Talks are likely to get off on the wrong foot as delegations getting ready for the meeting are getting "irritated by Canada's smugness," according to a policy expert observing sherpa talks in Berlin last week.
Leaders are due to meet for a warm-up summit in Busan, South Korea tomorrow (4 June) to forge some consensus on measures to cushion future bailouts.
Last week, the European Commission proposed imposing a levy on banks' balance sheets to help soften possible bankruptcies (EurActiv 26/05/10).
However, that consensus is already being seriously questioned as German and French sherpas are disgruntled by the lack of enthusiasm for such a levy, especially in Canadian quarters, sources from the Berlin talks told EurActiv.
In addition, US Treasury Secretary Timothy Geithner told the press in Seoul that agreement was unlikely in spite of European support for a levy.
"There is not universal support for that [bank levy] across the G20, at least at this stage. And I don't think that's going to change in Korea," Geithner said.
"The message from the Canadian delegation is that their banks are well regulated and well taxed, which is why they see no reason to introduce levies," the source added.
Delegations now also fear that the same truculence on a banking levy will spill over into discussions on other proposed measures, like bankers' pay and capital requirements.
Separately, a Washington insider interviewed by EurActiv predicted that the G20 will produce token agreements on upping capital requirements at banks and cutting 'too big to fail' banks down to size, two principles that were already agreed at the Pittsburgh summit.
"This will be a backward looking summit," said the source, who is close to the US government's reform process.
The source also spoke of anxiety on Capitol Hill that events in Europe, such as Greece's debt crisis, have weakened the bloc's ability to take a co-ordinated macroeconomic policy to the G20.
The US government, according to the source, is closely watching the EU as it fears recent moves to clamp down on the financial sector could destabilise the US banking sector before it has recovered.
French Finance Minister Christine Lagarde was critical of Germany's sudden move to ban naked short selling last month and called on the EU to establish a common approach ahead of the G20 (EurActiv 03/06/10).
