Controversial peace institute finally gets (just) off the ground. For decades, advocates fought for a `Peace Academy.' Congress finally passed a bill. But with a tiny budget, the battle is still uphill.

Nestled among the posh townhouses across from the White House is one of the newest additions to the federal government - the United States Institute of Peace. The institute, although formed by Congress in 1984, is only now gearing up operations. The organization recently announced its first grant awards for peace-related research and launched a series of hearings designed to ``map the intellectual terrain'' of the peace field.

``We're not going to create instant peace,'' says Dr. John Norton Moore, chairman of the institute's board of directors. ``But we can promote serious thought about peace and the avoidance of war, not just in this country but around the world.''

Some advocates lionize the institution, calling it a vital innovation in the quest for peaceful resolution of international conflict.

The bill creating the institute drew support from over half the Senate and 175 members of the House. The idea had bounced around for years. Indeed, support for it can be traced back to the founding of the American republic.

But critics say the concept of a government institution devoted to peace studies was diminished and distorted in the process of becoming a reality.

Over the years, some had pushed for the creation of a full-blown ``peace academy,'' a research and teaching facility similar to the military academies associated with each branch of the armed services. If millions could be spent studying every aspect of war, they reasoned, why couldn't a significant effort be directed toward avoiding it?

The White House initially opposed the notion on budget and policy grounds. The State Department bureaucracy felt threatened. And there were also misgivings among conservative lawmakers who worried that a powerful new national institution might be used to champion liberal political causes.

This led to a compromise: the creation of an organization with a decidedly modest structure and a clear directive not to intervene in political debates. The name ``institute'' was even substituted for the more grandiose-sounding ``academy.''

The institute now has a staff of seven and a budget this year just over $4 million - less than the Pentagon spends for a decent transport helicopter. Next year's budget is authorized at $10 million. But, in an era of budget slashing, it is unlikely this full amount will be appropriated.

Designers of the institute intentionally sought to avoid the creation of another bulging federal bureaucracy. And the careful use of every budget dollar is a strong theme among institute leaders.

``We don't want our money going to carpet faculty lounges,'' says Robert Turner, president of the institute. Nearly every grant awarded, he says, has been for an amount less than originally requested. Savings were made by reducing overhead and unnecessary expenses.

At least one-fourth of the institute's funds must be used for direct grants. The first 10 of these announced earlier this month totaled some $337,000, and included support for a study of the way biases are reinforced in textbooks used by Arab and Israeli schoolchildren and research into the nonofficial peace movements in the Soviet Union and Eastern Europe.

Analysts, including some critical of the institute, say support for such projects could prove to be the institute's most important contribution to the field of peace research and education.

Critics have lambasted the Reagan administration's nominations for the institute's 15-person board of directors.

No more than eight members of the same party are allowed to serve on the board. But some observers complain bitterly that White House nominations have not included a single woman and are overwhelmingly ``hawkish.''

Among the directors, for example, are W. Bruce Weinrod, director of foreign policy and defense studies at the Heritage Foundation, a conservative think tank, and Dr. Dennis Bark, associate director of the Hoover Institution of War, Revolution and Peace at Stanford University.

The legislation establishing the institute also assures a place on the board for the secretaries of Defense and State (who are represented, respectively, by Richard Perle and Richard Schifter), the director of the Arms Control and Disarmament Agency (Kenneth Adelman), and the president of the National Defense University (Lt. Gen. Bradley Hosmer).

The leaders of the institute say they hope the remaining open position on the board will go to a woman. They emphasize the independence of the institution from the current administration.

``We simply can't carry out our mandate of scholarly inquiry, unless we are carefully insulated from the politics of the moment,'' says Dr. Moore, who is a professor of law at the University of Virginia. The institute, he says, should pattern itself after the Woodrow Wilson Center at the Smithsonian Institution.

Moore says the institute will tap the full range of intellectual traditions as it explores the subject of peace in coming years.

Even many critics say the institute represents a historic initiative on the part of the American government to invest in such research.

``I don't expect very much from it for the next couple of years,'' says Elise Boulding, a peace advocate and scholar who served on the federal commission that studied establishing a peace academy. ``But it's very important that it was instituted - it establishes an important framework.''

The move to create government-funded peace institutes is also international in scope, she says, at least among the Western democracies. Sweden has had such an organization for years. Canada and Australia recently established institutes.

``This is clearly something more governments are now giving serious consideration to as a field they should be funding,'' says Mrs. Boulding. ``And that is a positive development.''