[6] In 1971, Pundak returned to the IDF following an appointment by Defense Minister Moshe Dayan to the post of governor in the Sinai Peninsula and Gaza Strip.

During his tenure, he proposed evacuating the Palestinian refugees from Gaza to a new city in the Sinai, but met strong opposition from the Southern Command chief Ariel Sharon.

[8] Shlomo Gazit, a retired IDF general and scholar, writes that the defense minister of the time, Moshe Dayan, created the civilian post of governor precisely to limit Sharon's jurisdiction, and appointed Pundak to the position to serve as "an excellent 'watchdog'".

The plan had major drawbacks because the two administrations (Sharon's and Pundak's) were at odds and conflicting orders were issued, reducing the system's efficiency.

[7] According to the September 2004 edition of The Washington Monthly, Pundak also criticized Yasser Arafat for not accepting Ehud Barak's peace proposal at the 2000 Camp David Summit, and said that he would be voting for Sharon in the next election.

[12] He later served as the ambassador responsible for Guatemala and El Salvador, and as the head of the Jewish Agency's delegation to Argentina at the height of the Dirty War, after which he retired from all public posts.