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After insisting for months that there was insufficient evidence to appoint an independent counsel to investigate Vice President Al Gore, the Justice Department on Wednesday initiated a process that could lead to the naming of a special prosecutor.

The decision significantly escalates the stakes in the campaign finance scandal that has engulfed the Democratic Party and has been creeping ever closer to Gore, whom many consider the favorite for the Democratic presidential nomination in 2000.

At issue are fundraising calls Gore admits making from his White House office, in possible violation of a law that forbids the solicitation of campaign contributions in a government building. Atty. Gen. Janet Reno had refused to act before now, saying Gore solicited only “soft money” which is used for general party-building purposes and is not covered by the law.

But she evidently changed her mind after the Washington Post disclosed Wednesday that some of the cash raised by Gore was used as “hard money,” which goes to specific candidates and is more clearly addressed by the law in question.

“The Justice Department is reviewing whether allegations that the vice president illegally solicited campaign contributions on federal property should warrant a preliminary investigation under the independent counsel act,” said department spokesman Bert Brandenburg.

The Justice Department is on a track to decide within 120 days whether to name an independent counsel. Now that the process has begun, it may be quite difficult for Reno to decide against a special prosecutor.

Staff attorneys at the Justice Department have been investigating campaign finance activities for some time. On Thursday, the Senate Governmental Affairs Committee resumes its hearings on campaign finance, intending to focus particularly on the vice president.

But an independent counsel, who would have virtually unlimited time and resources to focus solely on Gore, would present a much greater threat to the vice president.

Gore’s counsel, Charles Burson, issued a statement Wednesday. “We’ve cooperated fully with the Department of Justice, and, of course, we will continue to do so,” Burson said. “We remain confident that no law or regulation was violated.”

Republicans were quick to predict trouble for Gore.

“He is vulnerable now,” said Joseph diGenova, a Republican and former independent counsel. “Mr. Clean becomes Mr. Sullied.”

But Democrats pointed out that the investigation is just beginning. The central question in all phases of the probe would almost certainly be whether Gore actually knew the money he was seeking would go into hard money accounts.

“If you don’t know and have no reason to know that the money is in violation of that statute, then you don’t have a prosecutable offense,” said Kenneth Gross, a prominent election lawyer. “I think it’s credible that he didn’t know.”

The Clinton administration already is facing three independent counsel investigations. Kenneth Starr is probing the Whitewater affair.

Donald Smaltz obtained an indictment against former Agriculture Secretary Mike Espy last week. And David Barrett is pursuing allegations that former Housing Secretary Henry Cisneros lied to the FBI about the size of payments he made to his mistress.

Republicans repeatedly have hammered at Reno’s reasoning for not triggering the independent counsel process, characterizing it as a highly technical excuse. The independent counsel statute, they argue, was put in place for precisely this kind of situation– when Justice Department attorneys are put in the position of having to investigate high-level administration officials.

Republicans on the Senate and House Judiciary Committees wrote Reno in March demanding that she initiate the independent counsel process to investigate Democratic fundraising practices. The House Republicans renewed that request in a lengthy letter Wednesday.

Reno has held steady, in part because of pressure from inside the Justice Department itself, which takes pride in its ability to handle politically sensitive cases with integrity.

Conservatives, though, began taking aim at Reno, calling her “General Stonewall Reno.”

Sen. Orrin Hatch (R-Utah) said Wednesday that he applauds Reno’s decision.

“To be honest with you, I thought it was apparent last May that the independent counsel statute should be triggered,” Hatch said. “They just can’t avoid it any longer.”

The process of choosing an independent counsel is an elaborate one. When the attorney general receives information about a potentially criminal act by a high-level official, she conducts a 30-day review to determine whether the information is specific and credible. That is the process Reno initiated Wednesday.

If she decides that the allegations indeed meet these criteria, the attorney general begins a 90-day investigation to determine whether an independent prosecutor should be named.

If so, she communicates this to a special three-judge panel, which then picks a private attorney to serve as independent counsel.

This system has come under increasing attack recently. Unlike ordinary prosecutors, independent counsels have only one case to focus on and face no limits on the amount of time and money they spend. Some argue that this creates an unfair incentive to prosecute the target no matter what.

Therein lie the potential political ramifications of Wednesday’s decision. “There seems to be no stopping it,” Gross said of independent counsel probes. “It takes on a life of its own.”