By Ellen Francis
BEIRUT, Sept 22 (Reuters) - Lebanon's sectarian politicians have overshot one deadline they had agreed with France and missing more may put at risk a French lifeline to haul the Middle East nation out of its worst crisis since a 1975-1990 civil war.
France has drawn up a timeline for Lebanon to tackle corruption and deliver reforms to help secure billions of dollars in foreign aid to save a country drowning in debt.
But the leaders who oversaw years of wasted state spending and corruption have stumbled at the first hurdle by failing to deliver on a promise to French President Emmanuel Macron to form a new cabinet by mid-September.
Yet choosing a cabinet may prove the easy bit. Once named, the ministers have a mountain of challenges, ranging from reviving a paralysed banking industry to fixing a power sector that cannot keep the lights on in a nation of about 6 million.
Macron, who visited Beirut after a devastating Beirut port blast in August, has told politicians they could face sanctions if graft gets in the way. And Paris has repeatedly said there will be no aid without change.
WHAT PREVENTED LEBANON NAMING A GOVERNMENT QUICKLY?
Factional, sectarian politics is to blame. At the heart of the cabinet logjam has been a demand by the two main Shi'ite Muslim parties, Iran-backed Hezbollah and its ally Amal, to pick several ministers and to keep the finance post in their hands.
The finance ministry will have a vital role in drawing up plans to exit the economic crisis.
Prime Minister-designate Mustapha Adib, a Sunni under Lebanon's sectarian power-sharing system, had sought to shake up the leadership of ministries, some of which have been controlled by the same factions for years.
Hezbollah, whose political influence has grown, and Amal view moves to shift them out of key cabinet posts as a bid to weaken their sway, politicians say.
They have a parliament majority with their Christian and other allies, although the cabinet dispute has put them at odds. President Michel Aoun, a Maronite Christian allied to Hezbollah, has said no sect should claim any ministry.
But Washington's decision in September to impose U.S. sanctions on Hezbollah's allies deepened the Shiite bloc's resolve to dig in over cabinet appointments, political sources say. Washington deems Hezbollah a terrorist group.
Yet foreign pressure could also deliver results. Macron's intervention prompted Lebanon's bickering leaders to agree on the prime minister-designate hours before the French president arrived in Beirut on his second visit in less than a month.
WHAT'S AT STAKE?
France has said Lebanon faces collapse if it doesn't change course. The Lebanese president has said the country is going "to hell" if doesn't name a cabinet. Many Lebanese, thousands of whom took to the streets last year to demand change, have already been plunged into poverty as the economy has crashed.
Lebanon needs cash - and fast - after defaulting on its towering sovereign debt and with its banks on their knees. The Beirut port blast, which killed almost 200 people, handed the nation with a new repair bill estimated at up to $4.6 billion.
The central bank has been using up dwindling foreign reserves to subsidise vital imports of wheat, fuel and medicine. Lifting subsidies, which the central has said cannot go on indefinitely, will bring more misery and may stoke tensions.
Minor episodes of sectarian unrest and factional skirmishes have accompanied the economic freefall. Further deterioration threatens more flare-ups, while security forces are paid in a currency that is rapidly losing its value.
Donors who promised billions of dollars to help Lebanon in a 2018 Paris conference refused to hand over the cash when the country failed to deliver reforms. They have made changing course a condition for any future help.
Macron delivered a stark message in Beirut on Sept. 1: "If your political class fails, then we will not come to Lebanon's aid."
WILL THINGS GET EASIER WITH A GOVERNMENT IN PLACE?
There are big challenges ahead. France has drawn up a detailed roadmap for the new cabinet, ranging from swiftly restarting talks with the International Monetary Fund to launching tenders to start building new power stations.
Crucially, France has said the government must start to tackle endemic corruption quickly in order to secure funds at another donor conference that Paris has said it is ready to hold in the second half of October.
This means any new government faces a tight deadline. It may prove a tall order for Lebanon's fractious politicians who have already failed to name a cabinet on time.
(Editing by Tom Perry and Edmund Blair)
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