In a classic show of eve-of-summit brinkmanship, Angela Merkel and Nicolas Sarkozy joined forces to give warning that they would refuse to sign any agreement that did not meet their "red lines" on tax havens, hedge fund regulation, tracing "securitized" assets sold around the world and capping bankers' remuneration. They also wanted the "naming and shaming" of tax havens that refused to go along with tougher regulatory rules, which is being opposed by the United States.
In a reminder of former confrontations between America and the countries of Old Europe, Sarkozy suggested that Europe would not take economic direction from the U.S. He appeared to suggest that America would have to compromise, adding pointedly: "The crisis didn't spontaneously erupt in Europe, did it?"
The firm stance of Sarkozy and Merkel and the language used in a joint press conference took negotiators by surprise as they prepared to work through the night on the communique to be released today.
Although Brown and President Obama appeared confident of an agreement throughout yesterday's talks in London, it was clear last night that Obama would have to make more concessions if differences were to be smoothed over.