BEIRUT Lebanon must commit itself to wholesale privatization, such as selling Middle East Airlines, to win financial aid from abroad, according to a study by one of the country's leading economists. The report by Marwan Iskandar said Prime Minister Rafik al-Hariri, who has dismissed 500 public employees and ended a $30 million agricultural subsidy this year, must do more to reduce the size of the public sector. "For the first time since over 50 years, Lebanon has visible indicators of deliberate change for the better," Iskandar wrote in an advance copy of the report sent to Reuters. He said inefficiency, as shown by uncollected electricity bills, cost the state $200 million a year. Keeping defunct oil refineries and the loss-making MEA cost another $100 million. The cabinet is due to discuss on Thursday a proposal to lay off 1,200 MEA employees, one quarter of its workforce, as part of a restructuring program. MEA's pilots staged a 24-hour strike last week in protest at the planned cuts. Lebanon has $25 billion of public debt, equivalent to 150 percent of gross domestic product and the highest debt level in the Middle East. When Hariri returned to power last October, he was reluctant to lower spending and fire public workers, preferring instead to cut taxes and concentrate on growth after two years of recession. As prime minister between 1992 and 1998, the wealthy businessman has presided over a post-war boom fueled by expectations of Middle East peace and left office being blamed for racking up a huge debt. But Iskandar's study, entitled The Lebanese Economy (21st edition), said Hariri was given a "rude awakening" in talks with the World Bank and the European Union in Paris in February this year. The meeting with World Bank President James Wolfensohn and European Commission President Romano Prodi helped convince Hariri that indebtedness was too high and administrative reform was crucial to control it, the report said. Prodi has already said during a visit earlier in February to Beirut that the Lebanese government, whose spending accounts for more than half of GDP, should divest and limit itself to basic tasks, such as security and education. Although Hariri's subsequent dismissal of 500 public employees and ending of the agricultural subsidy helped Lebanon secure 500 million euro in aid, the prime minister still faces the hard task of reducing the huge army and security apparatus, Iskandar wrote.