A political battle between Lebanese Prime Minister Rafiq Hariri and President Emile Lahoud, who wants a change to the constitution to let him seek another term in November, is heating up, with the focus on the country's massive 34 billion dollar debt.
Hariri strongly opposes a second six-year term for Lahoud, but Syria, which holds the whip hand on the Lebanese political scene, has yet to make up its mind.
The president will propose to the cabinet on Thursday a huge swap operation involving foreign currency bonds maturing in 2005 and 2006 and worth some 7.05 billion dollars, or nearly 25 percent of the debt, which itself represents 185 percent of Lebanon's gross domestic product.
Debt servicing accounts for 47 percent of state revenues.
The prime minister, who claims to be the champion of reconstruction and reform in Lebanon, has rejected Lahoud's proposal, seeing in it an attempt to seize control over management of the country's finances.
Hariri has been at Lebanon's economic helm since 1992 except for a two-year break when he was removed from government following Lahoud's election in 1998, weathering criticism that his policies were especially benefiting the construction company he heads. He accuses Lahoud, a conservative former army chief, of blocking reforms pledged at a conference in Paris last year to secure aid from donor countries and institutions.
"Lahoud is trying to show that if he is re-elected he will not need Hariri any more," one economic expert who declined to be identified said.
The expert said Lahoud's swap plan was a reaction to a statement by Hariri on May 18 that Lebanon could hold a third donor conference in Paris in the second half of 2005, after having completed reforms needed to put a "final end" to deficit and debt crises.