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Daniel In- ouye's sponsorship of a bill to help North African Jews in France may open a hornet's nest of problems for pro-Israel activists here. The measure, tucked in- conspicuously into the massive $600 billion spend- ing package hammered out by Congress during the last frenzied days before the holidays, has been roundly at- tacked in the press, quietly criticized by Jewish political leaders. The controversy threatens to derail Inouye's bid to replace Sen. Robert Byrd as Senate Majority Leader — a bid looked upon with favor by Israel's supporters in the Capitol. But a more pressing dilem- ma for Jewish activists is this: How can they distance themselves from Inouye's ac- tions without appearing to repudiate a man who has been a solid and reliable friend to the Jewish community? Inouye's troubles began with an $8 million appropria- tion to help Ozar Hatorah, a New York-based organization, build schools for North African Jews in France. The money is slated to come from the State Department's refugee aid budget —despite the fact that the Sephardic Jews in France are not classified as refugees by either France or the United States. In fact, many of the Jews in question have lived in France for a decade or more. The proposal was vigorous- ly opposed by the State Department because it "ear- marked" funds for a specific group, rather than allowing officials at Foggy Bottom to make the allocation. A number of early news reports pointed out that Zev Wolfson, a New York developer who is a member of the Ozar Hatorah board, was a contributor to Inouye's most recent reelection campaign. For Jewish activists, the Inouye affair is an uncomfor- table one. News reports have suggested connections be- tween Inouye's sponsorship of the refugee measure and the pro-Israel lobby. In fact, sources here suggest that several major Jewish groups tried to warn Inouye about the possible repercussions of the bill. No major Jewish or pro-Israel organization sup- ported the legislation. Inouye, according to these reports, refused to reconsider his position. There is also concern about the political fallout. "This thing looks terrible, even though we had nothing to do with it," said a Jewish activist who works for a Senate com- mittee. "With all the concern about 'biting the bullet' on the budget, this is just not an appropriate thing for us to be doing — even if it is a very good school, and these are very deserving people." Others fretted about the ef- fects the controversy would have on Inouye's chances to Sen. Daniel Inouye: Questionable judgment replace Sen. Byrd, who is stepping down after ten years as leader of Senate Democrats. Inouye, with his strong and consistent record on Middle East legislation, would make an ideal choice for the important post, in the eyes of pro-Israel activists. Byrd, while not an opponent of Israel, was somewhat uneven in his support. Other candidates for the post include Sen. J. Bennett Johnston (La.) and Sen. George J. Mitchell (Maine). Both, according to sources here, have good records on Israel — but neither has emerged as a genuine leader. While many questions have been raised about Inouye's judgment on this issue, there have been few suggestions that the legislation represent- ed a payoff for campaign con- tributions. Inouye is widely regarded as an effective cam- paigner and fundraiser, with a secure Senate seat. But a number of political observers are asking the ob- vious question: what were In- ouye's motivations? Why did he push this measure, despite the risks? Sen. Inouye has refused to comment on the affair. Major Brookings Report Due There are rumblings over at the Brookings Institution that may have a significant impact on U.S. Middle East policy. A group of 19 distinguished participants, representing a wide range of views on the conflict in that part of the world, has been meeting for months in an attempt to ham- mer out a set of policy recom- mendations for the next president. Included in the group are Henry Siegman, executive director of the American Jewish Congress, Ken Wollack, former lobbyist for the American Israel Public Affairs Committee (AIPAC) and former Maryland Senator Charles Mathias. According to William Quandt, a senior fellow at Brookings and coordinator of the project, there is no target date for a final report. "We'll keep working until we reach a consensus," he said. "I wouldn't anticipate that this will be an easy process." It's no accident that the study was planned to cul- minate during a presidential election year. "We don't have much expectation that in the time left to this administra- tion, there will be much in the way of new initiatives in Arab-Israeli peace," said Quandt, who served in both the Nixon and Carter ad- ministrations as a specialist on Middle East affairs. "Our goal is to be useful to whomever comes next — as- suming that person wants to take a fresh look at U.S. policy in the region." The Brookings project is be- ing followed with special in- terest by Jewish leaders because of the enormous im- pact of an earlier report by the Washington think tank, issued in 1975. During his campaign for the presidency, Jimmy Carter claimed to have virtually memorized the document; according to many observers, the earlier Brook- ings panel provided the ideological framework that eventually led to the Camp David accords.