April 3 (Bloomberg) -- As Group of 20 negotiations on a new regulatory blueprint bogged down, President Barack Obama pulled French President Nicolas Sarkozy and Chinese President Hu Jintao into a corner of a room in London’s Excel Center.

Obama was seeking to bridge differences between Sarkozy, who wanted to publish a list of tax havens from the Organization for Economic Cooperation and Development, and the Chinese, who opposed it. Obama’s chat with Sarkozy produced a proposal for Hu, who considered it, a U.S. official said.

Obama called Hu over, eventually pulling Sarkozy back in and arriving on a compromise: The G-20 would promise action against tax havens, note the OECD list and go no further.

“Tax havens were the subject of frank debate right up until a few minutes ago,” Sarkozy told reporters yesterday after the meeting ended. “We ended up doing a three-way meeting. Obama was very helpful to me.”

So ended a gathering at times more notable for discord than for agreements.

Two days before the meeting began, French Finance Minister Christine Lagarde said Sarkozy was prepared to walk out unless the summit adopted strict international finance regulations. German Chancellor Angela Merkel told reporters she was worried the G-20 might try to “suppress the problems and paint things in a brighter light than they are.”

The day before yesterday’s formal meeting, Sarkozy and Merkel held a press conference to step up calls for tighter regulations and told reporters the leaders weren’t yet close to an agreement. Meanwhile, Japanese Prime Minister Taro Aso criticized Germany’s unwillingness to boost spending.

Friendly Soiree

The event had been organized with the trappings of a friendly soiree. Most of the G-20 leaders, whose countries account for 85 percent of the global economy, first came together on the evening of April 1 at Buckingham Palace for a cocktail party hosted by Queen Elizabeth II.

Conversations and negotiations continued over dinner that night at 10 Downing Street, the residence of U.K. Prime Minister Gordon Brown. The meal included fresh organic farmed salmon and shoulder of lamb prepared by U.K. chef Jamie Oliver and eight young helpers.

Canary Wharf

For the main meeting, the group repaired to East London’s barn-like Excel Center, within sight of the Canary Wharf, home to offices for Barclays Plc and HSBC Holdings Plc and two major recipients of U.S. financial-rescue dollars: Bank of America Corp. and Citigroup Inc.’s Citibank. After a 90-minute breakfast, the group spent the morning in a windowless secure room known as the “red zone,” taking breaks for private chats on mint-green seats in a separate lounge, a U.K. official said.

Some of the officials taking part in the meeting were happy with less lofty settings. U.K. Business Secretary Peter Mandelson opted to eat in the media canteen. When asked, “How do you feel being at the fulcrum of history?” Mandelson replied, “The soup’s nice.”

During the official meeting, the leaders wore microphones and got simultaneous translations for the 13 languages spoken. When one wanted to say something, he or she pressed a button, set off a light and waited for Brown to grant a turn to comment. Computer screens displayed a constantly updated version of the draft communiqué.

Talks Over Brandy

The high-tech setting was a far cry from international summits of the past, like the 1944 Bretton Woods economic conference, as Obama pointed out to reporters after the meeting. It was an easier negotiation when it was “just Roosevelt and Churchill sitting in a room with a brandy,” Obama said to laughter.

The group later opted to stay put in the dining room after a lunch of asparagus, Hereford beef fillet and lemon mousse so as not to break up the discussion, a U.K. official said. It was in that room that Obama, the leader of the world’s largest economy, went to work on Sarkozy and Hu.

The last issue of disagreement was the tax havens, contributing to what Sarkozy described as a “tense” situation as the meeting eventually ran half an hour late. The Chinese, who aren’t members of the OECD and have the fastest-growing major economy, objected to any form of words in the final communiqué endorsing the list. For Sarkozy and others, the issue is critical as they struggle to bring more funds into their government treasuries, because a list might encourage compliance.

Obama, 47, first signaled to Sarkozy, 54, that the two should speak in private. According to the U.S. official, they went into a corner of the room with their translators and Obama suggested a range of possible options. He then sent a proposal to Hu, 66.

Possible Deal

After Hu had mulled the offer, Obama took him into the same corner where he had spoken to Sarkozy. According to the U.S. official, who spoke on condition of anonymity, Obama sensed a possible deal and summoned Sarkozy. The three huddled with their “sherpas,” the officials who help prepare for summits, and their translators.

Hu and Sarkozy shook hands, agreeing that the G-20 would “note” the OECD list without endorsing it. The room erupted in applause when the final text won agreement.

Brown, 58, then asked Obama to make a closing statement to the meeting, and the U.S. president emphasized the “historic” nature of the assembly.

In the end, the group had produced a blueprint for reining in the excesses that fed the worst financial crisis in six decades and pledged more than $1 trillion in emergency aid to cushion the economic fallout.

Hedge Funds

The leaders called for stricter limits on hedge funds, executive pay, credit-rating companies and risk-taking by banks. They also boosted the resources of the International Monetary Fund and offered cash to revive trade to help governments weather the economic and social turmoil.

They sidestepped the question of whether to deliver more fiscal stimulus in their own economies and agreed to meet again before the end of the year.

Merkel, 54, who supported Sarkozy’s stance on tax havens, called the agreement a “victory for common sense.” Obama, she said, had been “especially concerned that we get good results” and “was involved in solutions to very specific problems.”

The U.K. delegation also seemed impressed with Obama, because most of Brown’s team made their way into the room where he was talking to listen to him.

Obama said he had come to the G-20 intending to listen, learn, show some humility and help encourage the “best answer.”

“I think we did OK,” Obama said.

To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net

Last Updated: April 2, 2009 19:27 EDT