Q. What does the clear no in the referendum mean?

GW. First of all, it is a rejection of the creditors offer that was on the table one week ago. We will see new discussions now. However, it will not be easy to come to substantive discussions of a third programme. To start formal negotiations, the Bundestag and other parliaments have to agree. The political willigness for this has gone down dramatically after the no vote.

Q. Will the new deal be better or worse than the old or will we even see GREXIT?

GW. Grexit is a real possibility. It would be very costly for Greece and for the entire eurozone. But I would not exclude another round of negotiations during which banks remain under capital control. The resulting deal may be slightly more favourable to Greece but I expect creditors to be reluctant as they really feel being held ransom.

Q. What would be the best outcome?

GW. Overall, the best outcome would be a real deal with less austerity but serious reforms in Greece. This is still possible and it would require real leadership in Greece and in other euro area countries. Creditors should understand that generosity is in their interest as Grexit is more costly. But creditors should not compromise on demanding structural reforms. Syriza needs to deliver on providing a transformative programme for Greece that ensures competition, limits corruption and ensures fair taxation.

This article originally appeared on Bruegel Blog, the Brussels-based think tank. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Guntram Wolff has been the Director of Bruegel since June 2013.

Image: A European Union flag (L) flutters next to a Greek flag on the facade of the Bank of Greece headquarters in Athens. REUTERS/Alkis Konstantinidis.