By Timothy Heritage
ST. PETERSBURG, Russia (Reuters) - U.S. President Barack Obama faced growing pressure from world leaders not to launch military strikes in Syria on Thursday at a summit on the global economy that was eclipsed by the conflict.
The Group of 20 (G20) developed and developing economies met in St. Petersburg to try forge a united front on economic growth, trade, banking transparency and fighting tax evasion.
But the club that accounts for two thirds of the world's population and 90 percent of its output is divided over issues ranging from the U.S. Federal Reserve's decision to end its program of stimulus for the economy to the civil war in Syria.
Russian President Vladimir Putin wants to use the meeting in a seafront tsarist palace to talk Obama out of military action against Syrian President Bashar al-Assad over a chemical weapons attack which Washington blames on government forces.
Obama wore a stiff smile as he approached Putin on arrival at the summit and grasped his hand. Putin also maintained a businesslike expression. It was only when they turned to pose for the cameras that Obama broke into a broader grin.
The first round at the summit went to Putin as China, the European Union and Pope Francis - in a letter for G20 leaders - aligned themselves more closely with him than with Obama over the possibility and legitimacy of armed intervention.
"Military action would have a negative impact on the global economy, especially on the oil price - it will cause a hike in the oil price," Chinese Vice Finance Minister Zhu Guangyao told a briefing.
The Pope urged the leaders to "lay aside the futile pursuit of a military solution". He has also invited the 1.2 billion Roman Catholics and people of other faiths to join him in a day of prayer and fasting on Saturday to end the civil war.
European Union leaders, usually strong allies of the United States, described the August 21 attack near Damascus, which killed an estimated 1,400 people, as "abhorrent" but added: "There is no military solution to the Syrian conflict."
Putin, Assad's most important ally, was isolated on Syria at a Group of Eight meeting in June, the last big meeting of world powers. He could now turn the tables on Obama, who recently likened him to a "bored kid in the back of the classroom."
Only France, which is preparing to join U.S. military action, rallied behind Obama.
"We are convinced that if there is no punishment for Mr. Assad, there will be no negotiation," French Foreign Minister Laurent Fabius said before leaving for St. Petersburg.
With backing by Beijing and Moscow unlikely at the U.N. Security Council, where both have veto powers, Obama is seeking the approval of the U.S. Congress.
Putin says rebel forces may have carried out the poison gas attack and that any military strike without Security Council approval would violate international law, a view which is now increasingly openly being supported by others.
He has no one-on-one talks scheduled with Obama but hopes to discuss Syria at a dinner with all the leaders. United Nations Secretary General Ban Ki-moon and U.N. special envoy Lakhdar Brahimi were also in St. Petersburg, hoping to secure agreement on holding an international peace conference on Syria.
Putin's press secretary, Dmitry Peskov, portrayed the "camp of supporters of a strike on Syria" as divided and said: "It is impossible to say that very many states support the idea of a military operation."
One national leader attending the summit said there appeared to be little chance of a rapprochement between Putin and Obama, whose relations have soured following Russia's offer of asylum to former U.S. spy agency contractor Edward Snowden.
Foreign ministers from the key states in the G20 - which includes all five permanent U.N. Security Council members - will also discuss Syria on the sidelines of the meeting.
Any G20 decision on Syria would not be binding but Putin would like to see a consensus to avert military action in what would be a significant - but unlikely - personal triumph.
LOSS OF HARMONY
The G20 achieved unprecedented cooperation between developed and emerging nations to stave off economic collapse during the 2009 financial crisis, but the harmony has now gone.
There are likely to be some agreements - including on measures to fight tax evasion by multinational companies - at the summit in the spectacular, 18th-century Peterhof palace complex, built on the orders of Tsar Peter the Great.
An initiative will be presented to leaders on refining regulation of the $630-trillion global market for financial derivatives to prevent a possible markets blow-up.
Steps to give the so-called 'shadow banking' sector until 2015 to comply with new global rules will also be discussed.
But consensus is proving hard to achieve among developed economies as the United States takes aggressive action to spur demand and Europe moves more slowly to let go of austerity.
The emerging economies in the BRICS group - Brazil, Russia, India, China and South Africa - urged the G20 to boost global demand and ensure that any changes in monetary policy are well flagged to minimize any disruptive "spillovers" that may result.
The appeal reflected the concerns among developing nations over the prospect that the Fed will scale back its ultra-loose monetary policy, and a view that Europe is not doing enough to promote a demand-driven recovery.
The BRICS also agreed to contribute $100 billion to a joint currency reserve pool. China will commit $41 billion; Brazil, India and Russia $18 billion each; and South Africa $5 billion.
Russia and China also joined forces in warning about the potential impact of the Fed ending its bond-buying program to stimulate the economy.
(Reporting by Gernot Heller, Luke Baker, Tetsushi Kajimoto, Lidia Kelly, Katya Golubkova, Steve Holland, Douglas Busvine, Steve Gutterman, Alessandra Prentice and Denis Pinchuk; Writing by Timothy Heritage; Editing by Alastair Macdonald and Anna Willard)