Tunisian leaders began the search for a new prime minister on Wednesday to try to lead the North African nation out of its gravest political crisis since an uprising that inspired a wave of Arab revolts two years ago.

President Moncef Marzouki was due to consult the leader of the main Islamist Ennahda party on who should lead the next government, a day after Prime Minister Hamadi Jebali resigned.Jebali quit after his plan for an apolitical technocrat cabinet to prepare for elections failed. He had proposed it after the assassination of opposition leader Chokri Belaid on February 6 shocked Tunisia and widened Islamist-secular rifts.Eventually it was Jebali's own Ennahda party that scuppered the idea, extending a political impasse that has cast a shadow over Tunisia's fledgling democracy and its ailing economy.

The crisis deepens," ran the headline in the independent Assarih newspaper, which said Ennahda's efforts to keep its cabinet posts and the collapse of Jebali's initiative had "returned the country to square one".Tunisia began a transition to democracy after the peaceful overthrow of President Zine al-Abidine Ben Ali in January 2011, electing a National Constituent Assembly to write a new constitution, and then forging a deal under which the moderate Ennahda party agreed to share power with its secular rivals.But disputes have delayed the constitution and the failure to tackle unemployment and poverty in a country that relies on tourism has dismayed many Tunisians and led to frequent unrest.

Negotiations on a $1.78 billion loan from the International Monetary Fund cannot be concluded amid the latest uncertainty.Once a new government is named, we will enquire about its intentions/mandate," an IMF spokeswoman, Wafa Amr, told Reuters in an email. "Once the political situation is clarified, we'll assess how best to help Tunisia."

"WORSENING OUTLOOK"

Standard and Poor's lowered its long-term foreign and local currency sovereign credit rating on Tunisia on Tuesday, citing "a risk that the political situation could deteriorate further amid a worsening fiscal, external and economic outlook".Marina Ottaway, senior scholar at the Wilson Center's Middle East Program in Washington, said the economic woes of countries like Tunisia and Egypt could not be solved in the short run.There will remain unfulfilled expectations and a lot of economic hardship, but the major cause of instability now is a struggle for power between Islamists and secularists," she said.

No one claimed responsibility for Belaid's assassination, the first in Tunisia since 1952, but it deepened the misgivings of secularists who accused the government of failing to rein in the sometimes violent activities of Islamist hardliners.Three days of unrest followed the killing, straining the Islamist-secular coalition government and prompting Jebali to propose a non-partisan cabinet to avert further strife.Secular parties mostly supported his idea, but Ennahda, the biggest party in the assembly, opposed the idea, fearing it would be sidelined from power. Jebali, who has been in office for 15 months, may be asked to carry on as caretaker premier.

Ennahda leader Rached Ghannouchi has said he wants to see Jebali head a new coalition, but the outgoing prime minister said on Tuesday he would not do so without assurances on the timing of fresh elections and a new constitution."Jebali will probably refuse to head a new government as Ennahda wants," said political analyst Youssef Ouslati. "If Ennahda does not open up more, it will be very isolated."Ghannouchi has said it is essential that Islamists and secular parties share power now and in the future, and that his party was willing to compromise over control of important ministries such as foreign affairs, justice and interior.

Marzouki, whose own secular party was in Jebali's coalition, held talks with opposition parties and a delegation from Ennahda on Wednesday, before his scheduled meeting with Ghannouchi.Samir Bettaib of the secular Massar party said Marzouki had asked it to join a new coalition, but it had its own demands. "We want the interior minister to be independent," he said.Tunisia is at a crossroads over the choice of prime minister, according to political analyst Salem Labyed.

If Jebali returned as head of a new coalition, negotiations would be easier and he could forge a new consensus, he said."But if Ennahda designates one of its hawks, there will be a conflict with the secular parties," he said. "At that moment the atmosphere would be very tense and could move to the streets.