NEWSWEEK January 2, 1978 ALOHA! - GOOD CONDITION!

COVER: ALOHA! Sun and Fun Islands.

TOP OF THE WEEK:
ROUND TWO: BEGIN AND SADAT IN JERUSALEM: The little island near Ismailia off the Suez Canal was given a new name last week: the Island of Peace. It was the setting of another extraordinary event in the rush toward peace in the Middle East--a summit conference between Egypt's President Anwar Sadat and Israel's Prime Minister Menahem Begin, the first since their historic meeting in Jerusalem last month. The outlook for lasting peace was still uncertain, but the Israelis and Egyptians were maintaining their momentum.

FIRST RESORT: Glistening beaches, crystal seas, and the warm aloha spirit make Hawaii a Polynesian paradise-on-earth.

The islands have long been a popular playground for Californians, but the tourist boom created by cutrate air fares from the East threatens to destroy the very charms that attract visitors in the first place. General Editor Susan Cheever Cowley describes the state of the 50th state from reports by Gerald C. Lubenow, with pictures by Lester Sloan. (Cover photo by Barry J. O'Rourke.).

WOOD BURNERS: New Englanders are discovering that one solution to the energy crisis is in their own backyard. They are heating their homes and even powering some factories with wood--and spawning a new cottage industry: stove making.

Once they were outsiders fighting the Establishment, many allied to Ralph Nader. Now they are reformers inside the Carter Administration. Newsweek talked to them about their and frustrations.

WOMEN'S WEAR: Fashion isn't frippery for Diana Vreeland, the 77-year-old doyenne whose latest exhibit at the Metropol- itan Museum of Art's Costume Institute is a glorious melange of styles, colors and fabrics from the Met's vestment vaults.

"Show me a fashionable woman, and I will show you a woman who accomplished something," she says.

THE THREE-MARTINI TAX BILL: Jimmy Carter thinks the time has come to crack down on expense-account lunches--a proposal that has caused acute indigestion among restaurant owners. Their horrified lobbying may persuade Congress to leave lunch rules alone, but a cutback on executive perks seems inevitable.

CONTENTS LISTINGS:
SPECIAL REPORT: The Christmas summit.
NATIONAL AFFAIRS:
Carter's new year's tour abroad.
David Rubenstein, White House workaholic..
The Panama treaties: a turn of the tide?.
Cleveland's Dennis-the-menace mayor.
Maine: a furor over hydro power.
The Administration: outsiders inside.
INTERNATIONAL:
Terrorism: a "Carlos" connectkn?.
Poland's meat-and-potatoes crisis.
Soviet Union: three dissidents' families.
Indonesia's devil's island.
LIFE/STYLE: Hawaii: the sun and fun islands (the cover).
MEDICINE: Heroin and pot as prescription drugs?; The new flu bug.
EDUCATION: A president for Yale.
BUSINESS:
Oil: OPEC's reluctant freeze on pricing.
The three-Martini tax lobby.
The box-office war of the scifi flicks.
Bert Lance's Saudi deal.
Railroads: rags to riches.
Retailing: an alternative optical company.
Heating with wood.
DESIGN: Fashion's Vanity Fair" at the Metropolitan Museum of Art.
NEWS MEDIA: Columnist Erma Bombeck, straight woman in suburbia.
TELEVISION:
ABC's "Love Boat": leer power.
TV's commercial critics.
THE COLUMNISTS:
My Turn: F. Lee Bailey.
Pete Axthelm.
Paul A. Samuelson.
Meg Greenfield.

THE ARTS:
MUSIC: The Waverly Consort makes ancient music.
MOVIES:
The fun scenario: a hit and a miss.
The mayhem scenario: a holiday triple.
BOOKS:
"Discipline and Punish: The Birth of the Prison," by Michel Foucault.
Richard Stem's "Natural Shocks".
"Eleanor Marx," by Yvonne Kapp.
Edna O'Brien's "I Hardly Knew You".