JERUSALEM -- Imagine a strip of blue water flowing 100 miles through the desert, punctuated by artificial waterfalls, surrounded by parks and luxury hotels. It would refill the shrinking Dead Sea, produce hydroelectric power and badly needed drinking water and bring Israelis and Arabs together in a thriving free-trade zone.

It is hard to predict how the proposed artificial waterway from the Red Sea to the Dead Sea, popularly known as the Red-Dead canal, will turn out.

An idea bandied about for decades, the canal has been given a new backwind from one of the world's richest people: Israeli real-estate mogul Yitzhak Tshuva, the owner of New York's Plaza Hotel. Last month, visiting French President Nikolas Sarkozy, one of the plan's backers, discussed it with one of the project's leading champions, Israeli President Shimon Peres.

Peres, 84, a Nobel Peace Prize laureate known for thinking big, sees the canal as the main component of what he calls the "Valley of Peace," a development zone that will provide jobs and wealth to Israelis, Jordanians and Palestinians. If built, it will be the most dramatic single change ever made to the landscape of the Holy Land.

Today, from the scrubby desert and Bedouin encampments of the Jordan Valley, past the dusty Palestinian town of Jericho, through the placid blue mirror of the Dead Sea and on south through the wastelands of the Arava desert, evidence of Peres's dream is nowhere to be found.

The Dead Sea has been shrinking for years because the Jordan River waters that once replenished it are now pumped for drinking water and agricultural use, and because Israeli and Jordanian factories mining the sea's valuable minerals have led to massive evaporation.

The dramatic recession of the sea, where salt concentrations are so high that no marine life can survive and humans float effortlessly on the surface, has harmed a lucrative tourism industry and caused dangerous sinkholes to gape suddenly along its banks.

Proposals for canals that would channel water from the Mediterranean Sea or the Red Sea have been debated since the 1980s, tickling the imagination before invariably being shelved by reality and economics.

There is one important difference this time around. In a speech Tshuva gave in May at a conference Peres convened for Israel's 60th birthday, Tshuva said he and other leading Israeli financiers can foot the whole bill for the canal, its desalination plants and hydroelectric installations. He said the cost would be around $3.3 billion, none of which would have to come from the public coffers.

The return on the investment would presumably come from selling the electricity and water and by developing businesses and tourist sites nearby. In his presentation, Tshuva claimed the project could create as many as 200,000 hotel rooms and a million jobs.

The vision combines two powerful streams in modern Israeli thinking: American-style private sector capitalism and old-time Zionist faith in redemption through construction, harkening back to the call by David Ben-Gurion, Israel's first prime minister, for Israelis to move to the desert and make the wilderness bloom.

"The barren desert will flourish, and the arid lands will bloom with greenery on both sides of the border," said the female narrator in a short movie Tshuva screened at the conference. Simultaneously, computer-generated Israelis and Arabs shook hands and embraced outside an artist's rendition of sleek hotels along the waterway's green banks.

Tshuva, ranked 214th on last year's Forbes list of billionaires, says his next step is to get Israel's parliament to pass a law that would expedite construction. Once the first bulldozers begin work, he says he will need only two years before the Red Sea waters begin flowing north to the Dead Sea.

Many are skeptical, like Israeli water expert Shaul Arlosoroff. With the cost of building materials rising, Tshuva's price estimate is low by about 50 percent, and hopes of making money from the hydroelectric power and desalinated water may well be unfounded, Arlosoroff said. Without international donations, the project is unlikely to ever get off the ground, he predicted.

"They are now saying that private sector money can make this happen, but that remains empty words," Arlosoroff said.

Jordan, which badly needs the water and electricity, supports the Red-Dead project, but a different variant -- one that goes entirely through Jordanian territory. In May, the World Bank began carrying out a $15 million feasibility study of that version, which might involve a pipe rather than an open canal and includes none of Tshuva's tourism and real-estate visions. Researchers expect to finish their work in two years.

The Jordanians seem miffed by the new Israeli plan. Mousa Jamani, director general of the kingdom's Jordan Valley Authority, said he doesn't understand the change and believes it violates an agreement signed between Israel, Jordan and the Palestinians.

"The term of reference was signed three years ago that the canal would pass through the Jordanian territories," he said.

The World Bank referred a query to Noga Blitz of the Israel Water Authority, whose director is Israel's representative to the project. Blitz said the new plan is not affecting the World Bank's study.

Israeli environmentalists are worried about overdeveloping the Arava wilderness, and the canal's route along the Syrian-African rift -- an active faultline prone to earthquakes. An earthquake that destroys the canal would send salt water flowing into the sweet-water aquifer underground.

But more than anything, many are worried about the effects on the sea the canal is supposed to save. Mixing Red Sea water with that of the Dead Sea could cause unpredictable chemical reactions that would result in the formation of a white layer of gypsum across the surface, or an explosion of new algae that would dye the Dead Sea red. Because no serious study has yet been undertaken, no one knows.

"Yitzhak Tshuva is selling us a vision of peace," said Tzipi Iser-Itzik, executive director of the Israel Union for Environmental Defense, one of six Israeli environmental groups trying to block the plan. "We want peace so much, and we want to save the Dead Sea, but this must be done in an intelligent way. Don't sell us dreams," she said.

• Associated Press Writer Jamal Halaby reported from Amman, Jordan.

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