Get ready for a stormy G20 summit.

When President Obama hosts a meeting of G20 leaders in Pittsburgh later this week, the summit will face some thorny issues. Forcing banks to raise capital to avoid the reckless investments of the past is a hot topic. Defining an exit strategy for the world’s top industrial nations to withdraw the money they pumped into the economy over the past year to avoid hyperinflation is another. But the hands-down top controversy is the question of whether to set limits on bankers’ bonuses.

Finance ministers of the G20 countries met in London earlier this month to thrash out the outstanding issues but basically dodged the issue of bankers’ pay. They asked the Financial Stability Board (a Basel, Switzerland-based regulator whose powers were beefed up by the G20 in April) to consider ways to control executive bonuses and report back to the Pittsburgh summit.

At the London meeting, the ministers rejected a demand from France and Germany that strict limits be placed on bankers’ pay. Instead, a compromise agreement backed by the United States and Britain was adopted, one that calls for bonus pay to be awarded over a minimum three-year period so that the bonuses reward long-term performance rather than short-term risky behavior. They also called for ways to “claw back” bonuses from banks where performance deteriorates. Also under study is whether banks should limit total bonus payments to a fixed percentage of profits.

Given that fudge, it seems unlikely that the full group this weekend will come up with a more satisfying solution. Still, the Europeans seem determined to raise the issue. “All over the world, people are sickened by the bonus system. We want to bring an end to the scandal of bonuses,” said French President Nicolas Sarkozy. “The bankers are partying like it’s 1999 and not 2009,” said Swedish Finance Minister Anders Borg. “The bonus culture must come to an end and it must come to an end in Pittsburgh.”

So far, France has adopted the toughest policy on bonuses. This includes deferring bankers’ bonuses over three years instead of one, forcing banks to pay a third of the bonus in stock and using long-term performance measures to determine if bonuses will be paid at all. Sarkozy has named Michel Camdessus, the former chief of the International Monetary Fund, to monitor pay policy at the banks. He wields a powerful weapon: Banks that don’t abide by the rules will be denied profitable mandates to work with the government.

It’s unclear whether the United States would accept international rules on bankers’ pay, especially since domestic efforts to control abuses remain mired in controversy. Would Goldman Sachs (GS), which has set aside $11.3 billion for bonuses in the first six months of 2009, agree to limits set by an international watchdog? Or would years of litigation ensue?