Lebanon looks to aid conference for help

PARIS, Jan 25 (Reuters) Lebanon's political and economic crisis takes centre stage at an international aid conference today, with the country's Western-backed leaders hoping anti-government protests do not scare away the donors.

Prime Minister Fouad Siniora has said Lebanon needs billions of dollars to help shore up its debt-riddled finances and to recover from last year's war between Israel and Hezbollah guerrillas.

''Paris 3, with large international and Arab attendance, to offer support today,'' said a headline in the pro-government An-Nahar newspaper.

Hezbollah is spearheading a long-running battle to topple Siniora, and France has warned that the campaign, which turned violent this week, could persuade some donors to hold back.

The pro-opposition al-Akhbar daily said the conference was designed to shore up the government, not help Lebanon.

High ranking representatives from more than 40 countries and organisations will attend the one-day meeting, including US Secretary of State Condoleezza Rice and the new United Nations secretary-general, Ban Ki-moon.

''The cost of helping Lebanon, however expensive that might seem, is much less than the cost of not helping Lebanon,'' Siniora told reporters yesterday.

French officials said they expected the meeting to raise at least as much as a previous donors' conference in Paris in 2002, which raked in 4.2 billion dollars in aid and loans.

On that occasion, the United States refused to make any commitment, but Rice told reporters as she flew to Paris late yesterday that the United States would pledge 770 million dollars for Lebanon, funds that must be approved by the US Congress.

''Yesterday's events, if anything, make more important a message from the international community that it supports the democratically elected government of Lebanon and that there should not be violence or efforts at intimidation to try and make governing more difficult'' for Siniora, Rice said.

France has already said it will offer a 500 million euro loan at ''very favourable conditions'', while the European Commission has pledged nearly 400 million euros.

DEBT MOUNTAIN Western countries are anxious to show the Lebanese people they have not abandoned them in the wake of the devastating July/August war against Israel which left many mainly Shi'ite areas of the country in ruins.

Hezbollah is funded by Shi'ite Iran and has promised to provide its own financial aid to the war victims. Washington and Sunni states, including Saudi Arabia, are worried that Lebanon might fall under the influence of Tehran.

Lebanese sources said yesterday Saudi Arabia and Iran were negotiating a deal to end Beirut's political standoff, following clashes this week that killed three people and raised fears the country was sliding back towards civil strife.

One source said the Saudis might even present an initiative at the Paris conference.

Once affluent Lebanon is still struggling to rebuild after its 1975-1990 civil war and is weighed down by 40 billion dollars of debt, equal to 180 percent of gross domestic product.

Some donors are likely to link their aid offers to Siniora's ability to push through an economic reform package, which was unveiled this month and includes plans for privatisations, cutting state spending, and hiking taxes.

''Irrespective of the troubles, we need this conference.

Irrespective of this conference, we need to implement our reform programme,'' Siniora said yesterday.

Reuters PB DB1258