Sarkozy's red lines for a G-20 summit deal

French President Nicolas Sarkozy came out swinging Wednesday morning. He threatened to walk out of the G-20 Summit in London.

But by late afternoon, Mr. Sarkozy was making nice.

“I have confidence in Obama,” and, “I am sure that he will help us and that he will understand us,” he said at a joint press conference with German Chancellor Angela Merkel Wednesday.

Mrs. Merkel said both leaders had come “in a very constructive mood.”

As for walking out, Sarkozy said “it would be annoying to leave when I have just arrived.”

But that doesn’t mean France and Germany have completely backed down.

Sarkozy has produced a number of ‘tests’ which he insists must be met.

Sarkozy's red lines

For starters, tighter financial regulation of banks was “a non-negotiable goal” that has to be met, he warned Wednesday.

Action on executive bonuses, hedge funds, rating agencies, and offshore tax havens were all also identified as "red lines" for France, as well as Germany.

Click here to read about Germany taking a tough line on Swiss tax havens.

But is there really a Franco-Germany initiative to hijack the G-20, enlisting he support of nations such as Brazil to prize the agenda away from President Barack Obama and Prime Minister Gordon Brown?

Sarkozy held a joint press conference with Brazil’s President Luiz Inacio Lula da Silva earlier on Wednesday. Sarkozy said that he and Lula shared “identical” views.

Setting the bar low

Still, some observers suggest that Sarkozy has deliberately set the bar at a level which can be met by Obama and Brown, giving credence to the British Prime Minister’s prediction that an agreement deal on a plan to kick start global recovery was just “hours away”

In some quarters, there are suspicions that Franco-German maneuvering has more to do with impressing domestic electorates, particularly in France.

But Merkel and Sarkozy are also continuing to dig their heels in on plans for a fiscal stimulus packages to pull the world economy out of the current crisis.

Why is Merkel saying "nein" to stimulus spending? Click here.

"France and Germany will speak with a single voice ... Compromise must be engaged in by all partners of the world," Sarkozy said at Wednesday’s press conference.

“We will see tomorrow exactly what the outcome of this will be. We will judge then,” said Sarkozy.

Stay tuned.