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Hanging out in streets strewn with trash, surveying a vista of decaying stucco apartment buildings, Oren Even-Haim was none too impressed with Prime Minister Shimon Peres' campaign slogan that peace equals prosperity.

"What's Peres talking about?" laughed Even-Haim, 26, who makes about $3 an hour at an ice cream factory. "Look around! This place is a dump. No one here will vote Peres. Peres loves the Arabs - he gives them everything. And we continue to live in garbage."A few blocks away, Peres told an audience of 300 supporters that peace accords reached in recent years with the Palestinians and Jordan - and the freeze on Jewish settlements in the West Bank and Gaza - have improved their lives.

"We doubled the education budget," Peres boasted. "For the first time, we have more teachers than army officers. We want a country of peace and science!"

He noted that Israel's standard of living has skyrocketed in recent years and that the Jewish state has emerged from economic isolation, flooding its towns with Western outlets: McDonald's, Tower Records and Toys-R-Us.

His message sits well with many middle-class Israelis, and the 1994 Nobel Peace Prize laureate appears to have the solid support of Israel's economic, academic and artistic elites.

But to win on May 29, Peres needs also to make inroads in poor communities like Kiryat Haim and neighborhoods like Tel Aviv's Carmel market, where crowds welcomed hard-line challenger Benjamin Netanyahu on Tuesday with cries of "Here's the king of Israel!"

Far more cerebral, Peres spends his campaign stops laboriously explaining how, since the peace accords, the economy has swelled over 40 percent, bringing per capita income to $16,000 - close to West European nations like Britain.

Since the Arab world ended its boycott on business with Israel, foreign investment tripled to $1.72 billion in 1994. Unemployment fell from more than 11 percent in 1992, when Peres' Labor Party came to power, to 5 percent today.

But Peres' predicament transcends ideology or economics. He struggles with ethnicity, too. The Polish-born premier may have difficulty winning voters who are Sephardim - Jews with roots in the Mideast and North Africa.

Many Sephardim still resent the way Labor Party governments welcomed them in the early years of Israel. Bitter memories of being deloused with DDT powder upon arrival have been passed on through generations.

"All the Moroccans will vote for Bibi," Even-Haim said, using Netanyahu's nickname. "Just like all the damned Ashkenazim" - Israelis of European Jewish origin - "will vote for Peres."

Pollster Hanoch Smith says his surveys show that higher income, higher education and European background all correlate strongly with support for Peres, who currently enjoys a slight lead over Netanyahu.

"The intelligentsia simply supports Peres," renowned novelist Amos Oz said. "They have always sought a compromise-based solution for the conflict with the Arabs."

During his campaign, Peres has been feted by impressive gatherings of business leaders and artists. Right-wing columnist Hagai Segal argued in the Maariv newspaper that the Israeli media has been reduced to "volunteers for Peres' campaign."

Last week, hundreds of members of Israel's economic elite gathered in what the Haaretz newspaper called "the most outstanding demonstration of support ever by the Israeli business community for any party or leader."

Danny Gillerman, chairman of Israel's Chambers of Commerce, warned that a victory by Netanyahu - who promises to make fewer concessions to the Arabs and to refuse the PLO's demand to upgrade the West Bank-Gaza autonomy to statehood - might lead to "an apocalyptic scenario: the end of investments . . . a flight of foreign capital and unemployment."