Sarkozy: London G20 Unlikely to Resolve All Issues

Germany joined France on Wednesday in demanding tough action not weak compromises from G20 leaders, underlining the difficulties in reaching an accord to haul the world out of recession and tighten regulation.

U.S. President Barack Obama, making his first official visit to Europe, played down differences and British Prime Minister Gordon Brown said leaders of the world's largest economies were "within a few hours" of agreeing a global plan to pull the world out of the deepest downturn since the 1930s.

Armando Franca / AP

However, the noises coming from France and Germany were more pessimistic, reflecting European calls for tighter regulation rather than new fiscal stimulus.

French President Nicholas Sarkozy said he would not associate himself with "false compromises" at Thursday's summit in London, the second such meeting of world leaders to try to tackle the problems created by the credit crunch.

German Chancellor Angela Merkel supported Sarkozy's stance and said she would make sure concrete decisions were taken.

Obama, speaking at a news conference with Brown, said that G20 nations were not going to agree on every point, but that there was "enormous consensus" about the need to cooperate.

"The core notion that government has to take some steps to deal with a contracting global market place and that we should be promoting growth -- that's not in dispute," he said.

"On the regulatory side, this notion that somehow there are those who are pushing for regulation and those who are resisting regulation is belied by the facts." Brown saw likely agreement on issues including a possible $100 billion boost for global trade, financial regulation, and support for economic growth and job creation.

No Deal

Sarkozy did not explicitly repeat a threat to walk out of the gathering but voiced pessimism.

"I will not associate myself with a summit that would end with a communique made of false compromises that would not tackle the issues that concern us," he told Europe 1 radio in an interview.

"As of today, there is no firm agreement in place." "The conversation is going forward, there are projects on the table.

As things stand at the moment, these projects do not suit France or Germany." Japan criticized the German approach, with Prime Minister Taro Aso quoted as saying that Germany did not understand the importance of fiscal stimulus.

Obama, seeking to thaw relations with Moscow and muster support for a new strategy in Afghanistan, holds talks with Russia's Dmitry Medvedev and China's Hu Jintao, among others, before the G20 leaders meet Queen Elizabeth at Buckingham Palace.

Thousands of anti-capitalist protesters gathered in London's financial district.

Police in fluorescent yellow jackets jostled with crowds outside the Bank of England, the focal point for one of the largest demonstrations.

Sarkozy and Merkel are pushing hard for visible results on regulation, such as closer tabs on hedge funds and credit rating agencies, and naming and shaming of tax havens if they fail to bow to pressure and end bank secrecy.

Those are not the only demands.

China and Russia want the West to give them more say over matters of global economic importance and have gone as far as to suggest the dollar should one day be dropped as the world's main reserve currency, though the latter is not seen as an issue the summit will broach in any depth.

The rest of the developing world is hoping aid flows will not dry up as governments elsewhere pump trillions of dollars of public money into bank rescues and tax breaks or fork out on big building projects to support demand and jobs.

To limit the fallout, the G20 leaders are expected to more than double the $250 billion available to the International Monetary Fund to help countries pushed to the brink.

G20 leaders got a reminder of the gravity of the situation from the Organization for Economic Co-operation and Development.

The OECD said on Tuesday the economies of its 30 members, most of which are wealthy industrialized ones, would shrink by 4.3 percent in 2009, costing 25 million jobs.

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