CHANCELLOR MERKEL: (As translated.) Ladies and gentlemen, I am delighted to be able to welcome the President of the United States here to Stralsund yet again. We had a lengthy conversation right now in the Office of the Mayor. We felt very much at home here in this beautiful city. We talked about all of the different issues on the global agenda.

We shall, later on, see a little bit more of the countryside here, of the city itself. I am really pleased to be able to show to the President of the United States how matters have developed here, with some problems still existing, but also with problems we've coped with quite successfully. And it's such a great thing to have this lovely weather for our visits.

Just now, in our talks, we talked at great length about international issues. Unfortunately, there are quite a lot of problems that we need to deal with and for whose solution we feel responsible. The first and foremost, on top of the agenda is certainly Iran. The international community actually submitted a very substantial, very fundamental offer to Iran, starting from the firm view that Iran should not be in possession of a nuclear weapon, but that, on the other hand, Iran should have -- should know good development. So far we have not received any sort of reaction from the Iranian leadership as to how their position is on this offer.

And this is why it was only consistent that yesterday the foreign ministers decided yet again to show clearly, also through a resolution in the U.N. Security Council, that should Iran not in any way reply to this offer and accept this offer, we, unfortunately have to embark on a new course. The door has not been closed, but Iran must know that those who have submitted this offer are willing -- and this is the success of yesterday's meeting -- Russia, China, the E3, and the United States of America -- all of them together are willing to act in concert and to show this clearly through their action in the Security Council.

We also addressed the very disturbing situation in the Middle East, and it fills us with concern and we have also stated clearly that everything needs to be done in order to come back to a peaceful resolution. We need to remind all of us again how this escalation started, with the kidnaping of a soldier, through rockets -- for the firing of missiles against Israeli territory. And we can only urge all parties, appeal to all parties to stop, to cease violence and to also release the kidnaped soldier, and to stop this firing of missiles at Israeli territory.

We would like to appeal to the powers in the region to see to it that further escalation is warded off, and that, first and foremost, the root causes of this conflict are removed. And only in this way will a negotiating process become possible again. We have every interest in seeing the Lebanese government be strengthened and this government being able to pursue its policies in a sensible and secure environment.

We also addressed matters of trade, global trade. Here we -- and I'm saying this from a German perspective -- have a common interest in seeing this world round be a successful one, this world trade round. But that means there has to be movement on all sides. And we're expecting a reasonable, sensible offer by the G20, because this is where movement is necessary. Europe and others have submitted far-reaching proposals, and we would like to explore every possibility of these negotiations, but that means, as I said, movement on all sides. And here I see that the G20 has to deliver.

We also addressed those issues that will be on the agenda at the G8 in St. Petersburg. Here, first and foremost, energy policy, secure energy supply, was at the top of the agenda. We addressed African issues, Darfur and the Congo mission. We, as Germans, as you know, have taken out a commitment as regards Congo. We also, however, see the situation in Darfur as a threatening one.

We found that there is a lot that we agree on, as regards our common responsibilities, responsibilities that we see for the two of us the world over. And I, for one, think that as regards, for example, Iran, this responsibility ought to be shouldered by more and more countries -- that goes for Russia, that goes for China. It will only be if we act in concert that we will be able to vanquish the tyrants, remove dictatorships and contain those who sponsor terrorism. And Germany would like to give its contribution to that.

PRESIDENT BUSH: Chancellor, thank you very much. Thanks for the invitation. This is a beautiful part of the world, and Laura and I are so honored to come to your constituency and meet some of the friendly people who live here. I remember you coming to the Oval Office, and you said, if you are coming to Germany, this is the part of Germany I want you to see. And now I can see why you suggested it. I'm looking forward to the feast you're going to have tonight. I understand I may have the honor of slicing the pig.

We had a good discussion -- it's more than a discussion, it's really a strategy session, is the way I'd like to describe it. We talked about a lot of subjects. We talked about the Middle East and Iran, and I briefed the Chancellor on North Korea. We talked about Iraq and Afghanistan, as well.

But when we talked about the issues, it's important for you to understand we're really trying to figure out how to work together to solve problems. And I appreciate -- appreciate the Chancellor's judgment a lot. It's an interesting conversation, you know, when you toss out what may seem to be a problem that's insoluble, and all of a sudden, two people start thinking about how to solve it, solve the problem. And that's what we're doing.

You know, on the Iranian issue, for example, the last time that we were together we talked -- spent a lot of time on Iran, and the Chancellor was wondering whether or not the United States would ever come to the table to negotiate with the Iranians. You made that pretty clear to me that you thought it was something -- an option we ought to consider, which I did. And I made it clear to the Iranians that if they were to do what they said they would do, which is to stop enrichment in a verifiable fashion, we're more than pleased to come back to the table.

There's no question that this issue can be solved diplomatically, and there's no question that it can be solved diplomatically with Germany and the United States strategizing as how to solve it. And I want to thank the Chancellor's leadership on this issue. It's really important for Europe to speak with one common voice. And it's important for Angela and myself to work with Vladimir Putin, which we will do at the G8, to continue to encourage him to join us in saying to the Iranians loud and clear, we're not kidding, it's a serious issue, the world is united in insisting that you not have a nuclear weapons program.

We talked about the Israeli-Palestinian and Israeli issues with Hezbollah, and our common desire to work together to help bring peace to that troubled region.

My attitude is this: There are a group of terrorists who want to stop the advance of peace. And those of -- who are peace-loving must work together to help the agents of peace -- Israel, President Abbas, and others -- to achieve their objective. You got to understand when peace advances, it's in the terrorists' interests in some cases to stop it. And that's what's happening.

We were headed toward the road map, things looked positive, and terrorists stepped up and kidnaped a soldier, fired rockets into Israel. Now we've got two more kidnapings up north. Hezbollah doesn't want there to be peace. The militant arm of Hamas doesn't want there to be peace. And those of us who do want peace will continue to work together to encourage peace.

We talked about North Korea. I assured the Chancellor that I'm committed to the six-party talks and that the five of us in the six-party talks will work to convince North Korea to come back to the table. I'm hopeful that we can get some U.N. action on North Korea.

We did talk about Doha, the trade round, and it's -- look, these trade rounds are difficult to negotiate with; we've all got our own interests. But the good news is we do share a common desire to open up markets. Germany is a great exporter. It's in Germany's interest that tariffs be reduced around the world. It's in our interests that tariffs be reduced around the world. And I committed to what I told the world back last September, we will reduce agricultural subsidies. But all we want is fair treatment when it comes to market access.

I'm optimistic we can still get something done on the Doha Round. It's going to take work, but G8 is a good place for us to continue the dialogue, and we will.

And I guess that's about all -- we discussed a lot of things, in other words. And thank you for having me. I'm looking forward to that pig tonight. (Laughter.)