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UPDATE 1-Kuwait govt calls for dissolution of parliament - KUNA

Wednesday, 3 Oct 2012 | 7:04 AM ET

* Move expected after parliament fails to convene

* Court ruling caused latest upheaval

* Political turmoil holding up investment and reforms

(Adds background)

KUWAIT, Oct 3 (Reuters) - Kuwait's cabinet has asked the country's ruler to consider dissolving parliament, state news agency KUNA said on Wednesday, in a widely-expected bid to clear the way for new elections and end months of political deadlock.

The major oil producer has been unable to hold a parliamentary session for several months after its top court effectively dissolved the opposition-dominated parliament, which was elected in February, basing its decision on a technicality.

The ruling in June reinstated the previous assembly, which contained more government supporters, but the body has not been able to convene due to a boycott by lawmakers.

The deadlock has frozen all parliamentary debate - the assembly was not even able to pass a budget for the current financial year.

Political turmoil has held up a 30 billion dinar ($108 billion) economic development plan. This year's phase of the plan was rejected by opposition deputies in April.

The plan, spread over four years until 2014, is supposed to provide for a series of huge infrastructure projects including a new airport terminal, new oil refinery and hospitals and was aimed at diversifying the economy and attracting foreign investment.

(Reporting by Sylvia Westall; Editing by Andrew Heavens)

((sylvia.westall@thomsonreuters.com)(+965 2240 8945)(Reuters Messaging: sylvia.westall.thomsonreuters.com@reuters.net))

Keywords: KUWAIT POLITICS/GOVERNMENT