Nicholas Blanford reports from Beirut on the latest political upheavals in Lebanon.

It has been a traumatic two months for Lebanon. No sooner had the new president Emile Lahoud been sworn in pledging a radical agenda of ending corruption and improving the civil administration, than Lebanon saw the seemingly invincible Rafik Hariri ousted from office as prime minister after six years at the helm.

Hariri, the flamboyant multi-millionaire businessman who launched the ambitious post-war reconstruction programme, had lost the support of Syria, the dominant powerbroker in Lebanon, and therefore had no choice but to step down. It must have been a bitter pill for Hariri to swallow when he discovered that his successor was none other than Salim Hoss, the veteran politician who was perhaps Hariri's most respected opponent in parliament.

The "White Revolution", as the switch in governments came to be known, was ostensibly provoked by a technical spat over the designation of the next premier after President Lahoud was installed in office last November. It was widely accepted that Hariri would be asked to form the next Cabinet. He has, after all, presided over three governments since first being appointed premier in 1992 and was irredeemably linked with Lebanon's recovery.

Few, including Hariri himself, could imagine Lebanon being governed by anyone else. Under the 1989 Taif Accord, which helped end Lebanon's civil war a year later, the 128 MPs in parliament are supposed to relay their choice of premier to the president in a series of consultations spanning a few days.

Hariri received the backing of 83 MPs, a sufficient number for him to be asked by the president to form the next government. However, Hariri objected to the fact that 31 MPs had asked President Lahoud to choose a candidate on their behalf, claiming the move was unconstitutional. He was also unhappy with Nabih Berri, the parliamentary speaker, who waited until the last minute before lending his support, with the clear objective of making it seem that his parliamentary bloc was instrumental in Hariri's appointment. In an apparent fit of pique, Hariri turned down President Lahoud's offer to form a government.

Few initially believed that Hariri was serious, expecting him to back down in a matter of days. As is customary when Lebanese politicians face deadlock, Hariri prepared to undergo the three-hour drive to Damascus to rally support for his position. But the penny finally dropped for Hariri when Damascus told him not to bother.

Hariri had apparently not recognised a significant shift in Syria's position towards Lebanon when Damascus earlier in the year threw its weight behind General Lahoud becoming the next president. Bashar Assad is being groomed to succeed his father, President Hafez Al-Assad, and, as such, has been handed the Lebanon portfolio from Syrian Vice-President Abdel-Hamid Khaddam.

Bashar Assad developed close ties with President Lahoud when the latter was the Lebanese chief of staff and Damascus was unwilling to see that relationship undermined by the redoubtable Hariri as prime minister. The election of Lahoud as president - which only proceeded after Damascus had given its blessing - heralded a new era in which Lebanon would be granted greater leeway in pursuing its domestic policies. The Taif Accord led to a weakened presidency and the creation of the so-called ruling troika of Maronite Christian president, Sunni Muslim prime minister and Shia Muslim Speaker. This shaky alliance was characterised by numerous feuds between the former president Elias Hrawi, Hariri and Berri. These spats were often only resolved after the three were summoned to Damascus where an avuncular President Assad would restore the peace between them. But Lahoud's election has signaled the imminent demise of the troika.

The new president was not prepared to play second fiddle to Hariri, with whom he had frosty relations. Too late, Hariri realised this. Berri, the third member of the troika, continues as parliamentary speaker for the time being but his influence has been severely undermined with the shift in power. Few expect Berri to survive in his post for much longer and his departure will be the final nail in the coffin of the troika, leaving President Lahoud very much in charge, supported by Premier Hoss. The departure of Hariri stunned the country. President Lahoud held a second round of consultations to find the next prime minister. There was only one realistic choice and that was Salim Hoss, three times premier and an economist with a reputation for honesty and modesty - the very antithesis of the ostentatious Hariri. Hoss selected a new Cabinet of 16 ministers - a mix of technocrats and politicians - half the size of the previous government. Only two ministers survived from the Hariri administration: Interior Minister Michel Murr retained his post and the former Health Minister Suleiman Franjieh was appointed to run the Agriculture and Housing portfolios. Both ministers remained in the cabinet due to their strong ties with Syria.

The pressing task facing the new government under Hoss is to tackle the dire state of the economy. When Hariri was appointed prime minister in 1992 he launched the ambitious Horizon 2000 reconstruction programme costing around $10 billion over a 10-year period. The plan was to rebuild the infrastructure, attract foreign investment and restore Beirut as the region's financial entrep™t. But the faltering peace process has discouraged nervous investors and helped stymie the influx of foreign capital. Instead of reducing spending, the Hariri government attempted to increase revenues, without much success.

The budget deficit is estimated at between 40 per cent and 50 per cent with Lebanon $15-$20 billion in debt. Hoss is well aware of the economic burden he faces: during his parliamentary speech to outline his government's policies he slyly referred to the "difficult situation we inherited from previous financial and economic practices."

Initial speculation that some of the more grandiose reconstruction projects may be shelved by the new cautious and frugal government was dismissed by Hoss. But it is clear that some of the projects will face close scrutiny for further cost-cutting measures. It is too early to tell how Hoss and his new Minister of Finance George Corm - a vocal critic of Hariri's economic policies - will cope with the economy, but their options are limited. "Frankly there is not much they can do other than a series of limited initiatives. It's like trying to cure a nervous breakdown with an aspirin," said Michael Young, the editor of the Lebanon Report quarterly. Among the mooted remedies are introducing privatisation, selling state property, increasing taxation, possibly through a value added tax system, and streamlining the civil service.

Hoss and his team have been swift to point out that no one should expect miracles and that the gloomy economic situation is likely to continue for some time. "The budget deficit is so huge that it cannot be curbed in one year. It has to be dealt with through a financial policy that stretches over five or even six years," warned Khalil Hrawi, the head of parliament's finance and budget committee.

As for Hariri, few expect him to sit idly by in the wings. There is a belief that if Hoss is unable to fulfill initial expectations and revive the economy, then Hariri may take advantage of his rival's loss of credibility and, with Arthurian destiny, return to lead the country.