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BERLIN - Germany hopes to impose further sanctions through the United Nations on Iran because of its insistence to proceed with its nuclear program, Chancellor Angela Merkel said yesterday during a meeting with Prime Minister Ehud Olmert.

Merkel stressed that the solution to the crisis must be diplomatic, but Olmert has not ruled out a military operation against Iran.

Olmert, who completed a three-day official visit to Germany last night, met with Merkel on Monday for dinner with a few aides. They also met yesterday morning.

Iran's nuclear program was the main focus. Merkel raised Iran's recent missile tests, including missiles with the range to target European capitals. "We are very concerned about these tests," she said.

In the coming weeks, a new report by the International Atomic Energy Agency will be released on Iran's nuclear program and will discuss the degree to which Iran has complied with international calls for an end to its uranium enrichment program.

During their talks, Merkel promised Olmert that the report will represent a point of reference and will not determine Germany's position on sanctions.

"I certainly understand the need to step up sanctions on Iran," Merkel told Olmert. "We will support additional sanctions on Iran irrespective of the IAEA report or that of U.S. intelligence."

A report in November by U.S. intelligence agencies stated that Iran had ceased its quest for nuclear arms in 2003, an assessment Israel does not accept.

Confusion in Germany

The American report has led to confusion in Germany and raised serious debate among defense and political leaders there.

Olmert presented the chancellor with Israeli intelligence assessments on Iran's nuclear program.

During the two leaders' press conference yesterday, Merkel said that "a diplomatic option must be preserved because this way we can have results."

Olmert partially agreed with his host's approach, but added that the military option should not be ruled out.

"We are acting together with other countries in order to create a unified effort of the international community in an attempt to prevent Iran from acquiring nuclear arms," he said.

"U.S. President Bush said that no option should be ruled out, and I think this is an acceptable definition."