CHANCELLOR MERKEL: (As translated.) Good morning, ladies and gentlemen. I see that there are quite a number of you who have made the trouble to come here today. I would like to welcome you very warmly. Let me say that I'm delighted to be able to have this press conference together with the American President after our talks here today. Yesterday we had very intensive talks over dinner. We had intensive talks this morning. We're going to continue them over lunch later on. Let me say that I'm very, very pleased to have the President of the United States here as our honored guest in this guest house of the government.

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Then on international issues, Afghanistan was discussed; progress in the Middle East; Iran, the offers we put on the table to Iran, but also the fact that if Iran does not meet its commitments, then further sanctions will simply have to follow. We again said we want to give room for diplomatic solutions. We want to give diplomacy a chance, but we also have to stay on that particular issue. These were constructive, very intensive talks -- talks that were characterized by a friendship between us. And I think this can lend a contribution towards solving a number of issues that are outstanding in the world at large, and we show at the same time transatlantic cooperation between Germany and the United States is working very well. Thank you again, Mr. President, for coming, and a very warm welcome.

PRESIDENT BUSH: Madam Chancellor, thank you for the invitation to this beautiful place, a modest little cottage by the lake, it is -- I'm really glad you thought of this location. Laura and I loved our dinner last night. For those in the German press who thought I didn't like asparagus, you're wrong. (Laughter.) The German asparagus are fabulous.

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We talked about Iran, of course. I told the Chancellor my first choice, of course, is to solve this diplomatically. All options are on the table and that -- but the first choice is to solve this problem by working closely together, by sending a dual message, which has been the consistent policy of this administration, that if you verifiably suspend your enrichment programs you'll end your isolation, and there's a way forward for you.

The Iranian regime has made a choice so far, and it's a bad choice for the Iranian people. The Iranian people deserve better than being isolated from the world. They deserve better from having, you know, their government held up as, you know, unsafe and not trustworthy. And so the message from the EU Foreign Minister Solana will be: There's a better choice for you. And we'll see what choice they make.

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CHANCELLOR MERKEL: Well, we now have the possibility to take questions. Maybe we ought to start with a German correspondent.

Q (As translated.) Mr. President, Madam Chancellor, you spoke about Iran at some length. In Israel the press writes that Israel might well contemplate action against this threat that Iran poses to them. What would be your -- what are you saying, Mr. President, to the Israeli government? And you said, Chancellor, give diplomacy a chance. Madam Chancellor, Mr. President, how long would you say diplomacy has to be given a chance? Can we exclude that during your term in office military action will be taken -- will take place against Iran, Mr. President?

And you, Chancellor, how do you assess the era of George Bush? In your party, one of your leading party members said that you will not miss George Bush. Will you miss him?

And a question directed to both of you -- why do you, Mr. President -- I think -- don't ask for too long, but why do you -- why are you seen as so unpopular, Mr. President, in Germany?

PRESIDENT BUSH: I just told you that all options are on the table, and my first choice is to solve this diplomatically. And the best way to solve it diplomatically is to work with our partners and that's exactly what we're doing. And the message to the Iranian government is very clear: that there's a better way forward than isolation, and that is for you to verifiably suspend your enrichment program. And the choice is theirs to make. Obviously we want to solve this issue peacefully and so we'll give diplomacy a chance to work. And I want to thank the message that came out of the EU meeting yesterday, which is that if they choose to be -- continue to be obstinate, there will be additional sanctions.

CHANCELLOR MERKEL: We talked just now at some length about this. I very clearly pin my hopes on diplomatic efforts and I believe that diplomatic pressure actually already has taken effect. If you look at the situation in Iran on the ground, you see that quite clearly. These efforts can have a success, but this presupposes, obviously, that the global community is sort of unified. Both in the European Union and in the world [sic] Security Council we have to continue this common approach. We cannot exclude either that there may well be a further round of sanctions, and those need to be negotiated in the Security Council of the United Nations.

What's important now is to see to it that this last round of the sanctions is actually implemented and can take effect, because the effectiveness of sanctions is actually been proved only once they are taken seriously. And we are under certain -- quite a considerable pressure to act together and in concert. And we in the European Union will do everything to see to it that this actually happens.

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Q Mr. President, back on Iran, can you talk a little bit about -- well, Iran has signaled that it seems likely to reject Mr. Solana's offer, presenting on behalf of you and the EU. What have you and your European counterparts agreed upon in terms of new measures against Iran, if that is indeed the case?

And to Chancellor Merkel, what is Germany willing to do specifically whether in implementing the sanctions already in place, or taking further measures beyond those?

PRESIDENT BUSH: That's exactly what we discussed: How do you implement sanctions that are already in place, and should we levy additional sanctions? Our position is, is that we ought to enforce the sanctions that are in place, and we ought to work with our allies to levy additional sanctions if they choose -- if the Iranians choose to continue to ignore the demands of the free world.

CHANCELLOR MERKEL: I personally have always come out very strongly in favor of seeing to it that sanctions are decided at the level of the United Nations Security Council, too, because including China and Russia obviously makes for much greater effectiveness of such sanctions. But that doesn't exclude that within the European Union, too, we may discuss, for example: Are further possibilities open, for example, in the banking sectors? But these further possibilities, these further measures, must not lead to a situation where at the greater -- the bigger stage, so to speak, we then relent, because the more countries are in on this, the more the effect -- the more effective the impact will be on Iran, for example.

We always think that quite often, on the one hand, people like to reject certain measures to be taken, but let us think of the people in Iran. This is what is essential. I think these people deserve a much more -- sort of a better outlook also as regards their economic prospects. And we would hope for the leadership in Iran to finally see reason. I mean, just look at the reports of the IAEA. They -- it says clearly -- the report states clearly that certain violations of agreements that were entered into have taken place, and we -- it means that we need to react to this, even if it -- with further sanctions, if that's necessary.

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