It Won the Confidence Vote, but Greece's Government Still Has Everything to Lose (Time.com)

For Greek Prime Minister George Papandreou, winning the vote of confidence in Parliament was the easy part. His ruling Socialists hold a slim majority, and last week's cabinet reshuffle elevated party hardliners to keep rogue deputies in line. The vote, held just after midnight on Wednesday morning, passed 155 to 143.

Now, back to the hard part: Papandreou's embattled government resumes the deeply unpopular austerity program that's supposed to save Greece from defaulting on its massive national debt. Euro-zone leaders say the government must approve €28 billion of cuts, tax hikes, financial reforms and privatization in a June 28 vote before Greece receives the latest installment of bailout loans to allow it to keep paying off its debts. (See pictures of protests in Greece.)

Since last year, when Greece imposed a program of deep budget cuts and tax hikes in exchange for more than $150 billion in bailout loans from the European Union and International Monetary Fund (IMF), austerity has increasingly become a dirty word for many Greeks. "Austerity means unemployment, a dead economy and a 45% cut to my pension after I worked almost 40 years to get it," says Dimtrios Kountomerkos, a 58-year-old Athenian who retired from the Hellenic Air Force two years ago. "And still, after all these cuts, everyone says we're going to default again. What's the point?"

Kountomerkos and two of his friends were among the thousands who were waiting outside Parliament last night for the outcome of the vote. They drank beer and booed each time a deputy voted to support Papandreou's government. Most of the crowd was aligned with the aganaktizemenoi, the revolution-minded Greeks who have camped out for weeks in Syntagma Square across the street from Parliament. Modeled after Spain's young indignados, who protested their nation's own austerity cuts, the aganaktizemenoi represent the most visible revolt against Papandreou, whom they deride as a weak leader carrying out orders from international lenders instead of looking out for the Greek people. Many of these protesters are left-wing activists who oppose capitalism and blame banks for Greece's problems. They want to upend a political system they see as irrevocably broken, and call Papandreou's government a "junta" to associate it with the military dictatorship that ruled the country from 1967-74. It's a painful jab at Papandreou, who hails from Greece's most powerful family, which was chased out of the country by the military dictators. (See more on Greece's debt crisis.)

The aganaktizemenoi may be using a dated template to create a fresh revolution, but they have mobilized Greeks who have been quietly stewing about the country's downward economic spiral. Yet, the Syntagma protesters offer no clear solutions on how to save Greece from its debt crisis, says Stathis Kalyvas, a political-science professor at Yale. "It's a protest movement, so they know what they're against, but what they are for is very fuzzy," he says. "But it's an important movement in that it makes 'political time,' which is usually glacial, move faster - and it's clear Greek politicians have to move much, much faster on this crisis."

To do so, the Socialists must, at the very least, stay unified. That's easier now that Papandreou has brought in Evangelos Venizelos as the new finance minister and deputy prime minister. Venizelos, a 54-year-old constitutional-law scholar and former defense minister, is a forceful politician who is both widely respected and feared. He is also the Prime Minister's longtime foe, having unsuccessfully challenged Papandreou in 2007 for leadership of the PASOK party. "Venizelos is considered a tough, serious guy," says Ioannis Tsarmougelis, an economics professor at the University of the Aegean. "He is someone who commands attention in the party." (See why another Greek bailout is a bad idea.)

Passing the latest austerity measures also looks easier now. The new measures include more cuts to public spending, as well as tax hikes and a privatization plan. One part of this privatization includes reducing Greece's holding in the state-run electricity company, the Public Power Corporation (PPC). The PPC's union, Genop, says the privatization will lead to higher rates for consumers at a time when they're finding it hard to pay their bills. Genop is protesting with 48 hours of rolling power cuts that began Tuesday.

The most controversial part of the new austerity package is the government's plan to trim the public sector by 150,000 workers. Many Greeks consider the public sector bloated and inefficient, but cutting it will cost the government dearly politically. For decades, both PASOK and the main opposition New Democracy party crammed the public sector with their cadres, regardless of their qualifications, as a way to curry favor with supporters. "It's been a no-go zone for politicians for years, but the public sector must be overhauled," says political analyst Dimitris Skalkos. "It's the first step to wean Greek politicians from their dependence on special interests, and it will also open up this economy."

The public-sector union, ADEDY, will join the private-sector union in a 48-hour strike next Monday and Tuesday, when Parliament is supposed to discuss and vote on the new fiscal measures. Meanwhile, the Syntagma protesters are vowing to stay in the square until new elections are called. They say public opinion is on their side: According to a survey by Kapa Research for To Vima newspaper, more than 47% of Greeks surveyed oppose new austerity measures and want early elections. Papandreou is vowing to finish his government's term, which ends in 2013. (See how one year after the bailout, Greece is still hurting.)

Many analysts say Papandreou's government is doomed, and new elections are inevitable. But they also acknowledge that stability is crucial as markets and creditors watch Greece right now. The government is in talks with international lenders about a second bailout that could be as large as last year's package. The hard part, for Greece and for Europe, is far from over.

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Greece prepares to slash budget after confidence vote

Athens, Greece (CNN) -- Greece is set to press ahead with new taxes, public-sector job cuts and the sale of everything from airports to gaming licenses after Greek Prime Minister George Papandreou narrowly survived a confidence vote early Wednesday.

Papandreou is planning to cut 150,000 government jobs, slash the salaries of those who keep their posts, and slap new taxes on property, yachts and swimming pools.

He's trying to win confidence from international lenders in order to get a second bailout package to keep the government from defaulting on debts.

But the austerity package is very unpopular. Weeks of protests forced Papandreou to shuffle his cabinet last week, leading to the confidence vote, which he won 155-143.

European markets were slightly down Wednesday morning, though it was not clear if that was in response to the Greek vote.

International lenders have demanded Greece cut spending, lay off public workers, increase taxes and raise 50 billion euros ($71 billion) through selling off state-owned enterprises in exchange for another bailout deal for the cash-strapped nation.

Analysts warn that a Greek default could cripple the euro, the European Union's common currency, and send shock waves throughout the world economy.

"If Greece were to default, I think the idea that you could contain that would be fanciful," former British finance minister Alistair Darling told CNN Wednesday.

"It's a bit like saying, 'Let's let Lehman's go bust again and wait and see what happens," he said, referring to the investment bank that collapsed in 2008, adding fuel to the global recession.

An acute crisis in Greece would lead to a chain effect that "probably wouldn't stop in Europe," he warned. "It would have a feedback to American banks and so on."

Greek lawmakers are slated to vote on the privatization plan and further tax increases, pension cuts and layoffs on June 30, and European Commission President Jose Manuel Barroso warned Greece risks being abandoned by both Europe and the International Monetary Fund if it fails to act.

"There is no alternative to this program. Let's face it," Barroso told CNN on Tuesday. "And that's why it has to be clear. We need Greece to deliver, and if Greece wants this program of support, Europe is ready to support it."

Greek Finance Minister Evangelos Venizelos said Tuesday he was encouraged by support he received from main opposition leader Antonis Samaras on the austerity plan, which Venizelos said he would take to Eurogroup ministers July 3.

Harsh reforms designed to help reduce Greece's enormous budget deficit have so far led to tax hikes and public-sector job losses alongside already record-high unemployment. Papandreou faces opposition from within his own ruling socialists over the austerity measures.

Airports, highways and state-owned companies as well as banks, real estate and gaming licenses will all go on the auction block.

On June 9, the Cabinet approved a tough five-year plan for 2011-15 and introduced a bill in Parliament to put austerity measures into effect. The government proposes reducing the public-sector workforce by 150,000; workers will also face changes in working hours, practices and wages, and the plan also sets out changes to social benefits, including pensions and unemployment aid.

Protests against those plans turned violent June 15 as demonstrators threw gasoline bombs at the Finance Ministry and police fired tear gas at protesters, police said. But Papandreou did not change course, telling lawmakers over the weekend, "The government must stop spending more than it takes in."

According to the Finance Ministry, these measures will help achieve 28.3 billion euros ($40.5 billion) in cuts from 2012 to 2015 and shrink Greece's public deficit to less than 3% of gross domestic product, in accordance with the EU target.

CNN's Diana Magnay and Richard Allen Greene and journalist Elinda Labropoulou contributed to this report.

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