June 29, 1981 12:00 PM

Israel’s lightning bombardment of Iraq’s nuclear reactor this month may have obliterated more than just a power plant. It may also have handicapped the once bright chance of Israeli Labor party leader Shimon Peres, 57, to unseat Prime Minister Menachem Begin in next week’s election. Although Peres joined in the chorus of public praise for the Israeli Air Force’s strategic brilliance, Begin made public a confidential letter his opponent had written in May advising against the attack. Peres had argued reasonably that Israel’s ally François Mitterrand, who had just won the French presidential election, would deprive Iraq of its weapons-grade plutonium supply and make the raid unnecessary. But in the rally-round spirit that followed the air strike, the letter was retailed as Peres’ unmasking. Begin, however, is still not assured of victory. Among his liabilities are Israel’s crushing inflation rate of almost 180 percent and public revulsion at firebomb attacks his supporters have recently launched on Labor party offices. Last week, moreover, it appeared that he had fabricated a quote from Iraq’s president threatening Israel with nuclear attack.

Through it all, Peres has kept his criticisms of Begin to the issues and has stuck to his contrary view of the mission to Baghdad. “Begin is inciting the Arabs into a nuclear arms race in the Middle East,” he charges angrily. “His announcing that 650,000 Jews could be killed by an Iraqi bomb is only giving the Arabs ideas. He has induced the Arabs to find other ways of building a bomb, and those ways are easy.”

The role of dove is an ironic one for Peres, who has been a pillar of Israel’s defense establishment for more than a generation. Like his nemesis Begin, Peres was a leader in the terrorist underground for Israel’s independence. By the age of 25 he was in charge of the Israeli navy, and later helped plan the British-French-Israeli attack on the Suez Canal in 1956. As David Ben-Gurion’ stop defense official, he negotiated the purchase of the French Mirage jets that won the 1967 Six-Day War, established Israel’s air industries, and undertook the construction of Israel’s two nuclear reactors. As Yitzhak Rabin’s defense minister, he rebuilt the battered Israeli armed forces after the disastrous Yom Kippur War of 1973. And three years later, following a bitter fight with Rabin, he launched the now legendary Israeli raid that rescued 103 hijacked hostages held by terrorists in Entebbe, Uganda. “He was so sure that this was the only way,” Israeli Gen. Benny Peled recalls, “that he turned into our only ray of light. We pilots were in a terrible depression. It was only due to him that we felt hopeful again.”

Early polls said that his party would win 30 more seats in parliament than Begin’s, but his lackluster campaign has disappointed followers. Peres has also been hurt by Begin’s timely efforts to stimulate the economy by flooding the marketplace with color TVs at low prices as a way of currying favor with the electorate. But Peres seems to maintain his aloof, pedantic campaign style as a matter of principle. “A political process is also an educational process,” he says. “One must act civilly and keep a civilized language. I do not like dirty fights.” Nor does he like making his case on television. “I get nervous when a makeup person touches up my face,” he says. “Frankly, I can’t stand it.”

Such reticence does not fare well against the abrasive grandstand politics of his opponent, nor does it serve to blunt the political impact of Begin’s military success in Iraq. But early last week Peres was given little hope of victory, and this week he was back within striking distance. “I have always believed in daring dreams,” he says quietly. “I do not fear the so-called realistic man of little faith who tells us, ‘Don’t dream, don’t dare, don’t promise.’ I believe.”

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