Lebanon to hold debt aid talks in Paris on Jan 15

BEIRUT, Oct 16 (Reuters) Lebanon, still struggling to recover from a devastating war with Israel, said today it would hold a long-awaited aid conference in Paris on Jan. 15.

''It has been decided, and this is the decision that the cabinet has taken today, that the conference will be held in Paris ... on January 15th, 2007,'' Prime Minister Fouad Siniora told reporters after a cabinet meeting.

He said French President Jacques Chirac had said he was prepared to host the conference in the French capital, adding that Malaysia and Russia had already agreed to participate.

Lebanon was due to hold an aid conference last year to help it cope with a public debt of around 38 billion dolars, whose servicing consumes at least two-thirds of government income.

But the meeting was repeatedly postponed amid political bickering over an economic reform programme which the government had hoped would encourage lenders to be generous.

Israel's war with Hezbollah in July and August left much of southern Lebanon in ruins and crippled the country's economy, reviving the urgent need to hold the conference.

Finance Minister Jihad Azour said Lebanon would request more aid in the form of donations -- it had originally planned to ask mainly for soft loans -- because the war had added to the small country's economic problems.

Azour declined to say how much cash Lebanon would seek but said the aid would still be accompanied by reforms to increase state revenues and cut spending, especially on the state power company that loses 0 million to 1 billion dollar a year.

Lebanon also hopes to push ahead with long-delayed plans to liberalise the telecoms sector, he said.

''We will be asking mainly for donations because the problems of the war mean loans are no longer enough,'' Azour said.

''This aid should be accompanied by reform... Aid without a new start for Lebanon will be a big opportunity missed.''

''The president spared us all embarrassment and shame,'' said Zahava Gal-On, a member of the leftist Meretz faction after Katsav decided not to accept the traditional invitation to attend the session. The scandal is unlikely to have any direct effect on the fortunes of Prime Minister Ehud Olmert and his coalition government. But it has diverted public attention from other political issues in the aftermath of the recent Lebanon war.

With headlines on Katsav's predicament emblazoned across red ink backgrounds on newspaper front pages, accounts of bickering within Olmert's coalition over the possibility of enlisting a far-right partner have been relegated to the inner folds.

Newspapers also gave the Katsav affair pride of place ahead of the preliminary findings of a military investigation highly critical of the functioning of an army division in battles against Lebanese Hezbollah guerrillas in the 34-day war.

Tourism Minister Isaac Herzog, whose late father Chaim Herzog served as president, said that while the sex scandal was ''most embarrassing and most unpleasant'', judicial authorities had sent a message that everyone was equal under the law.

Katsav, born in Iran, is married with five children and six grandchildren. His wife has told reporters she was certain her husband would be proved innocent.

Reuters