The German chancellor and French president were at pains to demonstrate the strength of their ties, and the informal meeting in the state of North-Rhine Westphalia has been billed as a new landmark in their relations.

Topping the agenda was the European Union's Growth and Stability Pact, which both leaders have criticized as inflexible. Germany and France have been threatened with punitive measures for allowing their public deficits to exceed EU guidelines. Speaking after their talks, the Schröder and Chirac stressed that the pact must be reformed to be take greater account of growth.

Chirac said sanctions should not be automatically triggered when the pact's guidelines are exceeded.

Warning against "technocratic brutality," Chirac said the pact "must not be purely technocratic, it must be political," and added that "each country has its own different characteristics."

Under the pact, euro-zone countries are not allowed to run public deficits beyond 3 percent of their gross domestic product, however, in 2004 both France and Germany were in breach of the restrictions. But Chancellor Schröder has said he's confident that changes will be made to the stability pact at the next EU leader's summit to be held later this month.

Support for Lebanon

The leaders also discussed developments in the Middle East, in particular recent events in Lebanon. In a joint declaration after their talks in Germany, they demanded "free and transparent elections which would allow the Lebanese people to determine their democratic future."

Their call came as Damascus announced that Syrian troops in Lebanon would pull back towards the eastern Bekaa Valley by the end of March, a move seen as falling short of international demands. Syria has been under intense diplomatic pressure to end its political and military grip on Lebanon three decades after it sent in troops shortly after the start of Lebanon's devastating civil war.

Schröder and Chirac, who consider their alliance the engine of European Union integration, called on Syria to make "a full withdrawal of its troops and services from Lebanon as quickly as possible."

They reaffirmed their "commitment to Lebanon's independence, sovereignty and democracy" and said their countries were ready to help if needed. "We will remain vigilant concerning the timetable for the steps to come and, like all the international community, we remain mobilized," their declaration said.

Increased pressure on Iran

The two men also called on Iran to forgo developing nuclear weapons.

"The Iranian government must agree to do without the production and possession of nuclear weapons and to use the nuclear program exclusively for peaceful means," Schröder said after the talks with Chirac.

The aim of negotiations was "also to illicit objective guarantees," a French-German position that Britain also supports, Schröder added. Both Germany and France were under the impression that the US government backed their efforts, he said.

Chirac said he was in full agreement with Schröder. "I could have issued the same statement as the chancellor," Chirac said after the German leader finished speaking.

The two men will meet again on March 18 in Paris, where they will be joined by Russian President Vladimir Putin and Spanish Prime Minister Jose Luis Zapatero.