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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.

In a televised news conference on Tuesday, US President Barack Obama - who also backs Palestinian statehood - said peace efforts would not get "easier" with a Netanyahu government, but were "just as necessary".

His comments echoed the message from Chinese officials. Su Wei, a senior negotiator, told the Guardian last month that the US had made a "substantive change" under the Obama administration."The message we have got is that the current US administration takes climate change seriously, that it recognises its historical responsibility and that it has the capacity to help developing countries address climate change," Su said.

"China used to think the developed world is not serious. That's what they were saying [at UN talks] in December," he said. "But now they know the US is on the pitch and ready to engage with them. It has made a real difference to what China is saying."

Miliband said he was encouraged by the change in tone since late last year in the country that emits more greenhouse gases than any other. "I think they're up for a deal. I get the strong impression that they want an agreement," he told the Guardian."They see the impact of climate change on China and they know the world is moving towards a low-carbon economy and see the business opportunities that will come with that."

China wants developed nations to commit to more ambitious reduction targets, to share low-carbon technology and to set up a UN fund that would buy related intellectual property rights for use across the world. Beijing's position is complicated by the fact that it already owns a large share of the patents for wind and solar energy in developed nations.

Europe and the US accept the Chinese economy should be allowed to grow further, improving the living standards of its millions of poor, before it makes overall emissions reductions. Instead, the western nations are pushing for strong measures to improve efficiency and establish caps for certain industries. One possibility being considered by Chinese officials is to set a carbon intensity goal up to 2040 that would include energy efficiency, renewable energy, transport and afforestation.

Last month, the Tyndale centre published research showing that it was possible for China to begin reducing its total emissions from 2020.Government officials say that is unrealistic and China has so far resisted announcing a target for when emissions might peak. But the authorities tend towards the later end of the various academic forecasts of between 2020 and 2040.

"China is becoming an indispensable power in the 21st century in the way Madeleine Albright said the US was an indispensable power at the end of the last century," Miliband said. "It has become an indispensable power economically, and China will become an indispensable power across a wider range of issues."

"I think that there is a scenario where America and China are the powers that count," the foreign secretary said. "It is massively in our interests to make sure that we have a stake in that debate, and the most effective way of doing so is … to ensure we do it with a European voice."

A report by the European Council on Foreign Relations argued that China was exploiting the EU's divisions and treating it with "diplomatic contempt". The report, published in advance of Wednesday's EU-China summit in Prague, said that European states, dealing with China individually, lacked leverage on issues such as trade, human rights and Tibet.

"Europe has not been sufficiently strategic in its relationship with China," Miliband said. "I think a significant part of that is institutional. The EU-China relationship is a good case for the Lisbon treaty. At the moment, at every EU-China summit, the EU side is led by a different presidency and every year there's a different set of priorities.

I turn to you, our Palestinian neighbors, led by the Palestinian Authority, and I say: Let’s begin negotiations immediately without preconditions.Israel is obligated by its international commitments and expects all parties to keep their commitments. We want to live with you in peace, as good neighbors.

I do not want war.  No one in Israel wants war.

to our regret, this is not the case with the Palestinians. The closer we get to an agreement with them, the further they retreat and raise demands that are inconsistent with a true desire to end the conflict. Many good people have told us that withdrawal from territories is the key to peace with the Palestinians. Well, we withdrew. But the fact is that every withdrawal was met with massive waves of terror, by suicide bombers and thousands of missiles. We tried to withdraw with an agreement and without an agreement.  We tried a partial withdrawal and a full withdrawal.  In 2000 and again last year, Israel proposed an almost total withdrawal in exchange for an end to the conflict, and twice our offers were rejected. We evacuated every last inch of the Gaza strip, we uprooted tens of settlements and evicted thousands of Israelis from their homes, and in response, we received a hail of missiles on our cities, towns and children.  The claim that territorial withdrawals will bring peace with the Palestinians, or at least advance peace, has up till now not stood the test of reality.

Territorial withdrawals have not lessened the hatred, and to our regret, Palestinian moderates are not yet ready to say the simple words: Israel is the nation-state of the Jewish people, and it will stay that way.

But we must also tell the truth in its entirety: within this homeland lives a large Palestinian community. We do not want to rule over them, we do not want to govern their lives, we do not want to impose either our flag or our culture on them.

The Palestinian leadership must arise and say: “Enough of this conflict. We recognize the right of the Jewish people to a state of their own in this land, and we are prepared to live beside you in true peace.”  I am yearning for that moment, for when Palestinian leaders say those words to our people and to their people, then a path will be opened to resolving all the problems between our peoples, no matter how complex they may be.

Therefore, a fundamental prerequisite for ending the conflict is a public, binding and unequivocal Palestinian recognition of Israel as the nation state of the Jewish people.  To vest this declaration with practical meaning, there must also be a clear understanding that the Palestinian refugee problem will be resolved outside Israel’s borders.  For it is clear that any demand for resettling Palestinian refugees within Israel undermines Israel’s continued existence as the state of the Jewish people.

Tiny Israel successfully absorbed tens of thousands of Jewish refugees who left their homes and belongings in Arab countries.  Therefore, justice and logic demand that the Palestinian refugee problem be solved outside Israel’s borders.

the connection between the Jewish people and the Land of Israel has lasted for more than 3500 years.  Judea and Samaria, the places where Abraham, Isaac, and Jacob, David and Solomon, and Isaiah and Jeremiah lived, are not alien to us.  This is the land of our forefathers. The right of the Jewish people to a state in the land of Israel does not derive from the catastrophes that have plagued our people. True, for 2000 years the Jewish people suffered expulsions, pogroms, blood libels, and massacres which culminated in a Holocaust - a suffering which has no parallel in human history.  There are those who say that if the Holocaust had not occurred, the state of Israel would never have been established.  But I say that if the state of Israel would have been established earlier, the Holocaust would not have occured. 

our right to build our sovereign state here, in the land of Israel, arises from one simple fact: this is the homeland of the Jewish people, this is where our identity was forged. 

the simple truth is that the root of the conflict was, and remains, the refusal to recognize the right of the Jewish people to a state of their own, in their historic homeland.   In 1947, when the United Nations proposed the partition plan of a Jewish state and an Arab state, the entire Arab world rejected the resolution. The Jewish community, by contrast, welcomed it by dancing and rejoicing. The Arabs rejected any Jewish state, in any borders. Those who think that the continued enmity toward Israel is a product of our presence in Judea, Samaria and Gaza, is confusing cause and consequence. The attacks against us began in the 1920s, escalated into a comprehensive attack in 1948 with the declaration of Israel’s independence, continued with the fedayeen attacks in the 1950s, and climaxed in 1967, on the eve of the six-day war, in an attempt to tighten a noose around the neck of the State of Israel.  All this occurred during the fifty years before a single Israeli soldier ever set foot in Judea and Samaria .

In my vision of peace, in this small land of ours, two peoples live freely, side-by-side, in amity and mutual respect.  Each will have its own flag, its own national anthem, its own government.  Neither will threaten the security or survival of the other.

This policy must take into account the international situation that has recently developed.  We must recognize this reality and at the same time stand firmly on those principles essential for Israel.

Palestinians must clearly and unambiguously recognize Israel as the state of the Jewish people.  The second principle is: demilitarization. The territory under Palestinian control must be demilitarized with ironclad security provisions for Israel.  Without these two conditions, there is a real danger that an armed Palestinian state would emerge that would become another terrorist base against the Jewish state, such as the one in Gaza. 

In order to achieve peace, we must ensure that Palestinians will not be able to import missiles into their territory, to field an army, to close their airspace to us, or to make pacts with the likes of Hezbollah and Iran.

It is impossible to expect us to agree in advance to the principle of a Palestinian state without assurances that this state will be demilitarized.

Therefore, today we ask our friends in the international community, led by the United States, for what is critical to the security of Israel:  Clear commitments that in a future peace agreement, the territory controlled by the Palestinians will be demilitarized: namely, without an army, without control of its airspace, and with effective security measures to prevent weapons smuggling into the territory – real monitoring, and not what occurs in Gaza today.  And obviously, the Palestinians will not be able to forge military pacts.

Without this, sooner or later, these territories will become another Hamastan. And that we cannot accept.

Regarding the remaining important issues that will be discussed as part of the final settlement, my positions are known: Israel needs defensible borders, and Jerusalem must remain the united capital of Israel

The territorial question will be discussed as part of the final peace agreement.  In the meantime, we have no intention of building new settlements or of expropriating additional land for existing settlements. But there is a need to enable the residents to live normal lives, to allow mothers and fathers to raise their children like families elsewhere.  The settlers are neither the enemies of the people nor the enemies of peace.  Rather, they are an integral part of our people, a principled, pioneering and Zionist public.

Unity among us is essential and will help us achieve reconciliation with our neighbors.

If the Palestinians turn toward peace – in fighting terror, in strengthening governance and the rule of law, in educating their children for peace and in stopping incitement against Israel - we will do our part in making every effort to facilitate freedom of movement and access, and to enable them to develop their economy.  All of this will help us advance a peace treaty between us. 

Above all else, the Palestinians must decide between the path of peace and the path of Hamas. The Palestinian Authority will have to establish the rule of law in Gaza and overcome Hamas.  Israel will not sit at the negotiating table with terrorists who seek their destruction.   Hamas will not even allow the Red Cross to visit our kidnapped soldier Gilad Shalit

If we receive this guarantee regarding demilitirization and Israel’s security needs, and if the Palestinians recognize Israel as the State of the Jewish people, then we will be ready in a future peace agreement to reach a solution where a demilitarized Palestinian state exists alongside the Jewish state. 

Unusually the resolution was unanimous, reflecting the extent of anger within the Chinese government over last month's nuclear test. Normally it is difficult for the US, Britain and France to persuade China, and to a lesser extent Russia, to take a tough line against North Korea.

The regime is believed to have enough plutonium for at least six nuclear bombs. It has around 8,000 spent fuel rods that if reprocessed could allow the country to harvest 6-8kg of plutonium – enough for at least one nuclear bomb, according to analysts.

The UN resolution authorises all countries to stop and search North Korean ships for weapons. The US, Britain and France wanted to make such inspections mandatory for all states, but China and Russia watered this down. The final resolution "calls on" states to carry out weapons searches.

Even so, the resolution risks standoffs between US and North Korean ships – a danger underlined by North Korea's response. "An attempted blockade of any kind by the US and its followers will be regarded as an act of war and met with a decisive military response," the regime said.

There was no attempt to expand the sanctions to exports and imports of non-military goods. This is partly because China and Russia would have been opposed, but also because of fears a collapse of the North Korean economy would result in a flood of refugees into South Korea.

Mr. Ahmadinejad and his allies have tried to demonize Mr. Rafsanjani as corrupt and weak, attacks that Ayatollah Ali Khamenei has not strongly discouraged. On the other side, opposition leaders, especially Mr. Moussavi, have received support from Mr. Rajsanjani, political analysts said.

It is a quirk of history that Mr. Rafsanjani, the ultimate insider, finds himself aligned with a reform movement that once vilified him as deeply corrupt. Mr. Rafsanjani was doctrinaire anti-American hard-liner in the early days of the revolution who remains under indictment for ordering the bombing in of a Jewish center in Buenos Aires in 1994 when he was president. But he has evolved over time to a more pragmatic view, analysts say.

He supports greater opening to the West, privatizing parts of the economy, and granting more power to civil elected institutions. His view is opposite of those in power now who support a stronger religious establishment and have done little to modernize the stagnant economy.

“At a political level what’s taking place now, among many other things, is the 20-year rivalry between Khamenei and Rafsanjani coming to a head,” Mr. Sadjadpour said. “It’s an Iranian version of the Corleones and the Tattaglias; there are no good guys and bad guys, only bad and worse.”

It is not clear what leverage Mr. Rajsanjani can bring to this contest. If he speaks out, the relative said, he will lose his ability to broker a compromise. Mr. Rafsanjani leads two powerful councils, one that technically has oversight of the supreme leader, but it is not clear that he could exercise that authority to challenge Ayatollah Khamenei directly.

Mr. Rafsanjani has been in opposition before. In the days of the shah, he was a religious student of Ayatollah Khomeini at the center of Shiite learning, in the city of Qum. He was imprisoned under the shah, and became so closely associated with the revolutionary leader he was known as “melijak Khomeini,” or “sidekick of Khomeini.”’ After 1979, he went on to become the speaker of Parliament.

Mr. Rafsanjani later served two terms as president and was instrumental in elevating Ayatollah Khamenei to replace Ayatollah Khomenei in 1989.

People who worked in the government at the time said that Mr. Rafsanjani, as president, ran the nation — while Ayatollah Khameini followed his lead. But over time the two grew apart, as Ayatollah Khameini found his own political constituency in the military and Mr. Rafsanjani found his own reputation sullied. He is often accused of corruption because of the great wealth he and his family amassed.

He was so damaged politically that after he left the presidency, he failed to win enough votes to enter Parliament. In 2002, he was appointed to the head of the Expediency Council, which is supposed to arbitrate disputes between the elected Parliament and the unelected Guardian Council.

And in 2005, he ran for president again but lost in a runoff to Mr. Ahmadinejad. He was then elected to lead the Assembly of Experts. The body has the power to oversee the supreme leader and replace him when he dies, but its members rarely exercise power day to day.

The European Union is one of the largest donors to the Palestinian Authority.

The commission says this year alone it has paid more than 200 million euros ($280 million) to help cover the Palestinian budget deficit

"The Italian preparations for the summit have been chaotic from start to finish," said Richard Gowan, an analyst at the Centre for International Co-operation at New York University.

The behind-the-scenes grumbling has gone as far as suggestions that Italy could be pushed out of the G8 or any successor group. One possibility being floated in European capitals is that Spain, which has higher per capita national income and gives a greater percentage of GDP in aid, would take Italy's place.

"The G8 is a club, and clubs have membership dues. Italy has not been paying them," said a European official involved in the summit preparations.

Critics say Italy's Berlusconi government has made up for the lack of substance by increasing the size of the guest list. Estimates of the numbers of heads of state coming to L'Aquila range from 39 to 44."This is a gigantic fudge," Gowan said. "The Italians have no ideas and have decided that best thing to do is to spread the agenda extremely thinly to obscure the fact that didn't really have an agenda."

Silvio Berlusconi has come in for harsh criticism for delivering only 3% of development aid promises made four years ago, and for planning cuts of more than 50% in Italy's overseas aid budget.

The heavy criticism of Italy comes at a time when the future of the G8 as a forum for addressing the world's problems is very much in question. At the beginning of the year the G20 group, which included emerging economies, was seen as a possible replacement, but the G20 London summit in April convinced US officials it was too unwieldy a vehicle.

The most likely replacement for the G8 is likely to be between 13- and 16-strong, including rising powers such as China, India, Brazil, Mexico and South Africa, which currently attend meetings as the "outreach five" But any transition would be painful as countries jostle for a seat. Italy's removal is seen in a possibility but Spanish membership in its place is unlikely. The US and the emerging economies believe the existing group is too Euro-centric already, and would prefer consolidated EU representation. That is seen as unlikely. No European state wants to give up their place at the table..

While President Mahmoud Ahmadinejad continues to make belligerent noises about Israel and the West, others in Tehran have hinted that they're ready for a change. In a Mar. 21 speech, Supreme Leader Ali Khamenei trotted out standard anti-American rhetoric but also indicated a willingness to talk. And Ahmadinejad's probable opponent in the June presidential election, former Prime Minister Mir Hossein Moussavi, favors negotiations with the US. "Obama has prompted Iranians to have an open debate about the relationship they want to have with the US," says Gary Sick, an Iran specialist at Columbia University in New York. "This is something that hasn't been seen in 30 years."

Most Iranian executives seem to be rooting for Moussavi. Although he is an old-guard leftist, businesspeople hope he would lead a reform-minded administration that could ease Iran's isolation. "Ahmadinejad has done serious damage to Iran's reputation and the reputation of Iranian business," says Mohammad Reza Behzadian, a former head of the Tehran Chamber of Commerce who runs Tondar Middle East, a trading company in Tehran.

Facing pressure from Washington, major European banks have stopped doing business in the country. So Iranians must pay exorbitant rates for trade financing from second- and third-tier banks in Europe, the Middle East, and Asia. Some Iranians work around the restrictions by setting up subsidiaries in the United Arab Emirates and playing cat-and-mouse with American inspectors. But such solutions are expensive, adding billions of dollars to Iran's soaring import bill-$57 billion for the year that ended in March. "It's a challenge finding banks that we can trust," says Parviz Aghili, CEO of Karafarin Bank in Tehran.

Sanctions also restrict the development of Iran's vital energy reserves. Tehran wants to boost oil production capacity by 25 percent, to 5 million barrels a day, but with little foreign help and aging fields in rapid decline, it's tough even to maintain current output. That's one reason Iranian oil officials are quick to say they want American help. "We don't have any problems with US investment," says M.A. Khatibi Tabatabaei, Iran's representative on OPEC's board of governors.

Ahmadinejad's erratic policies make things worse. The populist President has spent freely on everything from loans to small businesses of questionable viability to imported food and cash handouts for the poor. And he has pressured banks to shovel out easy credit, leading to a real estate boom. But worried that oil earnings will start to peter out, the central bank has tightened up, starving factories of capital and prompting a sharp fall in property prices.

Last year, when oil prices surged, the Iranian economy could shrug off its problems. With oil's steep decline and the global financial crunch, though, some fear social unrest. Many factories are months behind on salaries, says Ali Reza Mahjoub, a member of Parliament and head of Workers' House, a labor group. He estimates that unemployment, officially 12.5 oercent, is really closer to 17 oercent. As financing dries up, building is grinding to a halt, says developer Amir-Mohamad Mazaheri. "This is a very dangerous situation," he says, puffing on a cigarette in a new tower in North Tehran. "There will be 3-4 million construction workers looking to any activity to support themselves."

Even with sanctions in place, savvy foreigners have managed to make a mark in Iran-though it takes persistence. Renault, for instance, has a $200 million joint venture to build the Logan compact. But late payments from the Iranians and difficulties training enough suppliers to meet a requirement of 60 percent local content have slowed progress, Renault says. The venture, Renault Pars, has cut its output target for the Logan by 25 percent, to 150,000 cars per year. "You need a lot of time and energy," says Renault Pars chief Jean-Michel Kerebel. "What takes five hours in Europe could take five days here."

In Spain, where the growth has been the most explosive, the foreign population rose to 5.2 million last year out of a total of 45 million people from 750,000 in 1999, according to the National Statistics Institute. Ireland’s population, now 4.1 million, was also transformed, with the percentage of foreign-born residents rising to 11 percent in 2006 from 7 percent in 2002.

Alcalá, a Madrid bedroom community and the birthplace of Miguel de Cervantes, is home to so many Romanian immigrants — 20,000 by some estimates — that Romania’s president, Traian Basescu, campaigned here for parliamentary elections last fall.

But signs of the reverse migration of Romanians are already evident. “Slowly, slowly, they’re disappearing,” said Gheorghe Gainar, the president of a Romanian cultural association in Alcalá. “When you look for them, you don’t find them. Sometimes you ask a relative, and they say they’ve gone back.”

The reverse exodus from more prosperous countries in Western Europe is likely to add to the economic pressures already buffeting Central and Eastern Europe, where migrants from developing countries are in turn being encouraged to leave. The Czech government announced in February that it would pay 500 euros, or about $660, and provide one-way plane tickets to each foreigner who has lost his job and wants to go home. And in Bucharest, Romania’s capital, workers from China have been camped out in freezing weather in front of the Chinese Embassy for two months, essentially stranded after their construction jobs disappeared.

Like the Czech Republic, Spain is offering financial incentives to leave. A new program aimed at legal immigrants from South America allows them to take their unemployment payments in a lump sum if they agree to leave and not return for at least three years. The Spanish government says only around 3,000 people have taken advantage of the plan, but many others are leaving of their own accord.

Airlines in Spain are offering deals on one-way tickets to Latin America, and they say demand has increased significantly. Every day, Barajas airport in Madrid is the setting for emotional departures, as families send their jobless loved ones back home.