Since I'm about to close this, I'll take a moment first to shamelessly abuse last-word privileges, though I don't know that I really have much to add to what's already been said. Like several other posters I have colleagues, both male and female, with whom I'm on a casual enough basis that we commonly exchange jokes in poor taste, sarcastic slaps on the back, or reassuring pats on the shoulder to say "I feel for you--good luck." And academia is a freewheeling enough place that such displays of pal-ishness don't raise eyebrows even in certain semi-public settings, like the departmental office or the faculty lunchroom. However, I wouldn't dream of approaching these colleagues in such a way if I were coming into their classroom to guest-lecture to their students, or chairing a panel with them at a faculty senate meeting with the dean and chancellor and provost sitting right there. That would definitely be inappropriate, and an embarrassment to both of us.
Interestingly enough, *almost* everyone in here seems to be in agreement up to this point. OK, so certain political leaders might develop a "friendly" enough aspect to their relationships with certain other leaders that tasteless jokes, cursing, and certain forms of casual physical contact indeed might occur in their private meetings. But scheez, you don't display that aspect of your relationship in a setting like the G8 summit!
And it's at this point that everyone's perspectives diverge. I've read both the arguments in favor of it being clear-cut sexist behavior, and the arguments that it was just an equal-opportunity "faux-pas," and I find myself sympathetic enough to both perspectives that frankly, I really don't know what to think. (Though I'll hasten to add--the faux-pas alone would be sufficient cause for Merkel to react with shock and take offense, regardless of whether she found it sexist or not.) It comes down to what significance you find in the fact that the victim of Bush's misstep happened to be the only female head honcho in the room. Was it just random coincidence that Merkel was the "pal" he inappropriately displayed his affection for, and it could just as easily have been Tony Blair? Or was it the case that he just assumed a woman would be more receptive to behavior that he already knew better than to show towards a man in such a setting? I really don't know. But, if it was the latter--then yes, that's sexism, because the assumption categorically ascribes on the basis of gender a green-light to what would have been recognized as inappropriate, on grounds of due respect for another person's dignity, if said person were of the other sex, in the same situation.
That said............