An Insider Moves Out, Up : No, the Peace Corps’ new boss has never done any field work. But Elaine Chao knows her way around Washington’s political jungles.

The stereotype of the dewy-eyed Peace Corps volunteer who has nothing better to do with a bachelor’s in English than live in a mud hut seems absurd this crisp winter morning as the new director, a woman in black pumps and a designer suit, conducts a tour of her Washington office suite.

Elaine Chao, the 12th person to run the Peace Corps, tells the story of the celebrity photographs and plaques on her wall like a rancher showing off the back 40. But in her case, the landscape reveals a young Ivy Leaguer with banking on her resume who came to Washington and deftly scaled the Republican heights.

There she is, smiling broadly next to California Gov. Pete Wilson, and there again with Vice President Dan Quayle. Oh, and that’s her, too, a willowy figure amid a wall of blue suits. As yet, there are no pictures of the 38-year-old director casually attired in some village in Africa or observing an urban outpost in the Caribbean. But that will come.

“I think it is important for me to get out and impart to the volunteers what I think is important,” she says, explaining that after only a few months at Peace Corps headquarters, she is still learning what that might be. For now, she remains suited, crisp and ever the polished MBA.

To some former volunteers, it seems illogical that President Bush would appoint a director with no background in humanitarian programs. Especially now, when the Peace Corps, one of the few enduring idealistic missions in Washington, is at such a critical juncture.

In the last year, the Peace Corps has been skewered by its own inspector general for making changes that produced “strain, confusion and chaos” within the organization. At the same time, its rapid expansion in Eastern Europe has been challenged as a strategy to promote Bush’s foreign-policy agenda--and critics are asking why volunteers are being sent to a part of the world that is simply not as poor as others the agency has served.

It’s nothing personal against Elaine Chao, but one former volunteer carped: “The Peace Corps is being demeaned again by throwing someone in there to be window dressing.”

Still, Chao insists she has not only the experience to manage the agency but also a personal connection to the far-flung places where the Peace Corps goes.

At her swearing-in ceremony last October at the White House, Chao told of her life as a child in Taiwan, of playing with red earthen clay because that was all there was, and of eating duck eggs because chicken eggs were in short supply.

“Those memories of living in a developing nation are part of who I am today and give me a profound understanding of the challenges of economic development--an understanding which will make my tenure as Peace Corps director, I hope, a very special one,” she said then.

Yet what makes a person qualified to head the Peace Corps is unclear.

An obvious credential might be to have served in the program itself. Still, after 30 years and 130,000 volunteers, no former volunteer has ever held the job. The appointment is almost always a political pay-back by Presidents after campaigns. But it is also true that such a policy has produced successes--the most charismatic director since the agency’s first, Sargent Shriver, was Loret Miller Ruppe, a congressional wife who had never worked full-time in a paid job, although she had managed Ronald Reagan’s 1980 campaign in Michigan.

Chao, too, comes from the ranks of White House political loyalists, but in her view that can only help the Peace Corps as she fights for more funding in Congress.

“In a time of dwindling resources,” she declares, “it helps to have an edge.”

After the tour of her office wall, Chao settles into a white, cushiony chair and talks about her initial goals for the $200-million agency. She speaks softly, weighing every word; often, she sounds very much the organizational strategist she has been for the past decade, talking about a “macro” view of a situation or about “facilitating issues.”

“It’s very important that we act more like job counselors and consultants and head hunters melding the need of the host countries with the supply of talent,” she says.

Chao expects her first year on the job to be dominated by a request from Secretary of State James A. Baker III to start placing volunteers in the former Soviet Union, where she expects to send 500 people by 1994. This won’t be done at the expense of programs in other countries, she insists. If there are to be other changes, they will come through application of her tough management practices to long-standing problems in recruitment, placement and planning.

“Things are not going to be done in the usual way, but I’m not sure that’s so bad,” she says.

Chao is defensive when asked about the inspector general’s report to Congress last year that her predecessor, Paul Coverdell, created chaos by diverting resources from the Third World to Eastern Europe.

“I don’t think the situation is as dire as (the inspector general) says,” she explains. And she already has told him as much.

“When there’s change, people are always anxious,” she adds. “Certainly the agency has a challenge, with new programs in those former Communist countries. But we can meet it.”

However, Karen Schwarz, author of “What You Can Do for Your Country,” a recent oral history of the Peace Corps, argues that where the agency gets in trouble--and always has since the 1960s--is by responding with too many people too fast in new countries.

“It makes the hearts quicken of congressmen and the President that good ol’ Yankee ingenuity is being invited in, and it’s a good substitute for foreign aid,” Schwarz said in an interview. “But it forces the Peace Corps to march double-time, and the volunteers really sense it.”

It was in Schwarz’s book that volunteer Elizabeth Jones articulated increasing concerns about comparatively opulent living conditions in Eastern Europe.

“Here I sit in my beautiful apartment (in Hungary) eating ice cream and watching MTV,” Jones was quoted as saying. “Am I in the Peace Corps, or on an all-expense-paid, two-year vacation? I can’t help but think that all this money could go to someone a bit more desperate.”

But Chao has no doubts that the Peace Corps belongs in the emerging democracies. She is determined that volunteers will have real jobs there and that programs will be helpful.

When the Peace Corps was founded, “it was envisioned that one day the Soviet Union, the archenemy, would be free, democratic and peaceful,” she says. “We are seeing the fruition of a 30-year dream and the Peace Corps is involved in that.”

Chao recognizes her own vulnerabilities in her new position. For one, she says, she’ll have to stop talking like a banker.

“I find myself explaining to my staff much more how I feel rather than what I think needs to be done . . . and letting them know me more as a person,” she says. “They respond more to that emotional approach.”

Chao was plucked from the government bureaucracy for this assignment after six years of clocking excruciatingly long hours as undersecretary of this and deputy commissioner of that. Her reputation as a confident, philosophically driven manager moved with her as she climbed rung to rung every two years in the Department of Transportation, eventually becoming second-in-command under former Secretary Samuel Skinner.

At the same time Chao was plugging away at the job, however, she also was working the Washington social and political circuit. She went to luncheons with people like Supreme Court Justice Sandra Day O’Connor and networked like crazy.

“Elaine’s name came up the other day in the White House mess,” says White House counsel C. Boyden Gray, who has dated Chao on occasion, “and someone said ‘God, what a classy lady.’ She is bright, easy-going and impressive.”

Gray bristles at the controversies Chao has stirred within the national Asian-American community for being aligned with Bush’s conservative policies. She was challenged by the Asian-Americans’ Democratic-dominated leadership for standing with Bush in opposing the Civil Rights Act of 1991 because it promoted quotas, which Chao contends inhibit minorities’ meritorious achievements. Chao’s minority status, her critics point out, certainly hadn’t hurt her.

Gray says that’s not fair: “She would never want to be thought of as a preferential hire. . . . You leap at people like Elaine who are that bright and articulate.”

And the Republicans did leap at her when she first dabbled in politics.

Her initial experience in public service was as a White House fellow working on Reagan’s policy staff. From there, she moved to San Francisco for BankAmerica. Although she was on the West Coast just two years before moving back to Washington, she still calls herself a California resident. She is coy when asked if this is because she wants to run for office there someday.

“I can tell you I love California--and no more,” she says.

Indeed, it was in California that she first threw herself into politics, campaigning for Bush, Wilson and local Republicans in Los Angeles. Those political connections helped her become deputy administrator of the Maritime Administration.

Chao served as national chairman for Asian-Americans for Bush/Quayle in 1988 and gave a brief nominating address at the Republican convention. She and her family also are contributors to GOP campaigns.

It is when she talks about her parents, James and Ruth Chao, and her sisters that she sheds her formal demeanor and warms considerably.

The family’s saga in this country, by coincidence, parallels that of the Peace Corps.

It is 1961, the year Kennedy signs an executive order creating the Peace Corps to “promote world peace and friendship” by sending Americans to work side by side with the people of underdeveloped countries.

It is also the year 8-year-old Elaine Chao takes a great voyage from her homeland in Taiwan to America.

With her mother and sisters, Chao spends a month on a freighter until they are reunited with her father, who had left Taipei earlier to establish a better life for the family in New York.

“It was a wonderful trip for a small child of 8,” says Chao, relishing the retelling of her immigrant tale. “My first port of call was Los Angeles. That’s where I laid my first foot on America. There’s a wonderful photo, a black-and-white, grainy picture of a young mother, with a very tentative look on her face, holding the hand of her oldest child. That’s me.”

As her father’s shipping and trading business grew, the family moved from Queens to Long Island and ultimately to affluent Westchester County, N.Y.

The rigors of assimilation still seem fresh in Chao’s mind, but clearly her hard-driven father--who taught his daughters to fix toilets and tar driveways while he imparted his conservative values--helped her get by.

After Mt. Holyoke College and Harvard, Elaine Chao was never tempted to try out her MBA in the Peace Corps.

“If you’re of a minority background, you have obligations to your family to support them financially . . .,” she says. “It’s very hard after they have sacrificed for you to forgo two years of income . . . go back to the old country, and help the very people your parents took you away from.”

But the Peace Corps has tempted tens of thousands, mostly young people, and their accomplishments are legendary if often overblown.

At its peak in the 1966, there were 15,556 volunteers, with an average age of 24. After Kennedy’s death, with the country convulsed over the Vietnam War and with Americans cynical about government programs, the Peace Corps came under attack from both the left and right. President Richard M. Nixon nearly shut down the agency, decreasing the number of volunteers to a few thousand and folding it into another organization.

It wasn’t until the early 1980s that the agency was resuscitated. Reagan recommended that Congress make it separate again and suffuse it with funds.

But just like America had changed since the 1960s, so has the revived Peace Corps in some ways. The typical volunteer is older now--the average age is 31--and more skilled than the generalists of past eras. There are still plenty of volunteers with bachelor’s degrees in English, but the current crop of 6,500 includes many more people who have experience in business and engineering.

Maureen Carroll, who served in Micronesia in 1968 and recently rejoined as country director in Botswana, says she notices the generational differences.

“Volunteers come with more affluence,” Carroll says. “They can afford to go home for Christmas, or their parents send them a ticket. They’re not quite as pioneerish.”

But she quickly adds: “They get out in a village, in a community, and they interpret whatever they think Peace Corps should do. And that’s more important than what Elaine Chao is thinking on any given day, or than the stuff about agendas. That’s the key to Peace Corps.”

Another key element is noted by a volunteer in Latin America, who saw Chao answer questions from volunteers via a satellite hookup: “She’s sharp, savvy and came across pretty good on most questions, and she’s very telegenic. But I don’t know if she’s got the religion yet.”

By that, he means the enthusiasm, the passion, the sense of mission for the Peace Corps that Schwarz and others say is essential to the program’s mystique--and success.

“It’s really a job where she has to establish her credibility and win loyalties, more so than in other leadership positions, because Peace Corps is more a religion than an agency,” says Schwarz. “Once she has those people behind her and the (corps’) alumni--who, let me tell you, wield considerable clout in Washington, in academia, in business--she can really make a name for herself here.”

As Chao is being chauffeured in a midnight-blue plush car to her next appointment--a private lunch with Marilyn Quayle and other GOP women at a tony hotel across from the White House--she says she is used to the scrutiny and the advice she is encountering.

“I am always suspicious at first. I am a woman. I am a minority. I am young,” she declares bluntly. “I get past this by just letting people get to know me.”