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Sarkozy has focused on a €27bn stimulus plan through public and private investment instead of boosting consumers' pockets with major tax-cuts or higher welfare spending. He argues that without investment leading to job creation, France, with an already weak private sector and stuttering economy, will not be able to recover as fast other countries.

After the last general strike in January, Sarkozy moved to defuse tension by introducing certain tax cuts and welfare payments for the poorest families. Unions said it was not enough, but the president's advisers this week said there would be no more immediate measures. "Sarkozy says there's no money for the public sector, that state coffers are dry, then he miraculously finds money to bail out the car industry," said Olivier Langillier, a nurse at the Paris march.

Others in the ruling party accused Sarkozy of betraying his Gaullist heritage. The Socialist MP Jean-Louis Bianco said France would be forced to give up its special foreign policy standing and join "a race with Britain to be America's pet"

Jean-Pierre Maulny, a defence expert at Paris's Institute for International and Strategic Relations, said: "Rejoining the Nato command won't change anything with regard to French policy. It's more a question of perception abroad, above all in the Middle East. France has a certain specificity in its foreign policy. Arab countries could get the feeling that we are more aligned to American policy. Likewise in France, there could be a perception that this is a betrayal of de Gaulle. But it's more a question of perception than reality."

Sarkozy said that fully rejoining the alliance would allay suspicions of France's efforts to promote an autonomous European defence system, adding that he was still committed to European defence.

"It is possible to resolve the territorial aspect of settlement construction," Netanyahu said yesterday following his meeting with Sarkozy. "It is possible to find a formula but this requires good will of all sides. What is important is to enable people to live normal lives and that is what I am explaining to the Americans."

Another option that was reported yesterday in Haaretz is a "temporary freeze" of settlement construction, except for projects that have already begun. "The main consideration is how long the freeze will remain in place and whether this may be a precedent that will transform the temporary hiatus into a permanent one," a source close to Netanyahu said.

The prime minister's bureau did not respond to Sarkozy's remarks nor deny them, but the office of Foreign Minister Avigdor Lieberman did respond with a strong condemnation. "If the words attributed to the president of France are correct, the interference of a president of a respected democratic state in the matters of another democratic state is a grave and intolerable thing. We expect that that regardless of political stance, every political body in Israel will condemn this callous attack by a foreign state in our domestic affairs."

More significantly from a European perspective, the US agreed to significantly strengthen international oversight of financial markets, with particular attention paid to tax havens, hedge funds and ratings agencies.

It was a move that both Merkel and French President Nicolas Sarkozy insisted upon -- and one which will go a long way toward removing whispers of friction between Obama and Merkel.

Not only did the president pledge a renewal of trans-Atlantic relations -- he also said that he seeks to create a world free of nuclear weapons. "This weekend in Prague," he said, "I will lay out an agenda to seek the goal of a world without nuclear weapons."

"In Europe, there is an anti-Americanism that is at once casual, but can also be insidious. Instead of recognizing the good that America so often does in the world, there have been times where Europeans chose to blame America for much of what's bad…. On both sides of the Atlantic, these attitudes have become all too common. They are not wise."

At the Afghanistan Conference in The Hague earlier this week, Obama was careful not to make any concrete demands for more troops from his European NATO allies. But on Thursday, he seemed willing to tighten the screws slightly. In addition to warning that al-Qaida still posed a threat, he also said, referring to Afghanistan, that "Europe should not simply expect the United States to shoulder the burden alone. This is a joint problem that requires a joint solution."

The response from Sarkozy, who was standing right next to Obama, was swift. "There will be no French military enforcements," the French president said. "We are ready to do more in the field of policing, of gendarmes, in the field of economic aid, to train Afghans."

Other NATO countries on Friday, though, said that they would be willing to send more troops. SPIEGEL ONLINE learned from diplomats attending the NATO summit that British Prime Minister Gordon Brown intends to send several hundred more troops to Afghanistan. Both Belgium and Spain are likewise promising more soldiers, though Spain is reportedly planning to send just 12 additional troops.

Ali Akbar Velayati, Supreme Leader Ayatollah Ali Khamenei's top adviser on international affairs, said Western countries did not want the Islamic state to have peaceful nuclear activities, state broadcaster IRIB said on its website.

Sarkozy, upping the stakes in the dispute with Tehran, said the powers would review the situation at a G20 meeting of developed and developing countries in Pittsburgh on September 24-25.

However, Sarkozy made clear Russia was still dragging its feet over the issue and had pushed for more time before considering a fresh round of sanctions.

Vague low-carbon language and climate change negotiations in Copenhagen in December were relegated to two paragraphs at the communique's end.

Some critics also pointed out that the summit failed to produce a co-ordinated plan to purge the global banking system of billions of dollars of toxic assets, and suggested that regulation of the financial industry should have gone further.

Brown said that the existing agreed fiscal stimulus will amount to $5tn by 2010, and the measures will raise world output by 4% by the end of next year.

The prime minister also won agreement from other G20 world leaders that the International Monetary Fund will monitor the existing stimulus,

Overall, the resources of the IMF will be trebled from $250bn to $700bn, following the lifting by the US of years of opposition. In a sign of the shift in world power, China agreed to provide $40bn of the new loans given to the IMF, with more to come from Saudi Arabia.

At the centre of the deal was a six-point plan:• Reform of the global banking system, with controls on hedge funds, better accounting standards, tighter rules for credit rating agencies, and immediate naming-and-shaming of tax havens that fail to share information.• A global common approach to dealing with toxic assets that impair the ability of banks to lend.• A $1.1tn package to supplement the $5tn stimulus to the global economy by individual countries. The $1.1tn will allow the IMF, the World Bank and others to increase lending to vulnerable countries. There will be a tenfold increase to $250bn in the IMF's facility allowing members to borrow from other countries' foreign currency reserves.• More power for leading developing countries within the IMF and World Bank, to end the stranglehold of the US and Europe on their top jobs.• $200bn of trade finance over two years to help reverse the steepest decline in world trade since 1945, with cash from a range of public and private sources.• A pledge that the fiscal stimulus, including the sale of gold by the IMF due to raise $6bn, will give help to the poorest nations and create green jobs.

Nicolas Sarkozy said the summit meant that the era of secrecy by banks was over; "great progress" had been made, he said, and the page had been turned on the economic model which had dominated since Bretton Woods in 1944 created the world's institutional framework."Since Bretton Woods, the world has been living on a financial model, the Anglo-Saxon model. It's not my place to criticise it, it has its advantages [but] clearly today a page has been turned," he said.

The summit's biggest loser may have been the fight against climate change. Diplomatic sources said China led the opposition to green language in the final communique. David Norman, the WWF campaigns director, claimed that the summit had been "a huge missed opportunity".

France and Pakistan agreed to cooperate in the field of civilian nuclear energy during Mr Zardari's visit to Paris earlier this month, but details of the plan have yet to be agreed.

French President Nicolas Sarkozy, speaking shortly after Khamenei, said Iranians deserved better leadership and pledged to support Britain in its standoff with Tehran. "Really, the Iranian people deserve better than the leaders they have today," he said at a news conference with British Prime Minister Gordon Brown, pledging France's full support for Britain in the dispute over the embassy detentions.

President Nicolas Sarkozy of France has been especially unhelpful, making clear that he will do all he can to keep Turkey out of the European Union.

Ankara has played a positive role, mediating indirect talks between Israel and Syria. With Washington’s encouragement, Mr. Erdogan could also use his relationships with Iran, Sudan and Hamas to encourage improved behavior.

We are concerned about Mr. Erdogan’s increasingly autocratic tendencies. His government’s decision to slap the media mogul Aydin Dogan with a $500 million tax bill smacks of retaliation against an independent press that has successfully exposed government corruption.

Mr. Obama must persuade Mr. Sarkozy and others that admitting Turkey — a Muslim democracy — is in everyone’s interest. And he must persuade Ankara that the required reforms will strengthen Turkey’s democracy and provide more stability and growth.

Turkey’s cooperation with Iraqi Kurds has vastly improved. There are also reports that Turkey and Armenia may soon normalize relations.

We have long criticized Turkey for its self-destructive denial of the World War I era mass killing of Armenians. But while Congress is again contemplating a resolution denouncing the genocide, it would do a lot more good for both Armenia and Turkey if it held back. Mr. Obama, who vowed in the presidential campaign to recognize the event as genocide, should also forbear.