* Conservative Anastasiades short of outright majority
* Run-off against Communist-backed Malas on Feb. 24
* Kingmaker Lillikas suspicious of terms for any bailout
* Financial crash could reignite euro zone crisis
* Runner-up will say on Friday who he supports
By Michele Kambas
NICOSIA, Feb 18 The Cypriot politician most in
favour of an international bailout was in pole position to win
next Sunday's run-off presidential vote as he and his
communist-backed rival launched a week of bargaining to woo
voters suspicious of a rescue package to stave off bankruptcy.
Conservative leader Nicos Anastasiades, who backs a swift
deal with the European Union and International Monetary Fund on
a bailout to fight the worst recession in four decades, faces
off Stavros Malas in a second-round vote on Feb. 24 after
neither won a clear victory in the first round on Sunday.
Markets are looking at a stalemate over Cyprus getting aid
with growing alarm, fearing a debt default could reignite the
euro zone debt crisis just as confidence slowly returns.
Both candidates need to broaden their appeal to woo
supporters of third-placed finisher George Lillikas, an
independent who has said the terms of any bailout could keep
Cyprus in perpetual bondage to foreign lenders.
He took a surprisingly high 25 percent of the vote, just two
points behind Malas. Anastasiades, 66, took 44.5 percent, 15,000
votes shy of an absolute majority that would have spared him the
need to fight a second round.
Lillikas kept candidates guessing about his intentions on
Monday, saying he would consult his supporters. "After
concluding this dialogue I will announce my position," he told
He said that would be on Friday, a day after Socialist EDEK
party, which had endorsed Lillikas, was due to announce its own
recommendation for the second round. Both run-off candidates had
meetings scheduled with the EDEK leadership on Tuesday.
Lillikas has expressed misgivings about potentially onerous
terms of a bailout deal with international lenders, saying
Cyprus should negotiate hard to be able to extricate itself from
bailout terms as soon as possible.
He has floated the idea of securitising Cyprus's natural gas
reserves, a proposal which has little traction with the other
two candidates who say it is premature. Exploration of those
offshore reserves is still incomplete.
He has long been critical of Anastasiades over the latter's
support for a U.N. reunification plan for Cyprus in 2004 -
unforgivable in the eyes of many hardline Lillikas supporters.
However, Malas is backed by Communists, who Lillikas says
conceded too much to Turkish Cypriots in peace talks when in
Next Sunday's winner will replace President Demetris
Christofias, a Communist Anastasiades has charged with running
the economy to the ground. Christofias is not seeking a second
If successful, Anastasiades faces a long list of challenges
in convincing the European Union and International Monetary Fund
to sign off on a rescue before the tiny state faces a
1.4-billion euro debt repayment in June.
He will have to assuage fears that Cyprus will never be able
to pay back its debt even if given a bailout loan equivalent to
the size of its economy, and quell concerns in northern Europe
that the island is a hub for laundering money from Russia.
Talks on a rescue, which have dragged on for eight months,
have also proven tricky because almost any way of solving the
crisis - from restructuring debt to imposing losses on banks -
could set a precedent for other troubled states and damage
sentiment just as fears of a Greek euro zone exit fade.
Cyprus sought financial help last year after its banks
suffered huge losses from Greece's sovereign debt restructuring.
The island, which has been shut out of international financial
markets since May 2011, needs about 17 billion euros in aid -
roughly the same as its gross domestic product.