“It’s a giant step in terms of conception,” said Theodore Couloumbis, a vice president of the Hellenic Foundation for European and Foreign Policy, in Athens. “But it’s a baby step in terms of realization or implementation.” 
 
 European political leaders have pressed Greece for months to commit to a thorough overhaul of its bloated, state-led economy, and they hailed the vote on Wednesday as offering hope that the debt crisis was manageable. 
 
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 Chancellor Angela Merkel of Germany welcomed the development as “really good news,” while the president of the European Commission , José Manuel Barroso , and the European Council president, Herman Van Rompuy , said in a joint statement that Greece had taken “a vital step back — from the very grave scenario of default.” 
 
 They urged Greek lawmakers to pass the second vote on Thursday on carrying out the measures, adding that “it would also allow for work to proceed rapidly on a second package of financial assistance, enabling the country to move forward and restoring hope to the Greek people.” Officials have promised that they will make more money available to help stimulate growth in Greece if it sticks to its austerity pledges. 
 
 Europe has much at stake in making the new bailout a success because several other countries that use the euro face similar, if less immediate, problems of high debt, widespread unemployment and little or no growth. Ultimately, many economists say, the sovereign debt of Greece and some other countries will have to be restructured, with their creditors accepting a discount on the debts’ face value. European officials have so far sought to avoid taking that step. 
 
 “If Europe comes together with an appropriate framework, that will enable a default to be avoided,” said Joseph E. Stiglitz , the Nobel-winning economist. “But there’s every sign that Europe won’t do that, so the likelihood of a problem down the line is very significant.” 
 
 Kenneth S. Rogoff, a former chief economist at the International Monetary Fund , who is now a Harvard professor, said the Greek vote and the infusion of aid would only buy a little time. 
 
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 “It’s certainly kicking the can down the road,” Professor Rogoff said. “Greece is basically being bribed not to default. But as long as Greece doesn’t grow briskly for a sustained period, it’s in hot water.” 
 
 Hope is also in short supply among many Greeks, who said that the first round of austerity imposed after Greece’s first bailout last year had worsened rather than improved their plight, and that the second round demanded even deeper cuts in many areas. 
 
 “Of course things will get worse,” said Thimios Vilias, 35, who said his two-year contract at an insurance company would run out soon and who came out to protest on Wednesday. “The measures won’t do any good for Greece. We have more debt, more debt, more debt, and we have no work,” Mr. Vilias added. 
 
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 The measures approved on Wednesday will at least on paper lead to the dismantling of a big part of the economy’s state-run sector. They call for the privatization of 50 billion euros, or about $72 billion, in state assets, including ports, telecommunications concerns, real estate and stakes in the public power corporation. 
 
 They also include one billion euros, or about $1.4 billion, in cuts in the defense sector over the next five years; more than two billion euros, or $2.9 billion, in cuts to the health sector through 2015 by reducing regulated prices for drugs; tax increases on heating oil and the self-employed; and a shrinking of permanent and temporary public-sector employment. 
 
 They do not, however, provide for changing the Greek Constitution, which states that public-sector workers on permanent contracts have lifetime tenure. Since last year, Greece has cut the wages of its 800,000 public workers — a quarter of the work force — by more than 10 percent. 
 
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 After days of heated debate, Mr. Papandreou won by a simple majority, 155 to 138, with all but one lawmaker from his Socialist Party voting in favor and only one conservative opposition deputy breaking ranks to support the measure. 
 
 Perhaps the greatest challenge for the government will be to modernize the country’s confusing tax code, and to collect the billions of dollars in tax revenue that analysts say is at the heart of the country’s solvency problems. 
 
 At his first news conference as newly appointed finance minister after a cabinet reshuffle this month, even Evangelos Venizelos acknowledged that the new changes were emergency measures that did not constitute a new tax plan. 
 
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 “It is not the new national taxation policy, it is not the modern complete taxation system that takes into consideration everything and that eradicates injustice and contradiction,” Mr. Venizelos said. 
 
 Mr. Papandreou is also running low on political capital, having failed to form a coalition government with the center-right opposition after a revolt in the Socialist Party. It is unclear if he can hold onto power long enough to see the austerity plan through. 
 
 “This only buys Greece time to get the serious work done,” said Carl Weinberg, chief economist of High Frequency Economics in New York. “But now they have to make the debt situation sustainable beyond August. Much depends on whether the government will stay the course, and when there are new elections, whether a new government decides to stick with the austerity measures this government passed, which is not certain,” Mr. Weinberg added. ||||| Anti-austerity protesters set up roadblocks as they attempt to block streets leading to the parliament in Athens June 29, 2011. Greece's parliament looked increasingly likely to approve unpopular austerity measures on Wednesday, despite violent protests, to secure international funds to prevent the euro zone's first sovereign default. 
 
 ATHENS (Reuters) - Greek police firing tear gas fought running battles with stone-throwing protesters outside parliament on Wednesday as signs grew the government would succeed in pushing through an austerity plan demanded by creditors. 
 
 With Greece risking bankruptcy if the measures are blocked, parliament was due to vote in the afternoon on the mix of spending cuts, tax increases and privatizations to be implemented as conditions for a massive bailout by the European Union and the International Monetary Fund. 
 
 Tens of thousands of protesters, many of them waving Greek flags and beating drums, packed Syntagma Square outside parliament as a 48-hour general strike that began on Tuesday brought central Athens to a standstill. 
 
 "Dissolve parliament," read one banner. 
 
 Demonstrations turned violent for a second day when a surge in the crowd overturned metal barriers, forcing back a line of riot police, who responded with flash bombs and tear gas. 
 
 "Cops, pigs, murderers!" chanted the crowd at a line of white-helmeted riot police as tear gas projectiles turned the air outside parliament white. A line of protesters joined hands in a traditional Greek dance in front of police lines. 
 
 Inside parliament, the government of Socialist Prime Minister George Papandreou inched closer to securing the majority it needs to pass the law as a member of the conservative opposition said she would vote for the 28 billion euro ($39.7 billion) package. 
 
 Late on Tuesday, one of three rebel Socialist (PASOK) lawmakers climbed down, saying he would support the measures. 
 
 "I have made the decision to vote for the plan because national interests are more important than our own dignity," the deputy, Thomas Robopoulos, told Reuters. 
 
 A parliamentary official said the vote would probably take place between 2 and 5 p.m. (1100-1400 GMT). 
 
 One communist deputy was pelted with yoghurt as protesters tried to block several avenues around parliament to prevent the vote. At least three people were treated for minor injuries as protesters skirmished with police. 
 
 The communist-affiliated PAME labor group held a rally in the morning and several other meetings were expected during the day, culminating in a major demonstration by public service union ADEDY and private sector union GSEE at 7 p.m. (1600 GMT). 
 
 Greece's central bank governor, George Provopoulos, warned that a "no" vote would be suicidal for Greece. 
 
 "For parliament to vote against this package would be a crime - the country would be voting for its suicide," he told the Financial Times. 
 
 BITTER RESENTMENT 
 
 The measures demanded by international lenders as the price for continuing to support Athens have wrought bitter resentment in a Greek population coping with the deepest recession since the 1970s and now facing years of grim austerity. 
 
 Another PASOK rebel, Panagiotis Kouroublis, said he still objected to the plan but declined to say whether he would vote against it. "I will speak to the parliament later and you will hear what I have to say," he told Alter TV. "Nothing is more important than my dignity and my love for my country." 
 
 The Socialists hold a narrow majority with 155 seats in the 300-member legislature and with Robopoulos, the most prominent of a handful of potential rebels, backtracking on his opposition, chances of the vote going through improved. 
 
 In a sign of growing optimism on financial markets about the outcome, Greek bank stocks opened up 3 percent on Wednesday, while Greek bond yields fell. 
 
 However, even with approval on Wednesday, there will still be a risk of lawmakers rejecting detailed austerity bills in votes on Thursday on the implementation of different elements of the plan, such as tax rises and the sale of state assets. 
 
 "Will there be a way to compensate households for the heating fuel increase? Will there be exemptions for agriculture to help it be competitive? I am waiting for answers to see what I will do in the implementation law," said Socialist MP Mihalis Tzelepis, reflecting the anger within the party. 
 
 The EU and the IMF have said the entire plan must be passed this week for Greece to obtain the next, 12 billion euro ($17.3 billion) tranche of emergency loans under the bailout. 
 
 Greek officials have said the country needs the money by mid-July to continue paying its debts. 
 
 Despite heavy international pressure, the center-right opposition declared it would vote against the package but close attention was being paid to a splinter group of conservative deputies led by former foreign minister Dora Bakoyanis. 
 
 Bakoyanis, who broke party ranks to vote in favor of Greece's first EU/IMF bailout last year, said on Wednesday she would abstain from voting this time. The other four deputies in her group would vote according to their consciences. 
 
 "The government cannot govern and apply the program and the political opposition is lying, this is the problem. It does not dare to tell people that there are no magic solutions, that sacrifices are necessary," Bakoyanis said. 
 
 (Additional reporting by George Georgiopoulos and Ingrid Melander; writing by James Mackenzie and Daniel Flynn; editing by Mark Heinrich)
– Things got ugly in the streets of Athens today, as Greece’s parliament began voting on austerity measures—needed to keep the nation out of default—that looked increasingly likely to pass. Police firing tear gas fought what Reuters describes as “running battles” with protesters, who threw firebombs, rocks, and firecrackers, and knocked over barricades. Other protesters remained peaceful—one group broke into a traditional dance in front of police lines. One of the two remaining members of the ruling Socialist Party publicly opposing the austerity measures changed his mind today, as did one opposition legislator. That stoked expectations that the bill will pass and had European stock markets climbing, the New York Times reports. Protesters, naturally, were less enthused. “They’ll be the worst criminals in history” if the vote passes, one 57-year-old pharmacist opined. “We want to see them hanged.”