Next Step : Making Another Desert Bloom : Egypt’s big plans for the Sinai feature a $1.4-billion Nile canal, millions of settlers and a string of coastal resorts.

The peaked sands that fed and bewitched the children of Israel over 40 years of biblical history roll out to the end of the sky, and in their midst, clinging to a tenuous life, have sprung these few acres of new-sprouted olives, vegetables and tiny brick houses, battered by a chilly desert wind.

The settlement is called Takadom, which means “progress,” and it is one of Egypt’s tentative assertions of national possession over the vast northern Sinai, an empty desert roamed by invaders since the dawn of history and lost to Israel for 15 years, booty of the last two Arab-Israeli wars.

Here, a few dozen Egyptian families have settled in the one-room houses, fenced sandy lots and five acres of planted fields that the Cairo government is offering all university graduates mortgage-free for five years. Then, each family will have 30 years to pay off the $3,283 they owe for the land.

For Egypt, it is a way of easing the burden of population in the teeming Nile Valley--where 96% of the country’s 60 million people live on the fertile land, just 4% of Egypt’s territory, that straddles the river. And politically, development of the Sinai asserts, once and for all, Egypt’s hold on the strategic peninsula.

For Ali Abdel Qadir Ismail, 32, an agriculture graduate from the Suez Canal city of Ismailia who last year moved to Takadom, in the northern Sinai southwest of Al Arish, it is a way of staking a claim in a future--for himself and for Egypt.

“I worked for a rabbit breeding company in the private sector, making good money. But this is the future of my family,” he said. “It is enough now that I live in a kingdom of my own, on land that has been irrigated with the blood of martyrs.”

Twelve years after Israel returned the 23,622-square-mile Sinai to Egypt with the historic Camp David peace accords, Egypt is taking the most ambitious steps in its history to finally populate the vast, mountainous desert that is the most important land buffer between Arabs and Jews.

Last month, digging began on the second phase of the Salaam (Peace) Canal, a $1.4-billion project to carry 12.5 million cubic meters a day of fresh water from the Nile into the northern Sinai, irrigating 400,000 acres of new farmland and opening the way for 3 million or more Egyptians to eventually populate a region that is now, despite 12 years of sporadic development, home to only about 250,000 Egyptians.

It is the second-largest public works project in Egypt’s history--second only to the Aswan High Dam on the Nile--and a crucial part of Egypt’s plans not only to call the Sinai its own but to capitalize on $2.5 billion in investment envisioned as taking place in the neighboring Gaza Strip and West Bank when a peace agreement is signed between Palestinians and Israel.

Eventually, Sinai development will guarantee Egypt’s place in the emerging Middle East market and open a trade and travel corridor--possible only with a final peace between Arabs and Israel--that will link Libya on Egypt’s western border, through the Sinai, to Israel, Jordan, Syria, Turkey and finally Europe.

“We are trying to make our plans, taking into consideration the changes that are happening in the area and internationally,” said Hussein Gebaly of Egypt’s Ministry of Reconstruction. “To the west we have the (North American Free Trade) Agreement, to the east we have the new tigers of Asia, and we have in our area the new Middle East market with its dimensions that are imposing change on us.”

The Sinai development plan, which has the highest priority in Egypt’s five-year development projections, envisions new links between Egypt proper and the peninsula, either via a bridge across the Suez Canal or two new tunnels beneath it, an industrial zone straddling the canal at the city of Suez, expanded airports and power plants, mining development in the Sinai interior and a vast new network of housing, farmland and tourism along the pristine beaches of the Gulf of Aqaba.

Many Egyptian officials are sure that it was in part the sheer emptiness of the Sinai--invaded over the centuries by Jews, Romans, Muslims, Crusaders, Mamelukes, French and British forces--that left the Red Sea peninsula easy prey for Israeli tanks when they advanced across its deserts in the Arab-Israeli war of 1967.

It wasn’t until 1982 that the last Israeli settlers, in a deal sweetened with cash settlements, packed their belongings and left. The Israeli army was replaced in front-line zones by an 11-nation military monitoring group, the U.S.-led Multinational Force and Observers, which has kept watch on a peace that only recently has seemed ready to deliver prosperity. The town of Taba, on the peninsula’s eastern coast opposite the Israeli resort town of Eilat, was the last territory handed back, in 1989.

For years, the Sinai foundered under Egyptian control, in part because the Israelis destroyed much of the infrastructure they laid down during their 15-year occupation. The Israeli settlement town of Yamit, near the northern city of Al Arish, still lies in bulldozed ruins as it was left by furious Israeli settlers when they were forced out by the Israeli army.

In the early years, Israeli experimental farms near Nuweiba, taken over by Egyptian Bedouins, fell into decline, and tourist villages built in the Israeli era languished along the Sinai coastline. Bedouin fishermen damaged the coral reefs of the eastern coast by dynamiting their catch, and a massive land grab by both Egyptian and foreign investors for tourist hotel development near the peninsula’s southern tip at Sharm el Sheik threatened to irreparably befoul the pristine environment of the southern Sinai, with its untouched mountain valleys, clear turquoise waters and colorful underwater marine life.

But in recent years, Egypt, under massive pressure from international environmental groups, has set up a controlled development plan that is maximizing hotel construction along the eastern coast while imposing strict requirements on water desalination, garbage disposal and sewage treatment systems. The system should guarantee protection of the natural wonders that attract tourist dollars. Now, about 750 square miles of southern Sinai--or 52% of the Aqaba coast--have been set aside as part of a national protected area that joins the Ras Muhammad National Park on the tip of the peninsula.

“They were convinced by the economic argument that you needed to protect the resources if you were going to develop resource-based tourism, and now they’re very serious about it,” said Michael P. Pearson, project manager for the Ras Muhammad preserve.

Growth in southern Sinai has been unprecedented, increasing from 1,030 hotel beds in 1988 to 5,276 at present. That number is expected to more than double by 1995, producing a 1,005% growth rate over just seven years.

Sharm el Sheik, the sun-washed enclave that held barely three hotels and a few apartment buildings when the Israelis left in 1982, is alive today with the sound of bulldozers, hammers and drills. The last remaining seafront along scenic Naama Bay and the surrounding bluffs are being filled in with hotels and restaurants. Everyone from Israeli hoteliers to actor Omar Sharif to the sons of Egyptian President Hosni Mubarak have claimed pieces of the action, and land prices have soared.

Italian entrepreneurs are backing the most massive project to date, the $88-million Sheik Coast development, just north of Sharm el Sheik, which will include a 300-room hotel, apartments, private villas and a huge jetty reaching into the Red Sea.

Hisham Gabr, 33, an anthropology graduate of the American University of Cairo, was one of the first to capitalize on the building boom, moving from Cairo in 1982 to open the first private diving center in Sharm el Sheik. He reflects upon what it has meant for young Egyptians to come to the Sinai and, finally, embrace the peace with Israel.

“When I decided to come here, I said OK, the reality today is that our generation is dealing with the conflict between Egypt and Israel,” Gabr said. “We do not have any choices to make. We are dealing with the leftovers of whatever our parents and grandparents have done.

“According to Egyptian belief, Israelis took Palestine by force. And according to the belief of an Israeli of my generation, he was brought up in a house where his father lived, so it is home for him. How many of us are willing to go through, at the end of the 20th Century, the moral and ethical questions of: ‘Was my grandfather right to take this place? And are these debts legitimate today? Or has so much time passed that I am no longer responsible. . . .?’

“I have made the choice willingly to participate in the development of this area. I see that the development of Sinai is definitely a personal statement, and not just a political act. I am a young Egyptian, I’m fed up with Cairo, from the crowds, from the pollution, and I need a meaning for my life.”

The diving center, which Gabr opened when he was 26 with a loan from the National Bank of Egypt, is now undergoing a $3.2-million expansion.

Just down the street, Adly Mestekawy, who opened one of the first private Egyptian hotels in southern Sinai, has expanded his holdings to include an experimental farm that is producing oranges, figs, olives and landscape greenery, partially with reclaimed sewage water.

“The Israelis left, and there was nothing here. It was for us the Wild West, and I’m one of the cowboys who rode in first,” Mestekawy said. “From the first moment, I said the Israelis have left a mine of gold, and we have only to exploit it. There were no people, no businessmen, nothing--only Bedouins without the knowledge and the know-how to exploit it.”

Further up the coast, toward Dahab, hundreds of Bedouins, who for years roamed the deep valleys and coastal plains with their flocks, have since the Israeli invasion begun settling in and opening up shops, traditional tent-style coffeehouses and bamboo crash pads--often as cheap as $1.25 a night--for the youthful low-budget tourists who find in Sinai a remnant of 1960s California. Tie-dyed T-shirts and hashish are hot sellers on the lazy road that winds along the Dahab coast. The music of Lynard Skynard and Russian choruses filters out of coffeehouses.

But even they find themselves squeezed in by the five-star hotels that are pushing up on all sides. And the Bedouin entrepreneurs see yet another way of life nearing an end.

“Business is good, but it’s not for everybody. And the Bedouins in Dahab, they have land to sell, but so what, after they’ve sold it, what do they have left?” asked Embarak Hamid Sobieh, a Bedouin who began his sedentary days as a driver for the Israelis.

Since then, he bought land for 30 cents a square meter, opened a major tourist complex north of Dahab at Shark’s Bay and often takes the opportunity to deplore the evils of Egyptian bureaucracy that have forced him over the years to obtain licenses and permits to stay in business. Most of the Bedouins are like Sobieh. They miss the ready jobs and free food handouts that came with the Israelis.

“The government asks me, who are all these Israeli tourists who come to Egypt and say, ‘Where is Embarak? Where is Embarak?’ ” he said, chuckling. “I tell them, ‘I’m a Bedouin. If they come, I eat with them.’ ”

In blustery northern Sinai, where the Peace Canal is being built, the business focus is partly on tourism but primarily on the coming boom in nearby Gaza, which is scheduled for self-rule under the ongoing Israeli-Palestinian peace talks. The Egyptian Sinai towns of Al Arish and Rafah, just outside the Gaza territory, expect that they will host contractors from around the world who will rebuild Gaza, a Palestinian city under Israeli control for decades.

“Of course there are big hopes. This nation is right next door; there is only a barbed wire between us. We are enthusiastic to make that step,” said Said Jomaa Shehata, manager of the North Sinai Chamber of Commerce.

The Egyptian governor of northern Sinai, Mounir Shash, said the region is expected to grow from 215,000 people to more than 3 million, with an increase of more than 1 million in the next 20 years.

“When Sinai was liberated, we began from zero. There was nothing at all, either from infrastructure or services. Now, let anyone from Israel come and see what happened in the Sinai, and he will have a reply,” he said, pointing to Egypt’s $430-million investment in schools, roads, power plants, telephones and water facilities.

“The water from the Salaam Canal will be the new blood to Sinai to make a new society,” he said. “So it is a new future. Everything will be changed here. With everything beginning from zero, you can create the society you want. There are no restrictions. Everything is possible.”

The Peace Canal

Egypt’s $1.4 billion project will bring fresh water from the Nile to the Sinai peninsula.