Merkel, whom Bush has flattered with a rare invitation to his Texas ranch Friday, will make the case that the West can use sanctions to bring Iran back from the brink without military strikes, after recent US threats raised eyebrows in Europe.

"If the current talks are not successful, then Germany will also be willing to implement further, tougher sanctions," Merkel said in an interview with the daily Berliner Zeitung published Wednesday.

The night before, Merkel made a defiant speech as she accepted an award from the Central Council of Jews in Germany, saying that Berlin would stand firm in the face of Iran's nuclear ambitions and its threats to wipe Israel off the map.

She said that accepting Germany's responsibility for the Holocaust meant keeping a pledge to intervene "to protect the safety of Israel today and in the future, as well as our common values of democracy and the rule of law."

Germany plus the five members of the United Nations Security Council -- Britain, China, France, Russia and the United States -- have engaged in fraught negotiations with Iran for years to convince it to stop enriching uranium.

The United States and several of its European allies believe the sensitive nuclear work is part of a drive to acquire a nuclear weapon, a charge Tehran has repeatedly denied, saying it is only interested in civilian nuclear power.

Bush recently raised the spectre of "World War III" if Tehran acquired an atomic weapon, in a remark that raised fears in Europe that Washington could launch a new military offensive in the Middle East.

The US leader said in an interview with German television ahead of his meeting with Merkel that he shared her goal to resolve the Iran problem with peaceful means.

"I firmly believe we can solve this problem diplomatically and will continue to work to do so. And that's going to be an important topic with the chancellor," Bush told the commercial network RTL Wednesday.

Germany has long tried to convince the US administration to enter into direct talks with the Islamic republic over its nuclear programme after years of European diplomatic efforts failed to make any headway.

But Washington has consistently rebuffed such efforts, citing behind closed doors the enduring trauma from the hostage crisis when militant Iranian university students took over the US diplomatic mission in Tehran in 1979.

The countries have not had normal diplomatic relations since that time.

Germany, as one of the biggest exporters to Iran, has already begun restricting trade ties with the country on the basis of two previous United Nations Security Council resolutions.

Merkel has said she would prefer a new resolution because it would ensure the broadest, most effective sanctions.

But after initial reticence, Merkel has not ruled out moving forward with a smaller group if Russia or China, for example, levelled a veto at the Security Council.

An expert on transatlantic security policy with the German Council on Foreign Relations, Henning Riecke, said German industry had initially warned the government that if it abandoned Iran other companies would only be pleased to take their place.

He added that new sanctions were unlikely "to dissuade the United States from considering the military option nor to dissuade Iran from pursuing its nuclear programme," noting that Iran's elites would not feel their pinch.

But he called them "a necessary element of a broader strategy to turn up the pressure to lead Iran to suspend its nuclear programme and sit down at the negotiating table".

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