JERUSALEM, July 31 (AP)--Prime Minister Ehud Barak suffered embarrassment in Israel's Parliament Monday when he narrowly survived yet another no-confidence vote and his party's candidate for president, Nobel laureate Shimon Peres, was edged out by a relative unknown.

In the no-confidence vote, Barak beat back a challenge by those opposed to his willingness to concede land to the Palestinians in exchange for peace. The 120-member Parliament, or Knesset, voted 50-50, with eight abstentions and 12 legislators not present--11 votes short of the outright majority needed to oust the government.

Despite the new blows to his prestige, Barak is now free to pursue his peace agenda unhampered by parliamentary maneuvers. The Knesset does not meet again until October, giving Barak time to build support for the concessions to the Palestinians proposed at talks at Camp David, especially handing them some control over East Jerusalem.

The Israelis and Palestinians have set a deadline of September 13 for a final peace agreement resolving thorny issues, including control of Jerusalem, the borders of a Palestinian state, and the fate of Palestinian refugees who want to return to their former homes in what is now Israel.

Barak told the legislators that while he could not command a majority in Parliament for a peace accord now, he was confident the mood would shift once a deal is presented to the Israeli people. He has long maintained that he has popular support, despite his political problems.

In a voice husky with emotion, Barak accused the opposition and defectors from his coalition of following their own narrow interests, rather than the public good.

"I turn to each and every one of you and say, 'Rise above small-minded politics in order to bring peace to Israel,'" Barak told the legislators before the vote.

Hanan Ashrawi, a legislator in the Palestinian Parliament, said the three-month respite gives Barak a chance to move more decisively in the peace negotiations.

"They can rescue peace from the jaws of disaster should they wish to use this time wisely," she told Associated Press Television News.

Barak commands the loyalty of only 42 Knesset members, but another 20 have said they would not topple his government over peace moves.

Among those abstaining in the no-confidence vote was Barak's disgruntled foreign minister, David Levy, who has accused Barak of shutting him out of the peace negotiations and making too many concessions.

Levy has threatened to resign by Wednesday unless the prime minister makes a serious effort to bring the opposition Likud party into the government. During Monday's vote, Levy and Barak sat side-by-side in the row in the plenum reserved for Cabinet ministers, but did not speak to each other.

Earlier Monday, Peres, a former prime minister, was defeated by Iranian-born Moshe Katsav, a legislator from Likud, in a stunning upset. Peres had been considered a shoo-in and was the clear favorite of the Israeli public, according to informal opinion surveys.

The silver-haired elder statesman who led a reluctant nation to peace talks with the Palestinians in 1993 was visibly shocked at his defeat. In the second and final round of voting, he received only 57 votes, compared with 63 for Katsav, who began his political career 23 years ago as the mayor of a small impoverished desert town.

Legislator Eli Goldschmidt of Peres' One Israel faction said it was difficult to witness the pain suffered by Peres, whose career has spanned half a century. "Apparently, a person's greatness does not necessarily translate into an ability to win elections," he said.

Israel's presidency is largely ceremonial, but the incumbent--Ezer Weizman, who was forced to resign because of fraud allegations--has used the prestige of the post in support of Mideast peace efforts.

Peres had been expected to turn the presidency into a platform for assisting the peace negotiators. By contrast, Katsav, as a member of Likud, opposes far-reaching concessions to the Palestinians, including the creation of a Palestinian state.

Hawkish legislators said the presidential vote was a protest against Barak's peace policies and that they did not expect his government to survive much longer.

"I think this is another stage in the revolution that will take place in the next few months when there will be elections and the right-wing camp will return to power,'' said Shaul Yahalom of the National Religious Party, one of three factions that quit Barak's coalition ahead of this month's inconclusive Mideast summit at Camp David.

Peres had counted on the support of many of the 22 religious lawmakers. When he was prime minister, his governments were consistently generous to the ultra-Orthodox, a chronically impoverished sector of Israel's society; in addition, Peres' wife, Sonya, is herself Orthodox.

However, officials in the ultra-Orthodox Shas party said all 17 legislators of the faction supported Katsav. They said that on Sunday, Shas' spiritual leader, nonagenarian Rabbi Yitzhak Kadouri, had a vision that Katsav was favored by the heavens. As a result, Kadouri's aides called nearly all legislators and urged them to vote for Katsav.

Also, the ultra-Orthodox have identified more with the Likud's foreign policy in recent years, and many see Katsav--who himself is religiously observant--as the more sympathetic candidate.

Peres has had a topsy-turvy political career, holding nearly all of Israel's top jobs over the years, but also losing four of five elections for prime minister.

In 1993, Peres was the driving force behind Israel's breakthrough agreement of mutual recognition with the PLO, and he negotiated subsequent interim peace agreements.

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