By Ori Lewis
JERUSALEM (Reuters) - Outsider Avi Gabbai was elected chairman of Israel's opposition Labour party on Monday by beating veteran Amir Peretz, a former defense minister and labor union chief, in a leadership runoff.
Gabbai, 50, a relative newcomer to Israeli politics, last year defected to center-left Labour from the center-right Kulanu party, which is part of Prime Minister Benjamin Netanyahu's right-wing coalition government.
Labour and a smaller party headed by Tzipi Livni, a past foreign minister, have formed the Zionist Union, the largest opposition faction in the 120-seat Knesset with 24 seats.
Elections are not due until 2019 and Netanyahu's strong position at the helm of Israeli politics appears secure, although he could be damaged by investigations in two criminal cases in which he denies wrongdoing.
"(Israel) needs a leadership that is capable of taking significant decisions for the good of everybody, that looks after Dimona (the working classes in the periphery) and not just after Amona (West Bank settlements)," Gabbai said in his victory speech.
Although not a lawmaker, Gabbai served as environment minister in Netanyahu's government. He quit in 2016 in protest at the sacking of defense minister Moshe Yaalon to make way for Avigdor Lieberman from a rightist coalition partner.
Jerusalem-born Gabbai, the son of immigrants from Morocco, does not have a seat in the current parliament and so in his victory speech he asked Isaac Herzog to stay on as opposition leader for the time being.
Gabbai garnered 52.4 percent of the Labour membership vote to overcome Peretz, a previous party leader who was supported by most of its establishment. Peretz won last week's initial party vote with Gabbai second, and Herzog finishing third.
Recent polls had predicted that with Herzog at the helm, the Zionist Union would fare far worse than in the 2015 elections and would fall behind Yair Lapid's centrist Yesh Atid party but Gabbai's win could bolster Labour's fortunes, pundits said.
(Writing by Ori Lewis; editing by Andrew Roche)