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German Chancellor Angela Merkel earned a standing ovation at the Knesset yesterday after pledging to stand by Israel's side against any threat, particularly from Iran, and paying tribute to the victims of the Holocaust.

"Especially in this place, I emphasize: Every German government and every chancellor before me was committed to the special responsibility Germany has for Israel's security," she said.

"This historic responsibility is part of my country's fundamental policy. It means that for me, as a German chancellor, Israel's security is nonnegotiable."

Merkel took a strong stance against the Qassam rocket fire at Israeli communities near Gaza.

"I say it in a clear voice - the Qassam fire must stop," she said. "Terror attacks are a crime, and do not resolve political disputes."

The chancellor also singled out the Iranian nuclear threat. "It is not up to the world to prove that Iran is pursuing a nuclear bomb, but rather up to Iran to prove that it is not," Merkel said. "If Iran does not accept this, Germany will push for further sanctions."

"If Iran were to obtain nuclear weapons, it would have disastrous consequences," she said. "We have to prevent this."

Merkel's visit was emotionally charged due to the memory of the Holocaust, and in her Knesset address the chancellor said the murder of 6 million Jews at the hands of the Nazis continues to be a source of shame for Germans.

"The mass murder of 6 million Jews, carried out in the name of Germany, has brought indescribable suffering to the Jewish people, Europe and the entire world," she said.

"The Shoah fills us Germans with shame. I bow before the victims. I bow before the survivors and before all those who helped them survive."

Several MKs boycotted the session, protesting the decision to allow Merkel to address the Knesset in German. At the outset of her speech, however, Merkel thanked the Knesset in Hebrew for the opportunity to speak.

In his address, Prime Minister Ehud Olmert hailed the strong ties between Israel and Germany. "The special relationship between Israel and Germany is a prime example of humanity's ability to overcome," Olmert said.

Olmert also thanked Merkel for her strong position on Iran's nuclear program, urging other countries to follow Berlin's example.

Earlier in the day, Merkel met with President Shimon Peres, and the two agreed that only a serious investment in the Palestinian economy could advance the peace process.

Peres showed Merkel his "Peace Valley" plan which includes a German-funded industrial zone in Jenin. Merkel said Germany intends to donate 10 million euros to the project.

She added that Germany is interested in actively taking part in the economic cooperation between Israel, Jordan and the Palestinians; she intends to supervise personally the establishment of the industrial zone in Jenin.

Merkel started her Knesset visit at a lunch hosted by Speaker Dalia Itzik in the building's Chagall Hall, where she vowed Germany would do its best to bring back two Israel Defense Forces soldiers abducted by Hezbollah.

Merkel said that "we will do our best to help bring [IDF] captives home and we'll do our best to contribute to the peace process."