Merkel heads to US amid transatlantic tensions

The meeting in Washington Friday will be Merkel's first with the president at the White House and their third since Obama took office in January. But it comes amid persistent signs of tension between the popular leaders.

The Group of Eight most industrialised nations are to put forward proposals for tighter regulation of financial markets when they gather in Italy July 8-10, and mull coordinated efforts to combat global warming.

The conservative Merkel, who is up for re-election in September, said she would outline her vision for reform during her brief stay in Washington starting Thursday.

"I will work to ensure that we emerge stronger from the crisis than we entered it, and this can only succeed if we work together," she said in a radio address at the weekend.

But Merkel has been highly critical of Obama's answers to the economic meltdown, and fears they may stoke runaway inflation.

Germany has seen the crisis wipe away more than 300,000 jobs since it took hold in September, and the threat of surging inflation awakens memories here of the 1920s when soaring prices led to mass poverty and helped pave the way for the Nazis' rise to power.

The weakening dollar due to swelling US debt and low interest rates is dealing another blow to German exports, the economy's backbone. Merkel's advisors say she would like to hear from Obama a clear "exit strategy" from his massive spending to fight the crisis, and note that she had long warned of the danger of fast-and-loose practices on Wall Street and hands-off policies in Washington.

She also singled out the US Federal Reserve for rare criticism this month, urging a return "to a policy of common sense" and slamming the Fed's massive buy-up of government and private debt.

"The crisis has only pointed up fundamental differences in the approach to the economy," said political scientist Christian Tuschhoff at Berlin's Free University.

"(Germany's) social market economy and the free market in the United States are fundamentally different philosophies. Tensions would have developed between any two leaders, regardless of their party."

Although Merkel has welcomed Obama's pledges to do more to cut greenhouse gas emissions than his predecessor George W. Bush, she appears to doubt the political will behind them.

Merkel and Japanese Prime Minister Taro Aso agreed by telephone Monday to join forces in turning up the pressure on major emitters such as the United States, China and India, to take part in a new global climate agreement.

Obama said during a visit to Dresden this month that the United States was ready to take a leading role ahead of talks on a landmark treaty on climate change in December.

European Union nations have already committed to reducing emissions by 20 percent from 1990 levels by 2020, but Obama has been reluctant to get concrete on US plans until nations like China nail down their commitments.

Meanwhile Merkel has been vague in her pledges to help Obama close the Guantanamo Bay anti-terror prison. She again promised assistance in Dresden but her government has resisted two US requests for Germany to take in specific detainees, citing a lack of information from Washington.

"Merkel doesn't want to get involved, but she should," the centre-left daily Süddeutsche Zeitung said last week. "Next week at the latest, in the White House, she'll have to consider how much friendship is really worth."

Media reports said Merkel, who had warm relations with Bush, turned down a previous invitation to visit the White House because she was not offered a joint press conference with the president. But the chancellor in Dresden dismissed talk of a rift with Obama, saying it was "fun" to work with him.

The talks are also to cover disarmament talks with Russia, Middle East peace efforts, North Korea's nuclear programme, and the disputed Iranian election and bloody crackdown on opposition protesters.

Merkel on Sunday became the first Western leader to publicly urge a ballot recount in Iran.