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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 and secured the post of Foreign Minister.
The formal leadership of the party passed to Binyamin Ben-Eliezer, and in 2002 to Haifa mayor, 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.

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