It was one of the few disagreements the two leaders voiced after their White House meeting. It was the German leader's first visit to the United States since taking office last November.
On Guantanamo, said she raised the issue with Mr. Bush, and she described it as one of the differences between the United States and Germany. Germany opposed the war in Iraq.
"There sometimes have been differences of opinion. I mentioned Guantanamo in this respect," Merkel said.
Mr. Bush said, "I can understand why she brought it up because there's some misperceptions about Guantanamo."
He disputed reports that detainees there have been mistreated.
Mr. Bush said the prison camp would remain open "so long as the war on terror goes on, and so long as there's a threat."
Ultimately, the U.S. courts will have to decide whether terror suspects can be detained in Guantanamo or must be processed through the U.S. judicial system, he said.
The pair stood together Friday in
The world needs to "send a common message to Iran that their behavior ... is unacceptable," Mr. Bush said.
Merkel used similar words, and she also condemned statements by Iran's leader challenging Israel's right to exist. "We will not be intimidated by a country such as Iran," she said.
Iran threatened earlier Friday to if confronted by the U.N. Security Council over its atomic activities. Iranian President Mahmoud Ahmadinejad reaffirmed his country's intention to produce nuclear energy.
Mr. Bush said he wants the standoff with Iran to be resolved diplomatically, CBS News correspondent Mark Knoller reports.
"We should not prejudge the strategy in the Security council until they get to the Security Council," Mr. Bush said. "What we're doing now is beginning to lay out the strategy."
A White House spokesman added later that Iran and Iraq are different situations, Knoller reports.
Mr. Bush assailed what he called Iran's efforts "to clandestinely develop a nuclear weapon, or using the guise of a civilian nuclear weapon program to get the know-how to develop a nuclear weapon."
Taking the matter to the Security Council, as Germany, France and Britain recommended on Thursday, is the logical next step, Mr. Bush said.
"We want an end result to be acceptable, which will yield peace, which is that the Iranians not have a nuclear weapon in which to blackmail and-or threaten the world," Mr. Bush said.
On another subject, Mr. Bush said he had "no idea" about the possible truth of reports that German intelligence agents actively helped U.S. forces in Iraq at the start of the war.
It was a reference to German television and newspaper reports that the government of then-Chancellor Gerhard Schroeder, an outspoken opponent of the war, helped identify a bombing target in Iraq.