WASHINGTON INSIGHT

CHANGING CLIMATE: The White House is stiffening its resolve in criticizing Israel for continuing to make settlements on the West Bank over U.S. complaints that they are jeopardizing American peace efforts in the Middle East.

In the past, the congressional backlash against criticism of Israel has been so vehement that the Administration has been forced to abandon any hard-line stand early on. This time, White House strategists figure that the American experience in the Persian Gulf War may have altered the political climate here: Lawmakers may be willing to give the Administration more leeway in pressuring Israel to join the peace effort.

Worried pro-Israeli activists insist the skirmish isn’t over yet. Analysts say that if the Arabs balk at Secretary of State James A. Baker III’s next peacemaking attempt, the pro-Israeli forces in Congress may regroup--and the Administration may retreat again.

CAPITAL SCANDAL? Controversy over an Arab-controlled bank headed by former Defense Secretary Clark M. Clifford could easily be Washington’s next big scandal, officials investigating the affair believe.

Although prosecutors are probing the actions of Clifford and an associate, Washington lawyer Robert A. Altman, investigators say they already have gathered enough evidence to suggest that the bank--known as First American Bankshares Inc.--may have engaged in sweetheart transactions involving a wide array of political figures and some prominent Washington law firms as well. First American is controlled by the Luxembourg-based Bank of Credit & Commerce International, which, in turn, is influenced by Middle Eastern interests. Last year, BCCI pleaded guilty to laundering drug money.

Some officials speculate that the BCCI probe could produce the biggest scandal since the savings and loan brouhaha two years ago--with both Democrats and Republicans likely to be involved. Sen. John Kerry (D-Mass.), who has been investigating BCCI for three years, predicted “the biggest financial scandal involving a single financial institution ever--and I don’t say that lightly.�

UP IN ARMS? President Bush later this week is likely to face a skeptical--if not hostile--response from Congress to his expected new plan for slowing the arms race in the Middle East.

Some of the lawmakers already are grumbling that the proposal--which would bar sales of chemical, biological and nuclear weapons to Middle Eastern countries--would allow U.S. suppliers to sell arms to the region while at the same time asking those in other countries to exercise restraint. Bush is slated to unveil the plan formally early this week.

Sen. Dale Bumpers (D-Ark.), noting that, despite the best intentions, U.S. weapons often end up in unfriendly hands, recounts that Iraqis overrunning Kuwait last August captured 300 Hawks, sophisticated anti-aircraft missiles that were made in the United States and sold to Kuwait.

SWITCHING ROLES: Nicaraguan President Violeta Barrios de Chamorro has appointed a new Washington lobbyist to represent her freely elected government in seeking increased aid from the Administration and Congress. Her choice: Paul Reichler, the Washington attorney who represented Sandinista leader Daniel Ortega in his effort to block U.S. aid to the Contras in the mid-1980s.