After marathon and heated discussions, agreement was reached on a new rescue package for Cyprus. Compared to what had emerged a week earlier, this is a better technical outcome — both in what it contains and in what is left out.
Yet implementation will be very challenging, especially as Europe is yet to find an answer to the most important question of all: how to improve growth and employment prospects in a significant and sustainable manner.
After a badly botched attempt, Cyprus and its “Troika” of supporters (European Commission, European Central Bank and the International Monetary Fund) agreed last night on a technically more robust rescue program which would unlock some EUR 10 billion in external support. If implemented fully, Cyprus would thus avoid an immediate financial collapse. But its economy, nevertheless, faces significant economic contraction and tremendous social costs.