President brokers final G-20 agreement

LONDON — The Group of 20 summit (G-20) reached a final agreement to restore the world's economy Thursday only after President Obama personally intervened and negotiated a compromise between France and China, White House officials said.

It was a remarkable stroke of personal diplomacy by a new president who made his debut this week on the world stage.

The pact calls for added spending to stimulate growth, new regulation over all "systemically important" financial institutions, including hedge funds, more than $1 trillion for the International Monetary Fund (IMF) and an effort to list tax havens, as a way to "name and shame" them into becoming more transparent and cooperating with international rules.

Heading into the summit's final hours, however, it appeared the group would fail to reach a consensus. For a tense hour, French President Nicolas Sarkozy and President Hu Jintao of China were going back and forth about tax havens. In a large conference room at the Excel Center, surrounded by 18 other world leaders, the two men sniped at each other, according to officials.

Sarkozy pushed to have the G-20 spotlight offending tax havens — maybe including Hong Kong and Macau, which are under China's sovereignty — based on a list published Thursday by the Organization for Economic Cooperation and Development (OECD), but China objected, largely because it doesn't belong to the OECD.

Hu appeared angry that Sarkozy was effectively accusing China of lax regulation and that China was being asked to endorse sanctions issued by the OECD, a club of wealthy nations that his country has yet to join.

That was when Obama, long a champion of ending or curbing tax havens, decided to float a compromise and pulled Sarkozy aside, according to a senior White House official, who spoke on the condition of anonymity. "The president thought he could be helpful in resolving the differences," the official said.

The account was confirmed by other officials who had been in the room.

Obama proposed that the G-20 merely "take note" of the OECD list, thus opening the door to implicit but not direct endorsement of it.

"He sent a message to the Chinese," the official said. "They were considering it (Obama's message) for some time."

Obama then met with Hu and Sarkozy in a corner of the meeting room, as other world leaders waited.

Upon the trio's reaching agreement, the G-20 summit then agreed to note the list of tax havens.

The result: "The era of banking secrecy is over," the final communiqué said. "We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information." Hong Kong and Macau did not appear on the list.

Sarkozy, who had threatened days earlier to walk out of the summit if he didn't get his way, said the final agreement represented "great progress."

It was not a Middle East peace accord. But Obama had his first moment as a statesman.

Material from The New York Times is included in this report.