President George W. Bush and Chancellor Angela Merkel address the media after meeting at German government's guest house at Meseberg, 11 Jun 2008

President Bush says he wants the Iran dispute resolved peacefully. But he makes clear, military action remains a last resort.

"All options are on the table. And, my first choice is to solve this diplomatically. And, the best way to solve it diplomatically is to work with our partners," he said.

One of those partners is Germany - one of three European nations involved in a diplomatic initiative designed to convince Iran to suspend nuclear-fuel enrichment.

Speaking at a joint news conference with Mr. Bush after their talks at a castle outside Berlin, Chancellor Merkel made clear the German government is ready to step up the pressure on Tehran, if necessary.

"If Iran does not meet its commitments, then further sanctions will simply have to follow," she said, speaking through a translator.

European Union Foreign Affairs and Security Chief Policy Javier Solana gestures while addressing the Committee on Foreign Affairs of the European Parliament in Brussels, 08 Apr 2008

Javier Solana, the top EU envoy for foreign policy and security matters, will be heading to Iran soon to make what has been called "a refreshed offer" to Tehran.

Details have not been made public, but it is clear Solana will bring up the likelihood of enhanced sanctions, if Iran does not comply. Chancellor Merkel told reporters the world must take a unified stand.

"The more countries that are in on this, the more the effect, the more effective the impact will be on Iran," she said.

During the news conference, President Bush was also asked if he has any regrets about his decision to invade Iraq. The president said no, but repeated the quotes that appeared earlier in the day in a British newspaper - that he could have chosen better words to make the case for war.

"I could have used better rhetoric to indicate that one [first] - we tried to, exhausted diplomacy in Iraq ... and two, I do not like war," he said.

The Bush-Merkel talks also covered trade, climate change and a host of regional matters. But beyond all the substance, this visit was largely an opportunity for President Bush to bid a formal farewell to a German leader who has been one of his strongest allies.

His popularity among the German public, however, remains low.

The German Marshall Fund is among the private groups that has conducted surveys of popular opinion. John K. Glenn heads the foreign policy program at the Fund's Washington office.

"It seems if you look at the opinion polls that Europeans have made their mind up about President Bush. But we have seen a really interesting thing that we are just starting to get a sense of. When you ask about the U.S. more generally, there has been a recent uptick in the image of the United States," said Glenn.

Experts in trans-Atlantic affairs say that improvement may be, in large part, because of European fascination with the ongoing U.S. presidential campaign.

"Europe has been transfixed by the presidential election this year in the United States," said Reginald Dale, who is with the Center for Strategic and International Studies in Washington.

He says Europeans are intrigued with the notion of an African-American winning a major party's presidential nomination.

"Many people in Europe are looking ahead. And, for some of them, this has somewhat rehabilitated the United States in their eyes," he added.