In a speech to Germany’s diplomatic corps late on Wednesday, Merkel appeared to increase pressure on Iran just hours before a decision is to be taken on whether to report the country to the U.N. Security Council over its disputed nuclear program.
"The fight against terrorism requires the mobilization of all political, economic and, when necessary as a last option, military means — whenever possible under the umbrella of the United Nations," Merkel said.
Later in the speech she urged Iran not to cut back on cooperation with the U.N.’s International Atomic Energy Agency (IAEA) if Tehran is reported to the Security Council over Western fears that it is developing atomic weapons.
"I can only warn Iran not to pull away from the international community and the IAEA," she said. "We have been following with great concern Iran’s recent escalation of the dispute over its nuclear program into a crisis."
Members of the 35-nation IAEA were meeting in Vienna on Thursday to discuss what action to take on Iran, which insists it only has a civilian nuclear program.
They are likely to send Iran’s case to the Security Council but delay any action there, such as sanctions, by a month to allow more time for diplomacy.
On Saturday an Iranian military leader said Iran could launch medium-range missiles in the event of an attack on its nuclear facilities.
Iran’s President Mahmoud Ahmadinejad has called for Israel to be "wiped off the map" and has cast doubt on the Holocaust, when six million Jews were killed by the Nazis. Merkel has repeatedly condemned Ahmadinejad for his remarks.
Unlike French President Jacques Chirac, who said recently that nuclear weapons could be used against terrorist states, Merkel appeared to refer only to conventional force when she talked generally of military action against terrorists.
The use of German troops abroad has been an extremely sensitive topic in Germany since the end of World War Two. Many Germans are opposed to participation in foreign military operations. Germany began sending combat troops to participate in peacekeeping missions in the late 1990s.