Paris conference pledges aid to struggling Lebanon

PARIS, Jan 25 (Reuters) Lebanon asked the international community for financial aid today to shore up its heavily indebted economy and help the country recover from last year's war between Israel and Hezbollah guerrillas.

French President Jacques Chirac opened the one-day donors' conference, saying Lebanon needed generous support to overcome its economic woes following the ''appalling clashes'' in 2006.

The meeting comes two days after some of the worst street violence Lebanon has seen in years, with three people killed and more than 100 injured during a general strike called by the Hezbollah-led opposition.

The militant Shi'ite group has accused Prime Minister Fouad Siniora of being in the pocket of the West and Lebanon's pro-opposition al-Akhbar daily said today the Paris conference was designed to help the government, not the country.

The United States, France and the European Union have already pledged aid and loans worth some 1.92 billion dollar, but French diplomats are worried other countries might hold back because of the political turmoil.

''(Lebanon) is a country that is obstinately seeking rebirth and more than ever needs the unanimous support of the international community,'' Chirac told the conference.

High ranking representatives of more than 40 countries and organisations were attending the meeting, including Siniora, US Secretary of State Condoleezza Rice and United Nations Secretary-General Ban Ki-moon.

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 dollar in aid and loans.

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

The July/August war against Israel seriously exacerbated Lebanon's problems, with much of the country's infrastructure bombed and many Shi'ite villages and districts wrecked.

''After Israel's onslaught on our country we are now on the edge of a deep recession,'' Siniora told the conference, adding that his government would stand firm against the Hezbollah-led protests and try to enact a planned financial reform.

''The cost of failure is too great to contemplate, certainly greater than the cost of implementing success,'' he said.

Hezbollah is funded by Shi'ite Iran and has promised to provide its own financial aid to the war victims. Western countries and Arab Gulf states are anxious to show the Lebanese people they have deeper pockets and are the better allies.

''The process of reconstruction must be a priority for the Lebanese people, but they need help in order to do it,'' British Foreign Secretary Margaret Beckett told reporters, saying London would offer some 48 million dollars, primarily for refugees in Lebanon.

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

''Even in times of great despair our determination has never diminished. We have faith in the people of Lebanon,'' Siniora said.

REUTERS SP Ds1605