The Group of Eight leaders remained at odds over the despatch of occupation troops to Iraq, a possible role for NATO and debt relief for the country's interim government.
Summit host and US President George Bush, faced with opposition from NATO allies France, Germany and Russia, admitted on Thursday that his earlier suggestion for the alliance to play a greater role by sending troops was "unrealistic".
French President Jacques Chirac, who quickly dismissed Bush's suggestion after it was first made, reiterated his opposition to the idea at the summit's end, saying Paris had "clearly indicated that we could not accept a mission of this type for NATO".
"Any interference by NATO in this region appears to us to run great risks, including the risk of confrontation between the Christian West and the Muslim East," said Chirac.
NATO decisions have to be made by consensus - meaning that French objections risk derailing Anglo-US plans or at least causing them to be altered.
Finding an enemy?
German Chancellor Gerhard Schroeder said Berlin would not try to block NATO engagement in Iraq but stressed that he remained convinced such a move was unwise and would not help improve security.
Russian President Vladimir Putin, whose country along with Japan is the only non-NATO member of the G8, also shot down the idea of NATO troop deployment. He suggested that the alliance was seeking to replace its Cold War enemy, the Soviet Union, with a new one.
"NATO needs an enemy," he said. "In the past, it had one. Perhaps it is looking for one now. For Iraq, it would be better it the role was limited to the United Nations," he said.
Chirac (L) rejected Bush's idea of
of a bigger role for NATO in Iraq
NATO's involvement in Iraq has so far been limited to providing logistic support to a 6,500-strong occupation force under Polish command.
G8 leaders also remained split on the issue of debt relief for Iraq, which Washington is pushing. The question of Iraq's $120 billion debt is a thorny one, with Washington pushing for the cancellation of up to 90% and Paris, Moscow and Ottawa unwilling to go that far.
Palestinian issue sidelined
The summit also closed without any substantial progress on the Palestine-Israeli dispute. President Bush failed even to mention the issue in his closing press conference.
The G8 powers endorsed the largely moribund international "road map" aimed at ending the conflict and called for a new meeting of the four heavyweights that engineered it by the end of the month.
The quartet includes the United States, Russia, the United Nations and European Union.
In their closing statement, G8 leaders said the quartet should meet in the region before the end of June to find a way to kickstart the peace process.
However, US officials admitted that such a meeting would only be a routine gathering.
On Wednesday the summit adopted the US-backed Broader Middle East Initiative aimed at promoting 'democracy' and human rights in a swathe of the Muslim world from North Africa to South Asia.
But how far it takes hold remains to be seen. Egypt and Saudi Arabia, two of the biggest countries covered by the initiative but alarmed by its potential implications, declined invitations to the summit.
Tunisia, which holds the rotating presidency of the Arab League, also snubbed the G8 by turning down its invitation.