One year after the departure of the last Israeli soldier and settler from the Sinai, a horde of bureaucrats, construction firms and workers is busy laying the groundwork for a network of towns and settlements designed to attract 800,000 Egyptians to the region by the year 2000.

But a lack of public interest, as well as an acute water shortage and discontent being expressed by some of the Sinai's current 200,000 residents, raise doubts that this ambitious goal can be achieved.

Egypt's military planners long have placed a high value on the Sinai's harsh mountain terrain and sandy wasteland as the country's main barrier against Israeli invasion.

Now the government--in an effort to fully reintegrate this biblical "great and terrible wilderness" into the state--also is trying to make the public aware of its potential as a homeland for Egyptian settlers.

In the past year, the northern Sinai has become a beehive of building activity. Signs of the 15-year Israeli occupation are fading fast under the drifting sand dunes and a thorough Egyptian scrubbing of the landscape to remove all traces of its former Jewish settlers.

Only the mountain of rubble scattered among drying oleander bushes at the old Israeli settlement of Yammit, 25 miles east of here, and the blown-up remains of a cement reservoir at nearby Sadot still stand as mementos of Israel's final evacuation last April 25.

Given the normal snail's pace of Egypt's ponderous bureaucracy, the progress visibly made here over the past year is impressive. The government's budget for the region totals about $132 million, half of it earmarked for the Sinai Development Authority, in overall charge of planning, according to its director, Ali Abu Zeit.

The main axis of development is along the northern coastal road from Qantara on the Suez Canal through the sand-covered battlefields of three past Egyptian-Israeli wars, where the silhouettes of rusting tanks still dot the horizon, to this fast-growing administrative center of 80,000 people on the shore of the Mediterranean.

El Arish, famous for its towering palm trees and pure white sand beaches, quickly has become the main hub of activity in the northern Sinai. Big new apartment complexes have sprung up all around the city, a new branch of the Suez Canal University has just opened, a fishing port is being built on the eastern edge and Margotel, a 150-room seaside tourist village run by Marriott Corp., is about to open.

But the development plan for the entire coastal strip is being hampered already by the pervasive problem of limited water supplies--aggravated by the destruction of 35 previous wells east of El Arish by departing Israeli settlers.

Abu Zeit said 42 new wells had been drilled since last April capable of restoring to production about 1,000 acres of land. But this is still 2,000 acres less than the Israelis--who piped in water also from Israel--were cultivating, he told a press conference in Cairo.

During a recent tour of the area, a group of western correspondents saw Egyptian technicians trying to repair the old Israeli water pipes around Yammit and Sadot, where two new steel reservoirs have been built.

Bedouins and former landowners dispossessed by the Israeli settlers have moved in and erected corrugated tin shacks in the fruit orchards and barley fields once cultivated by Yammit's 2,700 inhabitants.

Yammit itself remains abandoned, and plans by the Cairo semiofficial daily Al Ahram to raise money to build a new town, called Fairuz, on its ruins seem to have died. Only the synagogue, now plastered with graffiti, remains intact.

The water shortage is one cause of discontent among the Bedouins and farmers. This was made clear Saturday when President Hosni Mubarak came here to celebrate the first anniversary of the final Israeli evacuation of the Sinai.

At a meeting with local leaders, Mubarak's speech was interrupted by a Bedouin chief who shouted, "Our palm trees have died, Mr. President."

Earlier, others, including the mayor, had said they wanted to raise with Mubarak "certain issues and demands."

Obviously peeved at the interruptions, Mubarak retorted that he had come to celebrate the Sinai's return to Egypt and not to discuss demands. He curtly told the Bedouin complaining about his palm trees, "Do you think you can revive the trees by shouting? Sit down and don't talk!"

He then ordered his security men to clear foreign press and photographers from the hall, but the local people had made their point.

The water shortage may be allayed somewhat when a six-inch pipeline, now being built from Qantara, reaches El Arish in 18 months. The line now reaches Bir el Abd, one of three desert centers where the government is trying to encourage Bedouins to settle.

The 400,000 gallons of water brought daily by the pipeline from Qantara will be used primarily for drinking water, according to the Sinai authority head, Abu Zeit. But this will free the use of most well water for land irrigation, he said.

Whether the Sinai ever can be developed to the point of sustaining 800,000 Egyptian settlers from "the valley," as Egypt west of the Suez Canal is called here, still seems questionable.

The water shortage, acute enough in the north, is even worse in the barren, mountainous south and east and largely explains why the population density of this 24,000-square-mile piece of wilderness still averages less than three per square mile.

Even Abu Zeit seemed somewhat skeptical, noting that it would require 160,000 new housing units plus all the social services necessary to support 800,000 people.

"It's not a very big goal, but it is not a very easy goal," he remarked. Even 10 years from now, he conceded, "I don't think it will be very populated."

Another problem the government will have to face is the local residents' resentment at an invasion of settlers. They already are chafing under the influx of perhaps 20,000 Egyptians, mostly bureaucrats and technicians, over the past year.

The transition from Israeli to Egyptian rule--particularly along the Sinai's eastern coast, once a crowded Israeli vacation playland--has not been easy for the local residents. Scores of makeshift seaside restaurants have gone out of business as have Bedouin taxi drivers, who also had great difficulty getting new Egyptian license plates.

Drivers say it is harassment by the new Egyptian authorities who suspect them of harboring sympathy for the Israeli occupiers. The authorities say they are just applying the law of "the valley" to the Sinai.

Here in El Arish, Essam Arraf, who owns a restaurant and three chalets on the seashore, gave vent to some of the local resentment toward the Egyptian "invasion" as he talked to visiting western reporters.

"You see all these Egyptian and Sudanese workers here," he said.

"They get paid only four pounds a day. We used to get 10 pounds when the Israelis were here. They bring them in from Egypt because they are cheaper," he said referring to Egyptian construction firms doing most of the building around here.

Whether city-oriented Egyptians will ever take to the comparatively rugged life and landscape of the Sinai is questionable. To date, few Egyptians have bothered to come even as tourists, despite the Sinai's staggering natural beauty and mesmerizing coral reefs.

The once-flourishing, Israeli-built tourist villages along the eastern coast at Sharm el Sheikh, Dahab and Nuweiba, which Egypt took over, today are starved for business. Few of those Egyptians who do make the trip seem content with what is available.

"Egyptians are not good tourists," said Abu Zeit. "But we're trying to persuade them to go and like it."