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A dramatic public confrontation erupted between Australia's prime minister and his ambitious treasurer yesterday over an alleged promise to hand over power.

 

Just hours after Prime Minister John Howard, 66, denied making such a promise, Treasurer Peter Costello, 48, called a news conference to say that he had.

 

"There was no deal made," Howard said, denying a reported account of a meeting with Costello in December 1994 as the two men haggled over the leadership of the Liberal Party.

 

Costello, apparently deciding to take the gloves off after years of sparring over the premiership and ahead of national elections due next year, said, however, that Howard had asked him at the meeting not to stand for the party leadership.

 

"He told me that he intended to do one-and-a-half terms as prime minister and then would hand over. I did not seek that undertaking, he volunteered and I took him at his word," Costello said.

 

"Obviously that did not happen," he added.

 

Howard, who then won the party leadership without a challenge from Costello, went on to lead the Liberals to victory in 1996 and in three subsequent elections.

 

After Costello's astonishing remarks, which came close to calling Howard a liar, the prime minister issued a statement that did not dispute the treasurer's account of the 1994 meeting, but again said there was no deal.

 

"Nothing said by Costello today has in any way altered the position that no deal was made about a leadership transition," he said through a spokesman.

 

Howard became the most powerful Australian leader in a generation last year when his Liberal-National coalition gained a majority in the senate, giving it control of both houses of parliament.

 

Domestically, he has presided over boom times for Australia, with vigorous economic growth, tax cuts and budget surpluses although Costello, as treasurer, frequently takes credit for this.

 

Internationally, Howard made Australia one of the key regional allies of US President George W. Bush, contributing troops to the US-led invasions of both Afghanistan and Iraq.

 

While Costello is seen as less conservative on domestic social issues, there is no suggestion that he would seek to recall the troops from Iraq if he did get the top job.

 

But the infighting within the government could help the anti-Iraq War Labor Party make inroads into the coalition's 10-year grasp on power before the next elections due by the end of 2007.

 

Australian newspapers noted that Labor was leading the Liberals in the most recent public opinion poll and said in an editorial that the government was suffering from the leadership row, "appearing to have lost its way on policy."

 

The disputed meeting was revealed at the weekend when former Liberal minister Ian McLachlan, who was present, said he had kept notes which showed that Howard told Costello he would step down after two terms.

 

Costello has made no secret of his ambition to be prime minister, though in the past he and Howard have handled the regular questions about the succession with a mixture of humor and caginess.

 

That ended yesterday, but Costello indicated that he had no intention of leaving the government, despite calls from the Labor Party for him or Howard to quit the cabinet after the confrontation.

 

Asked if the prime minister had lied, Costello replied: "I'm telling you what happened. I'm not making any allegations against anybody."

 

(China Daily July 11, 2006)