* Cyprus bailout thrown into doubt by parliament
* Further aid to be withheld, conditional on privatisations
* Island's cabinet debates situation on Friday
By Michele Kambas
NICOSIA, Feb 27 International aid to
cash-starved Cyprus was thrown into turmoil on Thursday after
its parliament rejected a privatisation plan, throwing into
disarray the disbursement of a new tranche of financial
assistance next month.
The rejection dealt an unexpected setback to an
administration that has gained plaudits in three reviews from
its borrowers, the International Monetary Fund and the European
Union, for meeting bailout commitments.
In a cliffhanger vote on a roadmap for mandatory
privatisations demanded by lenders, 25 lawmakers turned down the
motion, 25 approved it and there were five abstentions,
rendering the bill null under parliamentary regulations.
Earlier, hundreds of workers at corporations facing
privatisation staged an angry protest outside parliament.
Thursday's vote carried overtones of a chaotic bailout
almost a year ago, when the parliament rejected terms for
international aid, rendering the loan conditions significantly
worse days later.
It was not immediately clear if the government would try to
call a new session of parliament to debate modified proposals.
The eastern Mediterranean island's government had warned
lawmakers that the roadmap must be in place by March 5 for
Cyprus to be eligible for a new aid instalment.
"We are determined to maintain the course towards recovery
and stability," a senior finance ministry source told Reuters,
adding the cabinet would review the situation on Friday.
UTILITIES DUE FOR SALE
Approval of a privatisation plan is mandatory under terms of
an EU/IMF bailout Cyprus secured in March 2013, pulling it back
from the brink of bankruptcy with 10 billion euros in aid.
Without approval of the legislation, Cyprus cannot get a
fourth tranche of about 236 million euros in aid next month. The
state has already received almost half its bailout amount.
As part of its commitments to pay down debt, Cyprus is
expected to privatise three major public utility corporations -
Cyprus Telecoms CyTA, the Electricity Authority and the Cyprus
Ports Authority - to raise some 1.4 billion by 2018.
According to a confidential roadmap prepared by the finance
ministry and seen by Reuters, authorities plan to convert the
corporations into joint-stock companies initially, then seek
strategic investors later, with options for part-ownership also
offered to staff.
Thursday's rejection of the privatisation motion was aided
by some members of the Democratic Party, which had until then
been a junior coalition partner in Cyprus's centre-right
The party had earlier announced its decision to quit the
government in disagreement over its handling of reunification
talks with the island's estranged Turkish Cypriot community.