Greece is in a fifth year of recession, with the economy forecast to shrink 4.5 percent this year before starting to expand again in 2014 — although by then it will have contracted by more than 17 percent since the beginning of the crisis in 2009. Unemployment is at 21 percent, with one in two workers under 25 out of a job.
Majority Socialist leader George Papandreou urged Greeks "to continue the fight we have started, despite the huge price, and not abandon the effort halfway through."
Without either aspect of Tuesday's agreement, Greece would have soon been forced to default on its debts — halting pension and civil servant salary payments. In all likelihood, Greece would have had to leave the common European currency it joined in 2001.
"I feel relieved to start with, because my country has escaped the immediate danger it faced," said Athens lawyer George Sabalos, 40. "But I'm also troubled by our partners' demand that the country's constitution should be modified as part of the guarantees they are seeking, because I believe that is a rather excessive demand that goes against the principle of solidarity."
Greece has agreed to change its constitution, to give priority to debt servicing payments that will be put directly every quarter into a segregated account.
The country's unions fiercely oppose further austerity measures that accompany the second bailout, and have called a protest rally outside Parliament in central Athens on Wednesday.
Prime Minister Lucas Papademos called a cabinet meeting to discuss the additional cutbacks, which were included in emergency legislation tabled late Tuesday. The draft law will force private sector employees to accept further salary cuts as a result of the minimum €751 ($996) monthly wage being cut by 22 percent, and further cut pensions.
"Workers in our country refuse to accept the barbarity of the tougher neoliberal measures that have been extortionately imposed by our creditors, and that is why they will continue and step up their struggle ... to block the destruction of our society," the main GSEE private sector union said in a statement Monday.
GSEE and its public sector counterpart, the ADEDY, have staged a series of general strikes over the past two years. Many have turned violent, and as Greek lawmakers debated new austerity measures on Feb. 12 extensive rioting saw dozens of businesses in central Athens burnt and looted.
Three workers died in an Athens bank torched by rioters during a protest in May 2010.
Shares on the Athens Stock Exchange fell 3.47 percent Tuesday to 797.13 Tuesday, erasing some of the gains made on the expectation of a deal in recent days.
Greece is expected to hold national elections in April, after Papademos' interim coalition fulfills its mandate by securing and implementing the twin bailout and debt relief agreement.
Papademos told ministers Tuesday that a special account promised by his government to hold debt servicing funds would be created at the Bank of Greece and be less restrictive than initially sought by rescue creditors.
A new poll published Tuesday indicated that Samaras' conservative party would come first in the vote, but without the majority needed to govern alone. The GPO poll for private Mega TV gave New Democracy 19.4 percent, followed by the Socialists at 13.1, and the new Democratic Left party with 12. The Communist party would get 9.5 percent, followed by the Syriza left coalition at 8.5 and the rightist LAOS — a former member of Papademos' coalition — with 5.1 percent.
Some 63 percent of respondents said they would rather the elections led to a new coalition government.
Elena Becatoros in Athens and Menelaos Hadjicostis in Nicosia contributed.
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