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Plan for new Cyprus vote casts uncertainty on bailout

A man walks past a branch of Bank of Cyprus in Nicosia March 31, 2013. REUTERS/Yorgos Karahalis
A man walks past a branch of Bank of Cyprus in Nicosia March 31, 2013. REUTERS/Yorgos Karahalis

By Karolina Tagaris

NICOSIA, April 17 - A 10 billion euro aid deal to save Cyprus from bankruptcy has been thrown into fresh uncertainty with news that the country's fractious parliament will vote on the final package.

The surprise vote has only just been scheduled, and early signs are that nearly half the members of the 56-seat parliament may oppose the bailout, seen as vital to keep Cyprus in the euro zone.

The tiny opposition Greens Party said on Wednesday its sole parliamentarian would vote to reject the deal, becoming the first party to announce its intentions.

However, the Communist AKEL and Socialist EDEK parties, which together have 24 seats, have been vocal in their opposition to the bailout, and are seen as likely to vote against, although there is some chance they may abstain instead.

"We've fought for freedom, we've fought to maintain the Cypriot Republic," lawmaker George Perdikis said in statement.

"It is, in my opinion, a crime and wrong to deliver Cyprus into the hands of the troika and allow it to become a colony," he said, referring to the country's European Union, European Central Bank and International Monetary Fund lenders.

The parliament shocked Europe by voting unanimously in March against an initial bailout plan which featured controversial demands that bank depositors including small savers should have funds seized to pay towards the cost.

MASSIVE LOSSES

The final version of the bailout agreed with the European Union and International Monetary Fund, forced massive losses on big depositors in the island's two major commercial banks, triggering economic turmoil likely to sink the country deeper into recession.

The deal, which still requires ratification by parliaments in some EU member states, must also be put to Cyprus's parliament for a vote - a previously unscheduled plan - according to the attorney general, Petros Clerides.

In a statement late on Tuesday, Clerides cited a constitutional requirement for a vote on the bailout deal after it is formally submitted to the assembly by President Nicos Anastasiades. Opposition members had called for a vote, saying the assembly could not be ignored on such an important issue.

"Whoever is prepared to vote against the loan agreement should at the same time propose where this 10 billion euros will be found," government spokesman Christos Stylianides told state radio.

"They should also propose how we would deal with issues such as paying wages and pensions, and how we would deal with the international uproar caused by a possible rejection of the loan agreement," he said.

The bailout agreement was expected to be put to the assembly at the end of the month, once it has been approved by the cabinet, parliament's acting permanent secretary, Socrates Socratous, told Reuters on Wednesday.

Euro zone finance ministers last week approved 10 billion euros in aid. In return Cyprus must come up with a further 13 billion euros, bringing gross financing needs for the island to 23 billion euros.

Two of the biggest parties in parliament and allies in government, the Democratic Rally and the Democratic Party, will vote in favor of the deal. Even combined, however, they fall short of a majority, leaving the government scrambling to find support among smaller parties.

"It's time to face this critical situation for the salvation of our country and everyone needs to take responsibility," said Lefteris Christoforou, vice chairman of the ruling Democratic Rally party.

(Editing by Stephen Nisbet)

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