Bush Says Gitmo Is 'Necessary'

Defends Prison After Plea To Close It From New German Chancellor

(CBS/AP)  Germany's Federal Intelligence Agency said the reports were "wrong and distorted," although it did confirm that it had two agents in Iraq before and during the war.

"You did say 'secret intelligence,' right?" Mr. Bush said to the German reporter who asked the question. "The chancellor brought this up this morning, I had no idea what she was talking about. First I heard of it was this morning, truthfully."

On Thursday, Germany, Britain and France, backed by the United States, said talks with Iran had reached a dead end and urged that the issue be referred to the Security Council.

Trying to line up support, Secretary of State Condoleezza Rice spoke by telephone Friday to Chinese Foreign Minister Li Zhaoxing. But at the United Nations, China's U.N. ambassador, Wang Guangya, said referring Iran to the Security Council might toughen Tehran's position on its nuclear program.

What kind of sanctions the council might consider remained in dispute.

Both Mr. Bush and Merkel said they discussed Iran at length.

In two years of difficult negotiations between European nations and Iran, "Iran refused every offer we made," Merkel said.

"It's very important for non-transparent societies to not have the capacity to blackmail free societies," Mr. Bush asserted.

Merkel took power last November after an extremely close and protracted race with Schroeder.

Mr. Bush jokingly likened that race, which took almost two months to resolve, to his own victory in 2000 over Democrat Al Gore, which was decided only after weeks of suspense by a Supreme Court decision.

"We didn't exactly landslide our way into office," Mr. Bush said.

Eschewing the motorcade that usually transports world leaders to the White House, Merkel made the short trip to the White House from the Blair House guest quarters across the street on foot.

She and her sizable entourage walked through the White House gates trailed by empty black limousines and a fleet of silver German-made BMWs.

Schroeder's opposition to the U.S.-led war that deposed Iraqi President Saddam Hussein so damaged the German's relationship with Mr. Bush that the president refused at times to speak to Schroeder on the telephone.

Merkel, by contrast, is more in tune with Mr. Bush's conservative politics.

Merkel also was to meet with members of Congress and planned to attend a ceremony at the newly renovated headquarters of the German Marshall Fund of the United States.

Despite her calls for a partnership with Washington, she has demonstrated a strong streak of independence, including her criticism of the Guantanamo Bay camp.

Germany rebuffed an appeal by Attorney General Alberto Gonzales not to release a terrorist accused of killing a Navy diver in a 1985 airplane hijacking.