The people of Greece voted on a referendum on Sunday, the first referendum that Greece has held since 1974, and voted for whether or not to accept Greece's international creditors' proposals for more austerity in exchange for rescue loans needed to avoid default and a banking collapse.The result of the Greek referendum is also being watched closely by international creditors as well as EU officials in Brussels due to its potential effects on financial markets and the EU itself. Daily Sabah spoke with Greek academic Ioannis Grigoriadis from Bilkent University just before the referendum and talked about possible consequences of it passing or not, political and social consequences of the Greek crisis and its implications for international politics.Daily Sabah: How would you evaluate the current situation in Greece?Ioannis Grigoriadis: The government has decided to call a referendum regarding the approval of one of the proposals the lending institutions the European Commission, the International Monetary Fund (IMF), the European Central Bank (ECB) has put on the table. The Greek government has decided to recommend voting against the referendum and this has unleashed an unprecedented economic crisis, especially hitting the banking sector. The banks in Greece have been heavily weakened by the ongoing economic crisis for five years, but this decision of the government has brought them to the brink of collapse. Currently, the question is whether the Greek banking sector will survive a possible negative vote in the referendum and whether the collapse of the Greek banking sector, assuming there is a negative vote, might eventually lead the government to pull out of the eurozone or even from the EU. Right now, the Greek government has no cash to pay the debt. Therefore, in order to make payments, they will have to find a solution and the solution means a new credit line. If no alternative lender is found, the only way for the government to maintain its operation would be to print its own money.D.S.: What is your personal prediction for the result of the referendum?I.G.: It should be remembered that this is a really short referendum campaign period, almost 10 days. Recent polls show a slight lead for the yes vote, which I think is most likely. However, it is a very quick race and we do not have high quality statistical data to make a very strong prediction. Whatever transpires this week is likely to have an impact on the result.D.S.: If it results in a positive vote, what will be the implications?I.G.: This will mean Syriza will suffer a very heavy blow to its prestige and I am sure that the opposition parties and the pro-yes movement would demand the resignation of the government. The establishment of a coalition government to save the country from an economic catastrophe is very likely. However, it seems like Syriza will try to avoid resigning, because right now they have a majority. Therefore, even though politically weakened, they will still need a vote of no confidence if they do not resign themselves.One of the other possibilities is that the country may go on to early elections in September, however the situation of the economy is very critical so waiting until September will be a real challenge. Cash reserves are almost depleted and the government still has to make payments such as salaries and debts to avoid complete default. They did not repay the IMF, but there are still payments to be made to the ECB. If this is not paid, the ECB may just bring down the Greek banking sector, which is an important defense line, as it would mean the loss of millions of people's deposits. The disaster will acquire enormous proportions and will hit the everyday lives of citizens even more. As you know, there are limits for withdrawals from the banks and some vulnerable parts of society are already in a difficult situation.D.S.: Do you think that a yes vote may save the Greek economy?I.G.: I wish it would be that easy, but I am afraid that everything getting back to normal will require more effort. The damage that will be seen this week will be very hard to recover from. I think that the only way out of this crisis without causing further damage is a yes vote in the referendum and hopefully a strong one, above 60 percent. Yet there will be enormous work to be done and we do not know the damage. As I have mentioned, the banks are closed and to reopen them will require a huge effort. There was an offer of 12 billion euros on the table if Greece agreed last week. However, this offer expired formally at the end of June. This money is no longer available. Had the government said yes to this, they would have immediately gotten 12 billion euros. As this offer is now void, to have this money, you have to get approvals of all parliaments, which is not an easy task. The situation has become more complicated. Still, I think that the first step to take to stabilize the situation is a yes vote.D.S.: Do you think there will be political consequences for the government?I.G.: Yes, of course. Syriza has lost its credibility both internationally and domestically. If you look at what the government promised over the last months, they have fallen short in everything. The last proposal of the Syriza-led government was a reform program that would cost 8 billion euros that was not accepted by the others. Syriza promised no austerity measures, but they suggested austerity measures that would cost 8 billion euros. The tragedy is the poorest segment of Greek society is paying the price, not the rich or the big capital holders. In that regard, I cannot see how we can get out of this situation without the establishment of a coalition government. I do not say that Syriza should be left out of this coalition, but the ministers should be credible. Minister of Finance Yanis Varoufakis and Prime Minister Alexis Tsipras have created a deficit of trust between the sides. I wish the business negotiations were finished many months ago. Now, at the very last minute, everything has collapsed. This is not a good performance, especially in this critical circumstance.D.S.: When Syriza rose to power some expected that a leftist wave would sweep across Europe. Do you think this dream is over?I.G.: I think so. Syriza suggested something that appeared to be unrealistic from the very beginning, but many people thought they would eventually come up with a compromise. Syriza said that they would not question the position of Greece in the eurozone and the EU. However, all of the developments of the last week show that Greece's position in the EU may well be questioned if the country defaults in an unregulated way. The only solution for the government would be to pull the country out of the EU. If Greek fails badly, I am afraid that many leftist parties existing in Spain or Portugal or other parts of southern Europe would be willing to disconnect themselves from Syriza's experiences, as they would not want to end up supporting a party that brought a catastrophe to the economy. There was an interesting statement Sunday by Podemos in Spain trying to keep distance from Syriza saying that they would not do this and this is not how they see the future of Spain. While Syriza's victory was seen as an opening for new leftist parties, Syriza's fall along with Greece will have very negative consequences for leftist parties in other countries. People will get scared and they will see this sort of romantic or idealistic way of regarding economic policy as possibly leading to disaster.D.S.: What will be the consequences of a possible no vote?I.G.: This will be a big victory for Syriza, as well as the nationalist parties such as Golden Dawn who back a no vote. This will be an enormous success for Tsipras and his party, but it will not address the existing economic problems. Syriza says that they are willing to get a new mandate from the people to negotiate. The situation is that the Greek crisis has not caused significant economic turbulence in global markets. This might mean that managing the cost of a Greek collapse that may continue in the weeks to come if an agreement cannot be reached with the EU might appear to be more manageable than many have expected. In that respect, the Europeans might just let the Greek economy asphyxiate. They do not feel pressured to provide money as Tsipras rejected their offer and there is no threat against capital markets. The only way for the Greek government to pay salaries by the end of July would be to issue some sort of currency. There are many scenarios that include issuing bonds limited to Greek territory for the civil servants. This may have an enormous consequence for the Greek economy. Tourism may deteriorate more than the current situations as the withdraw limit caused a prominent impact on the sector already. No tourist would want to stay in a country in which social unrest or civil disorder is possible. This will likely generate a very negative spiral of developments like social unrest. I am afraid it might lead to clashes between people with different views on the situation in Greece.D.S.: It is estimated that a Grexit might cost 1 trillion euros. Do you think both the European and world economy can absorb this cost?I.G.: No one really knows. It will be a step into the unknown for everyone. The problem is that if the Greek government fails to collaborate and appears to be untrustworthy or incredulous, the European side could consider a Grexit as they would not want to award such an attitude. They know that if they appear to be soft on Greece it might implicate that rules do not carry weight in the EU. If they give up on Syriza, Podemos in Spain might have similar demands and the cost might go higher. Therefore, costs are taken into consideration, however Greece's failure to comply with the rules might be more costly.D.S.: What are the fundamental issues in the Greek economy?I.G.: There are three issues that are important while only the deficit and debt are mostly mentioned. However, I think the most important issue is competitiveness. The Greek economy has been disoriented over the last decade. We can look into how this happened and whether the EU was responsible. The manufacturing sector almost disappeared, the country exports very few products to the rest of the world, the economy is based on the service sector and these services are bought by domestic customers relying on the flow of cash to the state and its dispersion to citizens. With the exception of tourism and shipping, there is no real net inflow of cash into the economy. This is an important issue for me, how the Greek economic model can be revised. Unfortunately, no one talks about this. If you look at what Syriza does, it does the opposite of what is necessary. Instead of giving opportunity to the private sector to create jobs, they try to keep boxing the private sector in. If you look at Syriza's 8 billion euro plan, they try to tax everything from small to big companies that generate jobs in order to not touch their base who are public sector employees. How can the Greek model become more competitive and extravert; these question are not even discussed.D.S.: Even in the best scenario, it is expected that the Greek economy will suffer in the following years. Do you think this will have social implications?I.G.: Of course it will. I think that the Greek government could begin a discussion about some sort of debt relief, but not at this point. What is fundamentally important is that the government takes the right steps and does the right things. They have to build some trust and confidence with international institutions. Three or four years later, this discussion may come to the picture. Prioritizing debt relief is a populist move, in my opinion. It just tells the Greek people, "we do not need to change, everything is fine. It is not our fault, it is Europe's or the world's fault." I am not saying that Europe is faultless, but Greek society needs to come to terms with their own failures and mistakes and make a new beginning. If this happens, I do think there will be some rewards from the international community, the EU or the IMF. Nevertheless, it is not possible at the moment; the Greek government is at the lowest point of confidence. There is a complete lack of trust between the Greek government and the institutions, as the Greek government unilaterally interrupted the negotiations.D.S.: How will the situation in Greece affect Turkish-Greek bilateral relations?I.G.: My fear is if the situation turns ugly in the medium term we may see a rise of more nationalist parties. The relations may deteriorate if anti-West and antireform movements are on the rise, as they will be against Turkish-Greek rapprochement.D.S.: There were talks about Turkey providing Greece 1.6 billion euros to pay off the debt to the IMF. How was the reception of this in Greece?I.G.: In the Greek media it was seen more as a statement of solidarity and was not considered seriously. It seems unlikely that this offer will generate any real results.