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For years, it’s been commonplace for Washington policy observers to shrug over the power of the pro-Israel lobby group, the American Israel Public Affairs Committee (AIPAC). On questions of Congressional legislation and appropriations involving U.S. defense sales to the Middle East, the Israeli-Palestinian dispute, and policy towards Iran and Syria, AIPAC’s influence is an acknowledged fact of life on the Hill, similar to death and taxes, second in power as a Washington lobby group only to the National Rifle Association.

But though its power in Congress is broad and bipartisan, and with some 100,000 members it ostensibly represents an American Jewish community that skews overwhelmingly Democratic, some in Washington’s policy community have as long been concerned by what they see as a sharp rightward tilt in AIPAC over the years, in particular as some of its funders and leadership have aligned themselves with hawkish policy positions on issues involving national security, the Arab Israeli conflict, and how to deal with Iran.

So began the motivation for the creation of J Street and JStreetPAC, a new nonprofit lobby group and affiliated political action committee being launched today in Washington, whose leadership describes the new organizations as “pro Israel, pro peace.” And unlike most other smaller Washington Mid-East oriented policy shops that primarily issue position papers and opeds, J Street was designed to be distinctly political.

“It’s the first time that there has been a political arm for those of us who are pro Israel but pro peace, and who believe that reaching a negotiated settlement in the Middle East is absolutely essential for the security of both Israel and the United States,” Jeremy Ben-Ami, the executive director of J Street and JStreetPAC told me. “That is the reason for this effort. We believe the majority of American Jews and many other Americans friendly and supportive to Israel really do recognize that a policy both here and there that would be geared towards really pushing for a two state solution is in Israel’s and the U.S.’s best interests.”

“What has happened in the political world is that the people both elected [to Congress] and candidates and the folks around them have come to believe that the only way to speak to the Jewish community is to take the most right-wing position,” Ben-Ami said. “There is no political benefit to be at the center.”

“We would like to create a political mechanism, a political benefit to being at the center,” Ben-Ami continued. “Perhaps there should be a dialogue between the U.S. and Syria. Perhaps the U.S. should pursue an alternative route to Iran. Let’s get serious about a two-state solution, and stop the settlements and stop the occupation and get a two state solution. That is currently not being said.”

Among J Street’s leadership: Ben-Ami, a former senior domestic policy advisor to President Bill Clinton and former policy advisor to Democratic presidential candidate Howard Dean; Alan Solomont, a former finance director to the Democratic National Committee; Hannah Rosenthal, former Executive Director to the Jewish Council on Public Affairs; Victor Kovner, former New York City Corporation Counsel; and Samuel Lewis, former U.S. ambassador to Israel under Presidents Carter and Reagan. The new group has an advisory counsel of 100 American members and has gathered letters of support from twenty some former Israeli security and diplomatic officials, including the former Israeli Defense Forces chief of staff Maj. Gen. Amnon Lipkin-Shahak, the former Israeli Air Force commander Maj. Gen. Amos Lapidot, former Israeli foreign minister Shlomo Ben Ami, two former director generals of the Israeli foreign ministry David Kimche and Alon Liel, former Knesset speaker Avram Burg, and Dalia Rabin, daughter of former Israeli prime minister Yitzhak Rabin and a former member of the Israeli Knesset and deputy defense minister.

“It’s time for members of Congress in particular and the administration to hear much more loudly from those of us in the American Jewish community that the only way to protect Israel’s security and for that matter American security interests as well is to support relentlessly a negotiated settlement to the Israeli Palestinian conflict,” Solomont, a member of J Street’s advisory counsel, and a former chairman of the Combined Jewish Philanthropies in Boston, said Tuesday. “Unfortunately other voices are often heard more loudly and I think that distracts members of Congress and the administration from pursuing what I think everyone recognizes as the solution to this conflict.”

One of J Street’s Israeli supporters in Washington, former Israeli peace negotiator Daniel Levy, says Israeli leaders need encouragement from Washington to make concessions that could contribute to the peace process. “I think there comes a point when, if the Israeli leadership actually wants to see this thing resolved, it’s clearly easier to say yes to the president of the United States, rather than to the [Palestinian Liberation Organization],” Levy says. “You need to have the president of the United States to help carry you there.”

For now, Ben-Ami tells me he is working out of his basement, the organization has no headquarters and doesn’t plan for one, and plans to operate heavily in the online world. “We’re following the MoveOn model, of being virtual, and heavily online,” he says. “Part of our goal and plan in the coming year is to develop an online presence in the way that Obama and Dean and MoveOn have done … and to tap into that and have a large base of small donors.”

MoveOn financier George Soros, an initial backer of the concept for the group, pulled out of it, Ben Ami explains, because he thought his presence might ultimately be unhelpful, given his reputation as a bankroller for liberal groups.

J Street has raised half of the $1.5 million it hopes to collect from donors over 2008. That still makes it a tiny David in the shadow of AIPAC’s Goliath, which reportedly has an endowment of $100 million, and 18 offices around the country, including a new Washington headquarters funded, sources say, by Las Vegas Casino mogul and conservative philanthropist Sheldon Adelson.

Online fundraising innovations aside, some veteran Middle East hands expressed skepticism that the new organization can do much to transform the domestic political forces that guide Washington’s approach to the Israeli-Palestinian dispute– including strong right wing American Christian evangelical opposition to any U.S. pressure on Israel to stop expanding settlements. J Street “has a very steep hill to climb because peacemaking has acquired a bad reputation over the years in the Jewish community,” former U.S. ambassador to Israel Martin Indyk told the Washington Post. “And there is a widespread fear that U.S. intervention on behalf of peace will lead to pressure on Israel.”

But even just with its launch, J Street has perhaps managed to prod some of those same weary Middle East hands and Washington policy observers to talk about such thorny issues with a bit less ideological constraint — a small feat in and of itself.