The bailout deal for Cyprus is deeply flawed. Some analysts say it is even worse than the original plan announced just over a week ago.

For sure, it will have serious knock-on effects, some of which will only become apparent over the coming weeks, months and years.

But it was probably the best that could be achieved in the desperate circumstances that followed the rejection of the original terms by the Cypriot parliament last week. And it has removed the immediate risk of a banking collapse and exit from the single currency.

The new proposal removes the most objectionable aspect of the first package – the levy on all depositors – making it less politically toxic. Money will instead be raised from rich depositors – those with savings of above €100,000 – and bondholders.

By raising money from the better off – many of them Russian – Cyprus will get €10bn from the troika (the European Union, the European Central Bank and the International Monetary Fund).

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