AS October's election for the United Nations secretary-general draws near, the United States is facing a quandary: whether to support the candidacy of an esteemed Egyptian diplomat and boost Washington's standing in the Arab world or to risk disappointing Cairo, Washington's closest Arab ally, in favor of a candidate from a more neutral region.Boutros Boutros Ghali, Egypt's deputy prime minister and a respected expert on international law, has been nominated by Egyptian President Hosni Mubarak. As an Egyptian, Dr. Boutros Ghali also claims to be African, and the Organization of African Unity has included his name on their list of candidates. But there is a feeling in some quarters that it would be unwise to have an Arab at the helm of the UN at a time when peace negotiations between Israel and the Arab world are pending. "At any other time, Boutros would have a very good chance," says Ron Cathell, an official at the National Council for US-Arab relations. "But the next few years are going to be crucial. I think the UN is going to want a secretary-general who is perceived as neutral. I don't see an Arab fulfilling that." "Arab opinion is going to be more closely tied to the peace process," says an administration official. "But they'll be pretty unhappy if the peace process falls apart and Boutros Ghali doesn't get secretary-general.... They'd say we gave in to Israel, and we didn't support an Arab candidate." Boutros Ghali, a Christian married to a Jew, was in the US last month promoting his candidacy. From his Washington hotel suite, he conducted a broad campaign that included appointments with President Bush, Deputy Secretary of State Lawrence Eagleburger, National Security Adviser Brent Scowcroft, congressmen, and journalists. In an interview, he said the Soviet Union, China, and France are making "positive noises" about his candidacy. Despite his qualifications, some analysts don't give Boutros Ghali good prospects. According to informed sources, US officials were noncommittal in their meetings with him. "In deference to the Egyptians, we would not say 'no' out of hand," says an administration official. "But we are worried about having anybody who represents one side of an ongoing conflict," he says, speaking of the Arab-Israeli dispute. But Boutros Ghali scoffs at this. "I'm the only one who went with [Anwar] Sadat to Jerusalem," he says, speaking of the late Egyptian president's 1977 visit to Israel that culminated in the 1979 Egypt-Israeli peace treaty, the only peace accord between Israel and an Arab state. So far, Israel has not spoken out against the Egyptian nominee. A spokeswoman for the Israeli Embassy in Washington said Jerusalem "has not pronounced itself" on the issue. According to one report, Boutros Ghali has received assurances from Israel that the Jewish state will remain neutral in the campaign.