Like a Bay area morning, the California Republican Party is shrouded in fog.

But even dreary mornings can give way to golden afternoons. So the question for the California GOP at the dawn of the 2004 election cycle is whether the dense gloom will lift anytime soon.

Sunny Republican optimists say yes. With a new, politically moderate state chairman elected last weekend amid calls for unity, and a popular president at the top of the ticket in 2004, many Republicans believe things can only improve.

“It’s better to be a mile outside of hell heading out than 100 miles outside heading in,” said one California Republican strategist.

Yet even for a party that is now shut out of all 10 of California’s statewide offices, there are signs of still further danger and division ahead. A jelling campaign to recall unpopular Democratic Gov. Gray Davis has already changed the political calculus in the state, forcing many GOP leaders — including potential challengers to Sen. Barbara Boxer (D) in 2004 — to reorder their priorities for now.

At least one person who had taken steps to challenge Boxer — Rep. Darrell Issa (R) — now appears more interested in running for governor if a recall hits the statewide ballot in November or March 2004.

“Congressman Issa believes that Gray Davis has mismanaged the [state] budget and misled the people of California,” said Scott Taylor, a California-based GOP consultant working with the two-term Member.

Not that Issa has abandoned his hopes of a Senate run, either. At the state GOP convention in Sacramento last weekend, he was one of a half-dozen potential Senate candidates pressing the flesh and making speeches. The others were U.S. Treasurer Rosario Marin, Gary Mendoza, the GOP candidate for state insurance commissioner in 2002, Rep. Doug Ose, Rep. George Radanovich, and businessman Bill Simon, last year’s unsuccessful GOP gubernatorial nominee.

Ose has set up an exploratory committee to raise money for a possible Senate run. Simon — who most Republican leaders believe should be discounted because of his failed bid for governor — is starting a new political action committee to position himself for another statewide race.

But the jockeying for Senate has in many ways been limited by the attention now being paid to the recall attempt. Although new state GOP Chairman Duf Sundheim and Gerald Parsky, Bush’s top California operative, have not committed to mobilizing the party behind the recall, delegates to the state convention voted to support it.

Now Issa, Simon and former California Secretary of State Bill Jones are the most prominent Republicans mentioned as possible candidates in a recall election — so far. Jones was the last Republican to be elected statewide, though he finished a weak third in the 2002 gubernatorial primary.

Taylor said Issa, despite his personal wealth, has not yet offered any financial assistance to the recall organizers.

“Congressman Issa feels this needs to be a grassroots movement, and the grassroots movement seems to be taking shape,” he said.

Leading Republicans cannot agree whether the recall drive will energize party activists and Davis’ legion of critics into a potent force for the GOP, or whether it will distract Republicans from achieving their goals of defeating Boxer and capturing the nation’s biggest electoral prize for Bush.

“The whole thing is a very unpredictable situation with endless permutations,” said Arnold Steinberg, a California GOP consultant.

Republicans cannot even agree whether they are better off vanquishing Davis in a recall, or whether it’s advantageous to keep him around and limping until his term ends at the end of 2006.

“In some ways, you could make the case that the party is better off with an unpopular governor like Gray Davis hanging around,” said one leading California Republican.

But Dan Schnur, a Sacramento-based consultant whose clients include Radanovich, said the position of governor is so powerful that the GOP should go all out to recall Davis if the question reaches the ballot.

“Even an unpopular governor has a huge amount of authority and a huge amount of power,” said Schnur, one-time communications director to former Gov. Pete Wilson (R). “So the argument that a weakened Gray Davis is better than a new [Republican] governor [for the party’s long-term prospects], that’s not a credible argument at all.”

And how all of this affects the Boxer race is anybody’s guess.

Right now, there are actually two recall drives under way. One is being organized by Sal Russo, a strategist for Simon’s ill-fated gubernatorial campaign. The other more credible campaign is being led by anti-tax activist Ted Costa. Once the California secretary of state determines that the recall petitions are in order — and that could happen with Costa’s in a matter of days — the groups have 160 days to collect 900,000 signatures to put the recall on the statewide ballot.

Democrats are already dismissing both recall efforts as Republican sour grapes. “If they wanted to recall Gray, they should have done it before his second term [in the November 2002 election],” said Rep. Grace Napolitano (D-Calif.). “To me, it’s nothing more than a political ploy.”

But in the Internet age, in a state as big as California, gathering 900,000 signatures should be relatively easy. And that’s where things get really interesting.

Under California law, if the recall makes it to the ballot, voters will be asked two questions: Do they want to recall Davis? And if so, whom would they like to be governor?

The ballot would list all declared candidates — there would be no party primaries first — and the person with the most votes, no matter how small the plurality, wins.

Republicans believe they need to unify behind one strong candidate under that scenario to win back the governor’s mansion. But who would it be? Who would play kingmaker?

And what of Arnold Schwarzenegger, the movie star who has talked openly of running for governor in 2006? Does the actor want any part of the recall? Would he feel compelled to jump into a recall race if he feared another Republican had a chance of winning?

Bob White, a former chief of staff to Wilson who is advising Schwarzenegger, did not respond to messages left at his Sacramento office this week.

A new Schwarzenegger movie, “Terminator 3,” is scheduled to open on July 2. It is sure to be a summer blockbuster, and Schwarzenegger is likely to spend plenty of time promoting it. That wouldn’t leave much time for politicking, it would seem — although he will also be getting lots of free publicity.

Meanwhile, Democrats might have their own difficulty unifying around a gubernatorial stand-in if there’s a recall. At least four statewide officials — state Treasurer Phil Angelides, Lt. Gov. Cruz Bustamante, Insurance Commissioner John Garamendi and Attorney General Bill Lockyer — are all talking about running for governor in 2006, when Davis is term-limited. Would one or more jump into a recall election to head off the others?

“I suspect that Davis may have a hard time reining in his own people,” said Rep. Ken Calvert (R-Calif.).

Bob Mulholland, a consultant to the California Democratic Party, predicted that no name Democrat would run in a recall election, because Democrats would successfully characterize it as illegitimate. While acknowledging that the recall will probably get on the ballot for the first time in California history, Mulholland said Democrats would use the vote as an opportunity to blame national Republicans, rather than Davis, for the fragile economy.

“By the time we’re finished with squeezing the last Republican neck, the blame will be on Bush,” he said.

As for Boxer, Mulholland said the two-term Senator would be helped by the backlash that the recall would create. “It galvanizes the Democrats when they see what the Republicans are up to,” he said.

The groundwork for the recall is taking place at a time when Republicans had hoped Boxer challengers would be gearing up in a serious way. While one GOP consultant who did not want to be named said that the focus on the recall is a blessing, because it gives potential Senate candidates more time to prepare without too many people paying attention, other Republican leaders are fretting. Emboldened by a voting analysis that shows that Boxer is the most liberal Senator since Paul Wellstone (D-Minn.) died, they believe that the right kind of challenger can win.

“So far,” lamented Steinberg, “we haven’t seen a candidate or campaign capable of beating her.”