals.

If indeed Olmert forms the next government, he will have two natural allies - Likud and Labor. If Likud joins, then Netanyahu is a natural candidate for finance minister. In the two and a half years he spent in the office, he transformed the economy to a state of rapid growth and shrinking unemployment. It's true that he is now presented as the inventor of poverty, but the truth is very different. Netanyahu's plan - cutbacks and reforms - prevented a crash. Of course when allocations and welfare is cut, the social gaps grow and poverty widens in the short term. However, in the medium term people find work, their wages rise, society gets healthier and poverty shrinks. The fact is that National Insurance Institute officials are expecting a drop in poverty rates by the next report. It's also a fact that so far 190,000 Israelis have joined the job market, 120,000 of them at full-time jobs.

Now we are in the middle of a surgical operation, a move from welfare to work. It is a painful operation, but cannot be ceased in the middle because it carries with it great hope for the creation of a healthier society. That's why Shas should not be included in the next government, because its only goal is to return to the allocations and escape work.

The Labor Party will play the social role in the next government. It committed itself this week to demand the education ministry in any government it takes part in, and our educational system is indeed sick. Student achievement is low, the gaps great, and the teaching profession is in crisis. That is not a matter of a small budget. Per pupil expenditure in Israel is the same as throughout the West, but it is a wasteful, bureaucratic system that suffers from lack of management. A school principal cannot even raise the salary of a good teacher and get rid of a bad one.

The education minister determines what the state will look like in generations to come. He or she is the one who will lead the struggle to reduce the gaps in education and science, and thereby reduce the wage gap. Amir Peretz can lead that revolution. It is the most important social mission of all.