People walk by the Greek Parliament in Athens on Nov. 1, 2011.
People walk by the Greek Parliament in Athens on Nov. 1, 2011. - 
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Kai Ryssdal: The straight news of the day is nothing if not put in the proper context. So for that we've called Jacob Kirkegaard. He's a research fellow at the Peterson Institute for International Economics. Good to have you with us.

Jacob Kirkegaard: My pleasure.

Ryssdal: One assumes Mr. Papandreou is as an astute observer of the political condition and he knew that what has been happening today would be happening. So why did he do it?

Kirkegaard: Well I think he basically reacts to this sort of increasingly obvious reality, which is that the strategy that he and the Greek government have been using to implement to IMF program in the last couple of years is essentially crumbling. He no longer commands the loyalty of his own party, and therefore he basically needs to engineer a solution that is spreading the political pain, so to speak, of these reforms across other political parties in Greece.

Ryssdal: You have to believe, though, that the European Union is now looking at this and saying, 'You know what, we're just going to take our tours and go home. We're not going to keep this offer on the table.' And so, he's betting really -- Papandreou is -- that the EU wants more to save the EU than it is angry at him, if that makes any sense.

Kirkegaard: Yes and no. I mean, there's no doubt that the Europeans are going to respond angrily to this, as they already have, and they're basically going to tell the Greeks, 'Look, it's take it or leave it. You're either in or you're out, and beggars can't be choosers. So now get on with the program.' This is what I think we're going to see at this dinner that they're going to have in Cannes right before the G20 meeting.

Ryssdal: What I wouldn't give to be a fly on that wall, right?

Kirkegaard: Almost certainly, because it really is critical that they get the timetable for last week's deal back on track.

Ryssdal: Here's the thing, though: There are so few instances where anything in this entire episode has been unambiguously clear. Why do you think now they're going to start?

Kirkegaard: This is a hugely risky gamble. I mean, the last thing that the euro area wants is for the populations in other countries -- in Portugal, in Ireland -- also saying 'we want to have a referendum every three months about implementing our IMF programs.' So no, this is the introduction of a new, completely unknown factor in the sort of referendum politics into the European crisis, which is hugely destabilizing. So I think it's fair to say that this adds considerably to an already highly uncertain situation.

Ryssdal: I was thinking, actually, of Silvio Berlusconi in Italy. You could see him doing almost the same thing as Papandreou did, right? He's in political trouble at home, he needs austerity budgets.

Kirkegaard: Oh absolutely. And I think that this is really the main fear for the French and the Germans, and particularly French President Nicolas Sarkozy, who basically thought that he sort of more or less delivered last week the successful outcome of his G20 summit as a host. Now it turns out that he may actually end up showing up as the European host without a deal, which means that he runs the risk that this big thing -- also for his re-election campaign -- is going to be a huge failure.

Ryssdal: Jacob Kirkegaard. He's a research fellow at the Peterson Institute for International Economics. Thanks a lot.

Kirkegaard: My pleasure.

Kirkegaard: Tomorrow on the show, by the way, a special collaboration with the BBC and its main business program Business Daily -- how the eurozone crisis is playing out all over the world.

Follow Kai Ryssdal at @kairyssdal