ST. PETERSBURG, Russia – President Bush and Russian President Vladimir Putin agreed yesterday that leaders at the Group of Eight summit need to work together to help defuse the rising violence between Israel and Hezbollah but could not come to terms on how to do so.

U.S.-Russian tensions also surfaced over trade issues, democracy in Russia and Iran's nuclear program.

Bush placed heavy blame on the Lebanese militant group Hezbollah for the outburst of violence, saying it had launched attacks to derail a Western-backed effort to bring peace to the region by carving out a Palestinian state next door to Israel. He called on Syria to use its leverage over Hezbollah to halt the attacks.

Putin described Israel's concerns as justified, but added, in an apparent criticism of the scope of the Israeli response, that “the use of force should be balanced.”

“Escalation of violence, in our opinion, will not yield positive results,” he said.

The European Union – and France, in particular – has characterized Israel's response to Hezbollah's attacks as excessive, putting Bush at odds with key allies.

Bush and Putin met yesterday just hours after the collapse of negotiations aimed at completing an agreement to allow Russia membership in the World Trade Organization.

Lack of an agreement with the United States is one of the only hurdles keeping Russia out of the WTO, an international organization dealing with the rules of trade among nations.

The Putin government had hoped that pre-summit negotiations would resolve U.S. objections to Russia's entry into the group, but the effort fell apart after talks failed to resolve a handful of remaining issues, including questions about easing the access of American beef and pork to the Russian market.

Pressing issues in Lebanon, worries about North Korea's and Iran's nuclear programs and questions about Putin's commitment to political, economic and press freedoms in Russia have changed the focus of the annual summit of world powers.

The G-8 gathering, the first ever hosted by Russia, began last night with a lavish dinner at the opulent 18th century Peterhof Palace, which was extensively damaged during World War II and then painstakingly rebuilt. Working sessions were to begin today at a second palace that doubles as Putin's residence while he is in St. Petersburg.

Putin bristled after Bush suggested Russia might emulate some of the democratic changes being adopted under U.S. military guidance in Iraq.

“We certainly would not want to have the same kind of democracy as they have in Iraq, I will tell you quite honestly,” Putin said as Bush stood stiffly at his side during a joint news conference. The Russian leader's sarcasm was greeted by a wave of laughter from the huge media entourage covering the event.

“Just wait,” Bush replied.

Putin's remark about Iraq capped an ongoing dialogue between the two governments over whether Russia is backtracking on a commitment to embrace democracy, free speech and free market economics.

Although less edgy than when Vice President Dick Cheney accused Putin two months ago of adopting authoritarian policies, the exchange grew testy when Bush responded to a question about whether differences over the issue of Russian democracy were taking a toll on their relationship.

Bush, who had earlier met privately with Putin after a social dinner Friday evening, replied, “I talked about my desire to promote institutional change in parts of the world like Iraq, where there's a free press and free religion, and I told him that a lot of people in our country would hope that Russia would do the same thing.”

Bush went on to describe their relationship as “cordial,” adding, “I fully understand, however, that there will be a Russian-style democracy. I don't expect Russia to look like the United States.”

He has indicated that he does not want disagreements over Putin's domestic policies to jeopardize a partnership in dealing with threats to global peace – such as the current Middle East crisis and North Korea's and Iran's nuclear programs.

Bush told reporters that “a strong relationship” between Russia and the United States will advance the goal of peace because “we'll be better able to confront the current problems that face us all.”

When a reporter asked about whether there were any breakthroughs in countering nuclear proliferation and how Putin rated the state of U.S.-Russian relations, he began, “We will not participate in any crusades, in any holy alliances,” which analysts here took as a signal to Iran that Russia is not fully aligned with Bush, or as a dig at Bush's campaign to spread democracy in the Middle East, or both.

Asked what he took Putin to have meant by “holy alliance” and “crusade,” Stephen J. Hadley, the national security adviser, said during a news briefing here, “You know, I asked myself the same question.”

Asked about prospects for a unified summit position on the Middle East, Hadley said, “I think it is coming together.”

The United States pressed for a summit statement identifying Hezbollah as the instigator of the violence and emphasizing the importance of maintaining a democratic Lebanon. The statement also would criticize Syria, Iran, and the Palestinian group Hamas for “all acting in a way that frustrates democracy in the area and frustrates peace,” Hadley said. It would assert the importance of maintaining democracy in Lebanon and salute efforts by the United Nations to restore peace.

The other G-8 countries that would sign on to such a statement are Canada, France, Germany, Italy, Japan and Britain.

Bush and Putin did agree on a global strategy for combating nuclear terrorism.

The plan involves a joint effort to track nuclear terrorists and safeguard materials that could be fashioned into a nuclear weapon. Discussing his talks with Putin about the importance of injecting more democracy into the Russian government, Bush described the Russian leader at the news conference as “a strong man” who “doesn't want anybody telling him how to run his government.”

Putin confirmed Bush's statement but added, “We know for sure that we cannot strengthen our nation without developing democratic institutions – but certainly we will do this by ourselves.”

At a late-night news conference, Putin indicated that Russia had not changed its opposition to sanctions against Iran, saying “the question is not about toughening our stance, but about finding common approaches.” He defended Iran's right to pursue nuclear technology for peaceful purposes.

“We believe that all countries in the world have the right to access high technologies, including nuclear,” Putin said.