Sat 4 Feb 2006 5:38 AM ET
MUNICH, Feb 4 (Reuters) - Chancellor Angela Merkel likened hardline Iranian President Mahmoud Ahmadinejad to Adolf Hitler on Saturday, saying the world must act now to stop him before his country developed a nuclear bomb.

"We want, we must prevent Iran from developing its nuclear programme further," Merkel told top policymakers from around the world in a speech to the annual Munich security conference.

Referring to the rise of Hitler in the 1930s, Merkel added: "Now we see that there were times when we could have acted differently. For that reason Germany is obliged ... to make clear (to Iran) what is permissible and what isn't."

Europe and the United States suspect Iran of planning to build nuclear weapons. Tehran says its nuclear programme is purely for civilian energy purposes.

The United Nations nuclear watchdog, the Vienna-based International Atomic Energy Agency (IAEA), is expected to vote to report Iran to the U.N. Security Council later on Saturday over suspicions it is seeking atomic bombs.

Merkel, speaking to an audience that included U.S. Secretary of Defense Donald Rumsfeld, had particularly harsh words for Ahmadinejad, who has called for Israel to be "wiped off the map".

"Iran has blatantly crossed the red line," Merkel said. "I say it as German chancellor. A president that questions Israel's right to exist, a president that denies the Holocaust, cannot expect to receive any tolerance from Germany."

Merkel said Iran was a threat to Europe as well as Israel. But she also made clear that diplomacy rather than military action was the way to deal with the threat.

"Diplomatic avenues need to be exhausted. We need to keep our nerves, go step by step," she said.

In a question-and-answer session after Merkel's speech, Iranian Deputy Foreign Minister Abbas Araghchi said his country would end snap IAEA inspections of its nuclear facilities and step up its uranium enrichment programme if reported to the U.N. Security Council.

U.S. and EU leaders, aware that Russia, China and developing states on the IAEA board want to avoid a showdown with Iran, the world's No. 4 oil exporter, have said that reporting Tehran will not finish off diplomacy or trigger early sanctions.

Rumsfeld, speaking after Merkel, voiced his support for a diplomatic solution, but said Iran's nuclear programme posed a grave threat.

"The Iranian regime is today the world's leading state sponsor of terrorism," he said. "The world does not want, and must work together to prevent, a nuclear Iran."