"I think the government should support local technology, local know- how and local R & D," Mr. Waxman said. "They are getting paid back, because we are all Israelis, paying our taxes here."

But IDE, forewarned that its favorite-son status will not guarantee success, is bidding in partnership with Vivendi, the current world heavyweight.

Vivendi, a unit of Vivendi Universal, the media and telecommunications giant, has been buying its way to global primacy in the water purification business, paying $6 billion two years ago for USFilter of Palm Desert, Calif., an innovator in membrane technologies. A year earlier, Vivendi absorbed the International Desalination Company, a distillation specialist that is known by its French acronym, Sidem, and is a desalination leader in the Persian Gulf.

The pioneer and still by far the biggest desalination market in the world is almost next door to Israel. Kuwait, which built its first plant in 1957, was the first country anywhere to rely on desalination for drinking water. By 1990 there were about 15,000 desalination plants in the Gulf states, more than in the rest of the world combined. Saudi Arabia alone expects to spend $50 billion on new plants in the next 20 years, the Saline Water Conversion Corporation there recently said.

Most of the new gulf projects will use heated water from power plants, a process that is an IDE specialty. But as an Israeli company, IDE is excluded from bidding in the region. "Our inability to go to the gulf is our biggest disappointment," Mr. Waxman said.

Almost equally frustrating had been the lack of better business opportunities at home. The isolated Red Sea port of Eilat gets drinking water from an IDE plant, and there are smaller experimental operations scattered across the country. But despite Israel's recognized prowess as an innovator in the field, economics and politics kept it from embracing desalination as the solution to its own water problem.

In some circles of the Israeli right, desalination was opposed out of concern that a new fresh water supply would weaken Israel's strategic case for control of aquifers beneath the West Bank. On the left, some had argued that peace with Syria would let Israel buy surplus water from Lebanon. The last Israeli government proposed a coastal desalination plant, but as part of a peace pact with the Palestinians; the water was to be shared between Gaza and Israel, with foreign governments footing the bill.

Peace deals and donor subsidies appear less likely now. But desalination has an important booster in Prime Minister Ariel Sharon, who has long favored it as a tool to get water disputes off the regional diplomatic agenda. A year and a half ago, as the leader of the Israeli opposition, Mr. Sharon proposed building two plants on the Mediterranean for the Gaza Strip and Israel.

"This is one of the first things I am going to do after we establish quiet,"Mr. Sharon vowed in an interview a few days before taking office in February.

Some experts still challenge the economic rationale for desalination in Israel. The debate parallels American energy policy arguments, with advocates of increased production battling analysts who say scarcity is best eased through conservation.
Israel, like many nations, pumps water to arid farming districts at steeply subsidized rates. Agricultural users, paying half as much as industrial customers, account for three-fifths of Israel's water consumption. Yet agriculture contributes just 2 percent of Israel's gross domestic product. Most of the water irrigating Israeli fields and orchards has been purified to drinking-water quality. Finance ministry economists say higher prices would reduce demand by eliminating some marginal farming operations and encouraging the recycling of waste water.

But pricing reform remains politically unpalatable, and the supply-siders are winning the debate.

"There are two factors here," said Mr. Saguey of Israel's water company. "One is God, who brings whatever rain he does. In the last few years he's been a little disappointing. The other is whatever water sources we can develop ourselves."