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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.

"In America, there's a failure to appreciate Europe's leading role in the world." He went on to say that "there have been times where America has shown arrogance and been dismissive, even derisive."

"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.

The contrast is striking. Only four years ago, George W. Bush, in his second Inaugural Address, described what he called America's "considerable" influence, saying, "We will use it confidently in freedom's cause." Bush's vision of American power was combative and aggressive. He said the U.S. would "seek and support the growth of democratic movements and institutions in every nation and culture." He continued, "We go forward with complete confidence in the eventual triumph of freedom."

Obama, by contrast, is looking for collaboration. He is looking to build a collective vision, not to impose an American one.

Stiglitz: The banks that survived 80 years ago continued to lend money. Today many banks aren't lending money anymore, above all the large investment banks. This will deepen the crisis.

SPIEGEL: The US government's emergency plan is supposed to prevent this, though. The banks receive money from the state so they can continue to give loans. Stiglitz: That's the idea, but it doesn't work. We're just throwing money at them and they pay billions of it out in bonuses and dividends. We taxpayers are being robbed for all intents and purposes in order to reduce the losses that some wealthy people bear. This has to be changed.

SPIEGEL: The American government has committed over a trillion dollars to save the banks and $789 billion to boost the economy. Do you think this is too little? Stiglitz: I do. More than $700 billion sounds like a lot, but it's not. On the one hand, a large part of the money will first be given out next year, which is too late. On the other, a third of it is drained away by tax cuts. They don't really stimulate consumption, because people will save the majority of that money. I fear that the effect of the American economic stimulus plan won't be even half as big as expected.

SPIEGEL: Washington sees it that way, too. In particular, it wants countries with strong exports, like Germany, to offer further economic stimulus packages. Do you think that's justified?

Absolutely. Export surpluses are counterproductive in times of economic crisis. They have to be reduced through economic stimulus programs, for example.

I propose that countries with a positive trade balance should stream part of their surplus to the International Monetary Fund. This can then stimulate the economy in developing countries or prevent the economy from collapsing in Eastern Europe.

The Americans have always been masters at changing a supposed regulation measure into further deregulation.

They want to focus on tougher regulation of the financial community. They want the summit to start re-writing the global rulebook on capitalism.

The intriguing thing is that the economic crisis and Brown's lining up with Obama, who has proclaimed his belief in the enduring "special relationship" with Britain, has revived the Franco-German alliance which used to dominate EU affairs and which had seemed to wither under Merkel and Sarkozy. She doesn't like his touchy-feely ways, he finds her incremental style of politics frustrating. They had drifted apart, but they are back sharing a political tent.

The big question on the fiscal stimulus front is: What will China do?

Brown's hope is that China, worried about the safety of its money invested in the U.S., will be ready to commit extra funds to fighting the world recession. But if he agrees to do so, President Hu Jintao will surely exact a price.

If China comes up with the money to help, it will need assurances that it will in the future enjoy greater power within such multilateral institutions as the IMF and the World Bank. The U.S. and Europe, who have dominated the G-8, now have little option too but to accept a new world order.

Whatever the outcome in London it is unlikely now that the G-8 alone will ever carry the same sway. And not surprisingly, Italian Prime Minister Silvio Berlusconi, who hosts this summer's G-8 in Sardinia, has proposed that its gathering should be immediately followed by one of the G-20.

Clinton had pressed for Iranian participation in The Hague conference, stressing the importance of finding a regional solution to the insurgency in Afghanistan and Pakistan, and western officials were encouraged that Akhundzadeh, a deputy foreign minister and former charge d'affaires in London, was sent by Tehran.

Akhundzadeh told ministers from more than 70 countries at the meeting: "Welcoming the proposals for joint co-operation offered by the countries contributing to Afghanistan, the Islamic Republic of Iran is fully prepared to participate in the projects aimed at combating drug trafficking and plans in line with developing and reconstructing Afghanistan."

He repeated Tehran's criticism of the Nato role in Afghanistan, but used relatively moderate language, saying: "The presence of foreign forces has not improved things and it seems that an increase in the number of foreign forces will prove ineffective, too."

Akhundzadeh added: "The military expenses need to be redirected to the training of the Afghan police and army and Afghanisation should lead the government building process" - an apparent nod towards the Obama administration's decision to send 4,000 more American military trainers.

Western officials expressed hopes that the west and Iran could return to the close co-operation over Afghanistan that took place in the months after the 9/11 attacks. Iranian officials even helped the US target the Taliban, but the relationship cooled after Bush's "axis of evil" speech.

"There is a meeting of minds on drugs, development issues and the [August Afghan] elections, though not on foreign troops, on which they made clear their objections."

Malloch Brown acknowledged that Iran had done some "bad things" in both Afghanistan and Iraq, supplying weaponry to insurgents that had been used against British soldiers.But he argued: "This is Iran supporting its proxies because of a lack of diplomatic partnership around Iraq and Afghanistan. If this is a rapprochement, whether it is overall rapprochement or just aimed at stabilising Afghanistan, it offers the prospect of this behaviour getting moderated and hopefully stopping."

But even though European monitors have long been on the ground, Russia still holds large areas that had irrefutably been under Georgian control, and thousands of Georgians have not been allowed free access to homes far from the disputed territory where the war began.

Several areas under Russian control are at odds with the terms of the cease-fire plan. The most obvious examples are in the Kodori Gorge and the agricultural valley outside the town of Akhalgori

Gilles Janvier, deputy head of the European monitoring mission, said in an interview that Russia had told diplomats that it had entered its own military agreement with the two breakaway regions in Georgia, which the Kremlin recognizes as independent states, and that these newer arrangements rendered the troop withdrawal component of the cease-fire plan obsolete.

“They say there is now a new bilateral agreement between them and South Ossetian and Abkhaz forces that lets them station troops,” Mr. Janvier said.

A senior American official said that Secretary of State Hillary Rodham Clinton raised the subject in her meeting in early March with Sergey V. Lavrov, Russia’s foreign minister, to no apparent effect.

The new goal, according to American military planners and NATO-nation diplomats, is to produce an Afghan Army of some 220,000 troops and an enlarged police force of 180,000.

Europeans will also concentrate on the “civilian surge” to help create functioning Afghan political, judicial and security structures in the countryside.

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".

the limited reinforcements made available by the Europeans — and the restrictions to noncombatant roles in order to win the consent of Europe's mostly antiwar electorates — has raised questions about the purpose of the Alliance. "NATO lost its credibility when it refused to commit the resources needed," says Barkawi.

In Europe, says De Hoop Scheffer, a former Dutch politician, "fighting is not very popular."

During the 1990s, the Alliance began expanding, inducting nine new members from Eastern Europe's former Soviet territories and satellites that sought protection from Russian power.

But that program seemed to hit a wall last August, when Georgia fought a five-day war against Russia for control of South Ossetia.

Georgia, whose bid to join the Alliance had been strongly backed by the U.S., was viewed by many Western officials as having provoked a senseless fight, which would have obliged NATO to get involved had Georgia been a full member. Last summer's confrontation put Georgia's membership in the deep freeze, as well as that of Ukraine, whose accession to NATO would also be taken as a provocation by Moscow.

Moreover, NATO's passivity in the face of Russia's pummeling of Georgia will have left member nations along Russia's western frontier wondering what extent of support they could rely on from NATO allies in the event of a confrontation with Moscow.

Lieberman has taken the idea of two states for two peoples to an extreme. He seeks an Israel that effectively is not only predominantly Jewish, but one that is almost entirely Jewish. Lieberman imagines a transfer of some Israeli cities with Arab populations bordering the 1967 green line out of the Israeli polity, but to where? His prime minister has ruled out the creation of a Palestinian state in the West Bank and the Gaza Strip. 

More broadly, the mix of official government opposition to Palestinian independence, open discussion of ethnic separation, and the almost apocalyptic discourse being promoted by Israeli academics such as Benny Morris are creating a Balkan-like situation within Israel proper that could quickly eclipse the situation in the occupied territories as a threat to international peace and stability if allowed to continue.

sraeli leaders and their advocates have already promoted a full-court blitz demanding that the United States "stop" Iran, or Israel will be forced to do so on its own. In part, this is bluster, as few analysts believe Israel is able to attack Iran on its own, and no one believes that Iran wouldn't retaliate, which would force the United States into the middle of the conflict. However, this emphasis on Iran serves another useful purpose for Netanyahu and Lieberman: Not only does it remove Palestinian independence and potential Israeli peace treaties with the Arab world from U.S. focus, but it sets the agenda for the U.S.-Israeli talks that are to take place this May.

Dealing with a hostile and recalcitrant enemy in Afghanistan and Pakistan is hard enough, but the Obama administration may find that dealing with a hostile and recalcitrant ally brings its own set of challenges.

Baitullah Mehsud warned the attacks would continue in Pakistan and threatened future attacks on American soil, while he shrugged off the risk of "martyrdom".

Different Taleban factions in the border region, including Baitullah Mehsud's, have joined forces in readiness to confront the planned American troop increase in Afghanistan, she says. Meanwhile, as the Pakistan government attempts to build a national consensus to fight the Taleban, it is faced with trying to overcome deep opposition among its people to an American role in that struggle.

The North Korean foreign ministry said at the weekend that "even a single word critical of the launch" from the security council would be interpreted as "a hostile act".

Baitullah Mehsud, the man accused by Pakistani and U.S. intelligence of masterminding the assassination of former Prime Minister Benazir Bhutto. Although Mehsud is the nominal chief of the TTP, he has plenty of rivals, even in his native South Waziristan. Two major tribes populate South Waziristan: the Mehsuds and the Wazirs. The Wazirs dominate Wana, the main city in South Waziristan. But the ranking Taliban leader from the Wazirs, Maulvi Nazir, is a darling of Pakistan’s military establishment.

You’re probably scratching your head right now, a bit confused. You see, Nazir is only interested in fighting U.S., Afghan, and NATO forces across the border. He is not part of the TTP and has not been involved in the wave of violence sweeping Pakistan of late. Therefore, in the minds of Pakistani generals, he is a “good” Taliban versus Baitullah Mehsud, who is, in their mind, unequivocally “bad.” That’s just one example of Talibs living in Pakistan who do not necessarily come under the title “Pakistani Taliban” or the “Tehrik-e-Taliban Pakistan” moniker.

In Swat Valley, where Islamabad recently signed a peace treaty with the Taliban, the fissures among the militants are more generational. Swat, unlike South Waziristan, is part of NWFP and shares no border with Afghanistan. In the late 1980s, a group calling itself the Tehrik-e-Nifaz-e-Shariat-e-Mohammadi, TNSM or the Movement for the Establishment of the Law of Mohammed, launched a drive to impose Islamic law in Swat and its environs.

After the U.S. invasion of Afghanistan, the leader of TNSM, Sufi Mohammed, organized a group of madrasa students and led them across the border to combat the Americans. But only Sufi Mohammed returned. The legions who had followed him were “martyred,” or so he told their parents. Sufi Mohammed was thrown in jail by then president and Army chief Pervez Musharraf, and so he named his son-in-law, Maulana Fazlullah, to run TNSM in his stead. But Fazlullah had wider ambitions and assembled a several-hundred-man army vowing to fight the Pakistani government. The senior leadership of TNSM soon disowned Fazlullah, who happily embarked on his own and is now Mehsud’s deputy in the TTP. For the past year and a half, Fazlullah’s devotees have bombed, kidnapped, and assassinated anyone who’s dared to challenge their writ in Swat.

By 2008, Sufi Mohammed looked like a moderate in comparison to his son-in-law. So the Pakistani government asked him to mediate. Perhaps he could cool Fazlullah down. The recent treaty you’ve heard about in Swat is between the Pakistani government and Sufi Mohammed, who has pledged to bring Fazlullah on board. So far, the treaty has held, unless you count the soldiers who were killed by Fazlullah’s Talibs for not “informing the Taliban of their movements.”

In January, Umar Israilov, a former bodyguard for Mr Kadyrov who had accused him of torture and kidnapping, was shot dead on a street in Vienna. Then last month, a former deputy mayor of Grozny was shot dead in Moscow. In 2004, two Russian intelligence agents were convicted of killing a former Chechen president, Zelimkhan Yandarbiyev, in the nearby state of Qatar.

The latest book on Mr Walesa's life, which was published earlier this month, repeated a claim that he spied on his colleagues in the Gdansk shipyards in the 1970s. It also alleges he fathered an illegitimate child. It was published by historians at Poland's Institute for National Remembrance (IPN), which investigates communist-era crimes.

Some critics and Prime Minister Donald Tusk have voiced support for Mr Walesa, saying that the books are politically motivated. "We need Lech Walesa in Poland as an important authority figure," said Mr Tusk, himself a former Solidarity activist.

At the same time, American officials told The New York Times this week that Pakistan’s military intelligence agency continued to offer money, supplies and guidance to the Taliban insurgency in Afghanistan as a proxy to help shape a friendly government there once American forces leave.

The new Taliban alliance has raised concern in Afghanistan, where NATO generals warn that the conflict will worsen this year. It has also generated anxiety in Pakistan, where officials fear that a united Taliban will be more dangerous, even if focused on Afghanistan, and draw more attacks inside Pakistan from United States drone aircraft. “This may bring some respite for us from militants’ attacks, but what it may entail in terms of national security could be far more serious,” said one senior Pakistani official, who spoke on condition of anonymity because he is not permitted to talk to news organizations. “This would mean more attacks inside our tribal areas, something we have been arguing against with the Americans.”

The Pakistani Taliban is dominated by three powerful commanders — Baitullah Mehsud, Hafiz Gul Bahadur and Maulavi Nazir — based in North and South Waziristan, the hub of insurgent activity in Pakistan’s tribal border regions, who have often clashed among themselves.

Mullah Omar dispatched a six-member team to Waziristan in late December and early January, several Taliban fighters said in interviews in Dera Ismail Khan, a town in North-West Frontier Province that is not far from South Waziristan. The Afghan Taliban delegation urged the Pakistani Taliban leaders to settle their internal differences, scale down their activities in Pakistan and help counter the planned increase of American forces in Afghanistan, the fighters said. The three Pakistani Taliban leaders agreed. In February, they formed a united council, or shura, called the Council of United Mujahedeen. In a printed statement the leaders vowed to put aside their disputes and focus on fighting American-led forces in Afghanistan.

Shlomo Brom, a retired general at the Institute for National Security Studies in Tel Aviv, said it would be “very logical” to assume that Israel would have wanted to bomb a weapons convoy in Sudan. “It fits exactly with the pattern of how Israel operates,” he said.

Israeli military analysts said that eastern Sudan could have been a little-watched backdoor for Iranian weapons to reach Gaza.