In a chilly summit prelude, President Bush blocked Russia's entry into the World Trade Organization on Saturday and President Vladimir Putin mockingly said Moscow doesn't want the kind of violence-plagued democracy the United States has fostered in Iraq.
Alternately joking and poking at each other, the two also showed differences at a news conference on the explosion of violence in the Mideast.
Bush held Israel blameless for its punishing attacks in Lebanon and said it was up to the militant group Hezbollah to lay down its arms. Putin was critical of Israel's use of force and said the violence "should stop as soon as possible."
The two leaders met for two hours before the opening of the annual summit of eight major world powers, which was expected to focus on nuclear problems with Iran and North Korea and the escalating fighting between Israel and the Islamic guerrilla group Hezbollah.
There was a quick handshake but little warmth between Bush and Putin during a photo opportunity opening their talks. For the second day, Bush spent part of it mountain biking.
Despite the sparring, there was none of the tension and anger that crackled in Bratislava, Slovakia, 17 months ago when Bush challenged Putin over Russia's crackdown on dissent and retreat from democracy and the Russian president slapped back. After that jarring meeting, Bush concluded that lecturing Putin in public was unproductive. Still, Bush said he offered Putin some suggestions.
"I talked about my desire to promote institutional change in parts of the world like Iraq where there's a free press and free religion," Bush said at the news conference, "and I told him that a lot of people in our country would hope that Russia would do the same thing."
Putin, in a barbed reply, said: "We certainly would not want to have the same kind of democracy as they have in Iraq, I will tell you quite honestly." Bush's face reddened as he tried to laugh off the remark. "Just wait," Bush replied about Iraq.
Putin also said Russia would not take part "in any crusades, in any holy alliances" — a remark seemingly intended to win points with Arab allies. Bush's national security adviser, Stephen Hadley, said he was perplexed by the comment.
Hosting the Group of Eight summit for the first time, Putin dearly wanted to win approval for Russia's admission to the World Trade Organization, the 149-nation group that sets the rules for world trade. The United States is the only country that has not signed off on Russia's membership in the WTO, and Bush dashed Putin's hopes for getting in now.
"We're tough negotiators," Bush said, adding that any agreement would have to be acceptable to the U.S. Congress.
U.S. Trade Representative Susan Schwab said "significant progress" had been made in narrowing differences over the protection of U.S. copyrights and patents and boosting the sale of American manufactured goods. She said negotiators were unable to resolve a dispute over Russian barriers to the sale of American beef and pork. She said the hope was that the agreement could be completed "in the next couple of months."
The Mideast violence threatened to overtake the summit's carefully planned agenda and highlight divisions among leaders. Bush has been outspoken in defending Israel and blaming Hezbollah — backed by Syria and Iran — for igniting the crisis with a cross-border raid into Israel and capturing two Israeli soldiers.
"The best way to stop the violence is for Hezbollah to lay down its arms and to stop attacking. And therefore I call upon Syria to exert influence over Hezbollah," Bush said.
Putin agreed with Bush that it was unacceptable to pursue goals using force and abductions.
"At the same time," the Russian leader said, "we work under the assumption that the use of force should be balanced." The European Union — and France, in particular — has condemned Israel's attacks as excessive, putting Bush at odds with key allies.
Speaking to reporters after the summit's opening dinner, Putin stressed that significant efforts were needed to restore peace in Lebanon.
"However complicated the questions are, maximum efforts must be applied to resolve the situation in a peaceful way and I think all efforts have not been exhausted," he said.
Putin said he had the impression that Israel was "pursuing wider goals" than just the return of its soldiers. He did not elaborate.
The United States pressed for a summit statement identifying Hezbollah as the main culprit and emphasizing the importance of maintaining a democratic Lebanon. The statement also would criticize Syria, Iran, and the Palestinian group Hamas for "all acting in a way that frustrates democracy in the area and frustrates peace," said Hadley. It would assert the importance of maintaining democracy in Lebanon and salute efforts of the United Nations to restore peace.
Russian Defense Minister Sergei Ivanov called the conflict "basically, a war that has begun" and warned that other nations in the region could be drawn into the fight.
Bush said he and Putin agreed on the need for the U.N. Security Council to take action against Iran for refusing to halt uranium enrichment and North Korea for testing a long-range missile and refusing to rejoin six-nation disarmament talks.
"There is common agreement that we need to get something done at the U.N." on Iran, Bush said. He said there was common ground on North Korea, as well, and "now we're working on language." Russia and China have been reluctant to impose penalties on North Korea or Iran. Bush declined to say whether he asked Putin to back U.N. sanctions against Iran.
Lacking a centerpiece agreement on trade, the United States and Russia announced several lesser agreements:
—Increased cooperation against nuclear terrorism, which they deemed one of the most dangerous security challenges facing the world. The accord envisions other nations in the campaign.
—The opening of negotiations on a civilian nuclear agreement that would clear the way for a profitable arrangement for Russia to use its vast territory as a storehouse for the world's used reactor fuel.
—Creation of a foundation dedicated to the development of an independent entrepreneurial sector in Russia, rooted in the rule of law.