Tensions Rise at G-20 Economic Summit

March 31, 2009 -- President Obama arrived in London today to take part in the G-20 summit, the largest gathering of world leaders coping with an economic crisis since the Great Depression. But unlike Obama's first trip to visit foreign leaders during the campaign last summer, not everyone is cheering him on or agrees with his bottom line: to increase stimulus spending by other industrialized countries.

Germany and other European countries are leading the pushback against the Obama administration's economic policies. Having already passed stimulus packages with extensive social spending programs, many European countries do not want to take on even more debt.

"It makes no sense to pump more and more money in our economy whenever we haven't restored the confidence on the financial markets," German Finance Minister Peer Steinbrueck said.

Many foreign countries blame unscrupulous American capitalism for having sparked the recession in the first place. Russian and Chinese leaders have proposed a new international currency to replace the once-almighty U.S. dollar as the world standard -- a move the White House shot down today.

Another major point of contention among world leaders: more regulations for financial institutions to prevent future disasters.

Speaking at St. Paul's Cathedral today, British Prime Minister Gordon Brown said bankers have ignored basic morals that parents teach children.

"We don't reward them for taking irresponsible risks that would put them or others in danger, and we don't encourage them to seek short-term gratification at the expense of long-term success," Brown said.

But proposals for new regulations that are supported by Brown and Obama are not seen as strict enough by some foreign leaders. French President Nicolas Sarkozy is threatening to walk out of the conference if the countries do not go far enough with stricter international financial regulations.

The French president is quoted in the Paris newspaper Le Figaro vowing, "If there's no progress in London, there'll be an empty chair. I'll get up and leave."

"Yes, we will," French Finance Minister Christine Lagarde told the BBC. "President Sarkozy was very clear on that front. He said that 'If the deliverables are not there, I won't sign the communiqué'... It means walking away."

The report cited Sarkozy's advisers as saying Monday the French delegation would balk at a summit that produces a "false success with language that sounds good but contains no commitments."

The BBC interview brought into public view tensions that have been simmering for weeks among European countries and the U.S. over how to deal with the economic meltdown.

Sarkozy had earlier said the economic crisis was caused by "Anglo-Saxons" and is pushing for tougher regulations, including rules that would apply to money launderers, tax havens, and companies and hedge funds that could threaten the economic system.

Having the summit erupt in bickering would be a blow to Obama's hopes to forging an international strategy for economic recovery.

The White House did not immediately react to Sarkozy's remark.

"I haven't seen specific comments from Sarkozy… All I can say is we're working closely with all of the G20 on a robust regulatory reform agenda. The president has been personally involved in this," said Mike Froman, deputy national security adviser for international economic affairs.

The White House was hoping to avoid public flare-ups at the summit, although officials are that Obama will be facing a tougher audience than the last time he went to Europe as a candidate when he drew huge adoring crowds in Germany.