Their Rift Is in the Past, Bush, Schroeder Say

President Bush and German Chancellor Gerhard Schroeder moved beyond nearly two years of acrimony and agreed during an Oval Office meeting Friday to cooperate in promoting democracy and development in the Middle East.

Schroeder effectively endorsed a Bush plan to seek European and Group of 8 support for a broad Middle East democracy initiative, officials of both nations said. But they did not agree on whether it would become part of an existing European initiative or operate separately.

The most important upshot of the meeting, they said, is that it happened at all.

“We have now been able to take up the relationship from where we were before the Iraq crisis erupted almost two years ago,” said Wolfgang Ischinger, the German ambassador to the United States. “Today’s meeting really demonstrated that both sides want bygones to be bygones.”

Relations with Germany soured in 2002 when Schroeder, who was running for reelection, began to accuse Bush and his administration of war-mongering over Iraq. At the time, Bush made it clear that he took those comments personally and accused Schroeder of anti-Americanism.

However, the relationship has been on a slow mend since April, when Schroeder, after the fall of Baghdad, began to make conciliatory statements. The two leaders shook hands during meetings in Russia and France several weeks later. They had a cordial meeting on the sidelines of the United Nations General Assembly in September.

“We have differences -- in the past,” Bush said as he sat beside Schroeder in front of the Oval Office fireplace. “But there’s nothing wrong with friends having differences. And we have both committed to put the differences behind us and move forward.”

Despite Germany’s opposition to the war in Iraq, Schroeder said his country is committed to assisting the reconstruction effort.

“We talked about -- not about the past. We very much agreed on that. We have to talk about the present and the future now,” Schroeder said during his appearance with Bush. “We both have a great interest in seeing a stable and democratic Iraq develop.”

As for the rest of the Middle East, Schroeder was careful to say that U.S. efforts to democratize the region should not replace the Israeli-Palestinian peace process, which has been stalled for months.

“Our point is that you cannot move forward on the greater Middle East without taking the Israeli-Palestinian situation into account,” Ischinger said. “But on the other hand, you can’t let the Israeli-Palestinian situation block other progress in the region.”

One diplomat involved in discussions over the broader Middle East democracy initiative said both the Europeans and Americans face a dilemma in how to help reformers change repressive societies. He said supporting reformers too much can get them branded as foreign lackeys. Help them too little, he said, and they don’t stand a chance against their governments. That balance is easier to strike if the United States cooperates with Europe, the diplomat said.

In another sphere, Schroeder said he appealed to Bush to take action to halt the slide of the dollar, which has shot the value of the euro to record highs -- $1.29 last week -- which in turn is hurting European exports as Germany and France struggle with sluggish economies and high unemployment.

But in comments as he was leaving the White House, Schroeder said he understood that Bush’s hands were tied.

“It is clear that governments have limited possibilities for action,” he said. “As you know, the central banks, which can act, are independent, and we respect that. The president made clear that he is politically interested in a strong dollar, not a weak one.”

In Germany, the trip is a political boost for Schroeder, who has been criticized for his economic and social reform proposals. It was symbolic that he traveled to Washington for the visit. The White House announced no immediate plans for a reciprocal visit by Bush.

“Schroeder and Bush will smile into the cameras today. Politically weakened, they need each other,” the German daily newspaper Bild wrote. “But in reality the differences remain” over NATO, the weak dollar and German-French efforts to counteract the unrestrained exercise of American power around the world.

Philip H. Gordon, an expert on U.S.-European relations at the nonpartisan Brookings Institution in Washington, described the meeting as “one step more in the normalization of a relationship that was deeply abnormal for more than a year.”

“Nothing was announced that shocked anyone, and nothing important was announced,” Gordon said. “The fact that they are talking and working together is the important thing.”

Schroeder opened his two-day trip to the United States on Thursday, delivering a speech to the Council on Foreign Relations in Chicago. After meeting with Bush on Friday, he traveled to Jackson, Miss., to open an art exhibit, “The Glory of Baroque Dresden,” before returning to Germany.

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Times staff writers Jeffrey Fleishman in Berlin and Sonni Efron in Washington contributed to this report.