Broadly speaking, the Americans want growth and want the rest of the world to take some risks in order to provide it. The Europeans have had quite enough risks lately, after the Greek crisis plunged the euro into trouble, and so are prepared to give up some prospect of growth in order to cut their budget deficits. The Asians are content to let them squabble.

This can be expressed in simplified political terms. The Americans, with a slightly left-of-center Democratic administration, are pressing for Keynesian policies, which might be summarized as spend now and cut later. The Europeans, with right-of-center governments in Germany, Britain, France and Italy, are pursuing more orthodox and monetarist policies, which mean cuts now.

The difference can also be seen in the comparative unemployment figures. Last week's U.S. employment report was grim, showing that almost all new jobs came from the temporary hiring of census workers and that hiring by the private sector was much weaker than expected. Germany by contrast, with its exports boosted by the weak euro, has seen its jobless rate drop to 7.7 percent.

What this means in practice is that the United States wants surplus countries like China, Japan and Germany to boost demand, which should mean they buy more American exports. But for both Germany and Japan this would mean politically unpopular budget deficits rising yet further, so it won't happen. The Chinese are also resisting American pressure to revalue their currency, claiming that the sharp fall in the euro has already sent the price of Chinese goods soaring in Europe, their biggest export market.

Beyond a shared relief that their exports are doing well with the weak euro, the Europeans don't have a common policy. But the Germans, British and the European Central Bank think the immediate priority is to cut budget deficits, even at the risk of choking off the very feeble recovery. The French and the International Monetary Fund (currently led by a Frenchman) think that budget cuts should be delayed until more deficit spending has consolidated the recovery.

IMF Managing Director Dominique Strauss-Kahn said at a post-summit briefing that over-zealous budget cuts in rich countries could hurt growth over the next two years. Stimulus measures that had been launched since the financial crisis of October 2008, should be maintained. He cited a new IMF study that concluded that budget cuts, without accompanying labor market reforms and de-regulation to boost domestic demand, could cut global economic growth by 2.5 percent and cost 30 million jobs worldwide.

The G-20 meeting, which sets the agenda for the heads of government summit in Canada in three weeks time, is unlikely to reach any significant consensus on a concerted international policy. They might not even agree on the need for a global bank tax, to help defray the costs of bailing out the banks. The one conclusion they could all agree was that the world economy may be recovering but it is far from healthy and still faces big risks of a second dip into recession.

"The recent volatility in financial markets reminds us that significant challenges remain and underscores the importance of international co-operation," the final statement from finance ministers said. The recent turmoil in Europe's government bond markets "highlight the importance of sustainable public finances", they added.

The widest public gap emerged between European Central Bank President Jean- Claude Trichet and U.S. Treasury Secretary Timothy Geithner. Europe's austerity programs to cut budget deficits "could not be considered negative because it would improve confidence," Trichet said. The need for such tough measures in the "old industrialized economies" is clear.

"Stronger domestic demand growth in Japan and in the European surplus countries" is needed, Geithner countered in a separate briefing, adding that budget cuts should be delayed "until the medium term."

Behind the scenes, there were other ominous arguments under way, with the Americans worried that Europe's banks were still at dire risk from the euro crisis, in a way that could damage the still convalescing U.S. banking system. Rates for European credit default swaps and inter-bank lending were back to where they were before the euro countries launched their trillion-dollar rescue scheme on May 7.

"Further progress on financial repair is critical to global economic recovery," Geithner wrote in a June 3 letter to his G-20 counterparts. "This requires, particularly in parts of Europe, further efforts to restructure and recapitalize the banking system."

The French and Germans were squabbling separately over reports that the French banks were off-loading their toxic Greek bonds onto the European Central Bank, while the Germans were stuck with theirs, abiding by an agreement to hang onto them at least until 2013. The source for these reports, which inspired the French daily Le Monde to say "the smell of divorce floats between the Germans and the ECB," appears to be German central bankers. Axel Weber, head of the Bundesbank (and campaigning hard to be the next head of the ECB) has been openly critical of the ECB's policies under Trichet.

What all this reflects is the sharp divergence between a world where China and the emergent markets are recovering fast, the United States is limping along more slowly and the European economies are faltering and nervous of more government debt crises in the eurozone. To expect a G-20 consensus in such circumstances in unrealistic. National interests still come first.

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