LONDON: On his 10-year trip home, the Greek hero Odysseus at one point had to steer his ship and crew down a narrow stretch of water menaced on opposite sides by two sea monsters, Scylla and Charybdis.

The Greek people are in similar dire straits as they prepare to vote on a future in which they face two painful prospects: the slow grind of years more of austerity cuts or the country’s potentially catastrophic exit from the euro.

The question is whether their vote on Sunday can help them escape either. “Yes” to more budget cuts in exchange for a financial aid package for the country? Or reject it in the hope it will not lead the country out of the euro?

The referendum question makes no reference to Greece’s future in the currency union. It is on a set of proposals that European creditors say they have withdrawn following the failure to forge a deal with Greece before an end-June deadline.

For the radical left-led Greek government, the proposals were unacceptable. It’s urging a “no” vote and says that will have no impact on Greece’s euro status.

Proponents of a “yes” vote, including a parade of former prime ministers and the main opposition party, say backing the government will jeopardise Greece’s place in the euro. Instead, they argue that by voting “yes” Greece would get a new deal quickly to shore up the economy.

In fact, what might happen in each case is unclear. Analysts in the world’s biggest investment banks are putting percentage probabilities to outcomes, such as Greece’s exit from the euro, but no one knows for sure.

Here’s a look at the events that each vote might trigger.

IF THE PEOPLE SAY ‘NAI’: A “yes” vote backing the reform proposals creditors had made would likely see Greece turn immediately to talks on a new rescue package. Whether that leads to a swift deal that might allow Greece to reopen its banks and restore a semblance of normality to the life of citizens and tourists is another question.

Much would likely depend on what happens on the political front. The government has said it will respect the verdict.

Greek Finance Minister Yanis Varoufakis has said he’ll resign in the event of a “yes” vote and Prime Minister Alexis Tsipras has hinted as much. If the government does not collapse, it could try to build a new coalition with other parties, Varoufakis hinted.

It’s not clear, however, if that would involve new elections. That would take time and without financial assistance, Greece would surely go bankrupt.

Greece is no longer in a bailout programme since its previous package expired Tuesday. So it would have to negotiate a new one with its creditors that involves more money for the government and the banks and new economic measures.

That is unlikely to be agreed on overnight, meaning the harsh controls on money withdrawals and transfers may remain in place for longer than anticipated. The Greek government had to put those limits when a run on the banks started last weekend and the European Central Bank refused to increase the emergency credit it allows the banks to draw on.

IF THEY SAY ‘OXI’: Despite the Greek government’s assertion that a “no” vote will not lead to a euro exit, most people agree it would open up more uncertain outcomes, especially if the ECB calls time on the life-support measures to Greece’s banks.

Some say a “no” vote would jeopardise Greece’s place in the euro while others appear to be holding the door ajar for further talks. Even Wolfgang Schaeuble, the tough-talking German finance minister, has said the country could stay in the euro in the event of a “no” vote.

But investors are likely to be worried in case of a “no” vote amid fears it increases the chance of a Greek exit from the euro, or Grexit. Markets will open first in Asia.

The word ‘Grexit’ has dominated the past months of negotiations on Greece. But the country will not return to the drachma as soon as Monday. Rather, the risk increases the longer there is a deadlock in talks. Without a deal and without money, Greece will default on more of its debt repayments and will not be able to afford the day-to-day spending on salaries and pensions. The banks will run dry, even with the cash withdrawal limits.

In such a case, printing a new currency may be the only option available, which almost everyone thinks will be a short-term disaster for the Greek economy.

“A ‘no’ will result in Grexit with an uncertain future and high costs to Greek society, at least initially,” said Guntram Wolff, director of think-tank Bruegel.

Odysseus got through his ordeal, but Scylla the monster ate six of his men — not a great thought for Greeks seeking to navigate the straits of bankruptcy and national pride.

Published in Dawn, July 4th, 2015

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