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ATHENS The Greek government is claiming a major success. The risk of immediate default has been avoided.

In the largest restructuring of debt in history, 85% of private investors have agreed to take steep losses on their holdings of Greek debt. They will lose more than 70% of their investment. They accepted - in the end - that this was a better deal than allowing Greece to go bankrupt, in which case they would have lost everything.

This agreement with private investors is an essential part of Greece's second bailout. It paves the way for the EU and the IMF to sign off on a 130bn-euro (£110bn; $173bn) rescue package. Greece, which was facing bankruptcy within two weeks, can breathe again.

Those investors who held out will be forced to participate. Because they would not be accepting losses on a voluntary basis it is quite possible that this will be judged a "credit event", which could count as a technical default. That, too, could trigger pay-outs of insurance, called credit default swaps (CDS). Even if it happens the ability to damage the market is less than it was. It remains, however, an unpredictable factor.

The focus will now shift to Greece itself. Its debt mountain - currently standing at 360bn euros and rising - will have 107bn euros lopped off the total.

The country will still be left with debts of 250bn. The economy is in the fifth year of recession. The earliest anyone predicts growth is 2014.

Another round of spending cuts - which was a condition for this latest bailout - will only weaken demand further. Unemployment is rising sharply. It has shot up to 21%. There are many who believe Greece is locked in a cycle of decline.

In this atmosphere the country will soon turn to politics. Elections are due in April or early May. The mood in the country is sullen and resentful. The parties that negotiated this bailout may not be rewarded. Parties from the far left and right are seeing their support increase. If successful at the polls these politicians they may not feel bound by the bailout conditions.

Greece has become a laboratory for austerity. Never, in recent times, has an economy of a Western country shrunk so fast - 16% in just four years. Its politicians are held in low regard. There is humiliation and shame that the running of the economy has largely been handed over to outsiders.

Many see Greece as little more than a protectorate of the EU. It is widely believed that the purpose of the bailout was less about helping Greece and more about saving the euro and protecting international banks from a default.

The unanswered question is where the growth will come from to bring down the remaining debt. There are plans to free up the labour market, to open up closed professions, but there is huge resistance. Some government assets may be sold off, but that will take time. The EU - after the Greek elections - may decide to throw in some funds that lie unused in one of its accounts.

The Greek government, time and again, has told the people that they face a choice. Leave the euro and face chaos and catastrophe. Or accept austerity and build a different future. The Greek people have largely accepted that argument.

But staying in the euro involves years of hardship and social tension. The best will emigrate, as they are doing already. The signs are everywhere of poverty, social break down, and homelessness.

It cannot be taken for granted that the Greek people will accept the medicine prescribed for it. That is why the Greek crisis is far from over.