Q Mr. President, in a couple of days the German Chancellor, Angela Merkel will come to your ranch, which I think is a special privilege. What will you do with her on the ranch on a weekend like that?

THE PRESIDENT: Well, we will -- if she wants -- we'll do anything she wants. If she wants to go for a hike, I'll go for a hike. If she -- I look forward to showing a piece of property I dearly love. But we'll have plenty of time to visit in a different setting. It's not very formal, but it will be conducive to a conversation amongst friends. I can't thank her enough for coming down there.

Q She had said some weeks ago at the United Nations that Germany wants to contribute more to the world and take on more responsibility by perhaps getting a permanent seat in the Security Council. Will you support her in that?

THE PRESIDENT: Well, I made my clear statement there at the U.N., that I'm for overall reform and I do believe we ought to look at reforming the Security Council in a way that, you know, accomplishes some missions. And Germany clearly is an important country. I have not taken a stand on any specific country, except for Japan, and won't. But clearly Germany is a very important country for a lot of reasons.

Q Not a permanent member in the Security Council, you don't see her like that -- you don't see Germany as --

THE PRESIDENT: Well, I haven't made that endorsement one way or the other. And I pretty well kept my counsel. I just want to make sure the U.N. is functioning well, that it does -- it needs a big-time reform, and so does the Security Council and so we're open to ideas. It's not easy to get done and the only one country that I've endorsed has been Japan, and it's been a long-standing policy of the government of the United States, and I continue that policy.

Q What are the topics that you will be talking to her where you might need Germany to help you, the United States?

THE PRESIDENT: Oh, me, personally?

Q No, not personally. I mean -- personally, as well, but --

THE PRESIDENT: No, but we definitely need Germany's help on issues like Iran so that we can, you know, solve this issue diplomatically. We need Germany's help on issues like Darfur. Germany is a crucial country in terms of, you know, building coalitions to deal with the threats we face. We need Germany's participation in Afghanistan. I know Angela went over there; I'm looking forward to hearing her report. And I'm pleased with our relationship.

Q Germany doesn't want to contribute any forces to the south of Afghanistan, where it's really getting a little bit hotter, than up in the north, where the Germans are right now. Are you having a problem with that?

THE PRESIDENT: No, I understand. I mean, you know, people -- everybody's parliaments or legislative bodies reacts to the challenges differently. I'm just so pleased that Germany is contributing forces there to help this Afghan democracy. These contributions are meaningful and some countries are able to take on different assignments. And I fully understand that. And I'm not going to try to put Angela Merkel in a position that she nor her Bundestag is comfortable with.

Q You just mentioned Iran. Do you think that the nuclear threat that Iran poses right now is larger than the threat Iraq posed about five or six years ago?

THE PRESIDENT: I think they were both dangerous. I think both of them could have been solved diplomatically. Saddam Hussein chose to ignore the demands of the free world and Security Council 1441 -- which, by the way, Germany voted for initially. And I think they're both dangerous. And I think therefore the lesson of Iraq is that we can work together and solve questions peacefully now.

And hopefully we can and hopefully we can keep pressure on the Iranians to say, one, we respect your people; two, we respect your history; but your government is making decisions that are isolating your country. And all they've got to do is suspend their enrichment program and then there will be a dialogue and a way forward. But it's up to the government to make their choice.

Q But you still have as a last option the military option. Do you think that that could be an option in the future? You even mentioned the possibility, the chance of third world war -- you were serious about that?

THE PRESIDENT: Oh, absolutely serious. I said, if you want to avoid World War III. I didn't say I'm for World War III.

Q Oh, no, I didn't say that. But you mentioned it in that respect, yes.

THE PRESIDENT: But I said if you -- the reason I said that is because this is a country that has defied the IAEA -- in other words, didn't disclose all their program -- have said they want to destroy Israel. If you want to see World War III, you know, a way to do that is to attack Israel with a nuclear weapon. And so I said, now is the time to move. It wasn't a prediction, nor a desire.

And do I think we can solve it? I do. Should all options be on the table? You bet. But I firmly believe we can solve this problem diplomatically and will continue to work to do so. And that's going to be an important topic with the Chancellor.

Q Do you think there's a point where you'd say only a military option is a possibility for us?

THE PRESIDENT: I would never say that. I would say that we would always try to try diplomacy first. In other words, I -- I've committed our troops into harm's way twice, and it's not a pleasant experience because I understand the consequences firsthand. And so I owe it to the American people to say that I've tried to solve this problem diplomatically. And that's exactly what I intend to do. And I believe we can do it, so long as the world works in concert. And Chancellor Merkel understands the dangers and she wants to solve this issue peacefully.

Q The U.S. has imposed some harsh sanctions on some parts of the Iranian government.

THE PRESIDENT: Yes.

Q The Russians were pretty much against that. Do we see a new rift growing between Russia, on the one hand, and the United States on the other hand?

THE PRESIDENT: No, I don't think so. I mean, look, there's going to be -- there's places where we disagree. No, it's a complicated relationship with Russia.

Q Why that?

THE PRESIDENT: Why is it? Just because we've got a history. It's not easy to eradicate history overnight. You might remember, we were quite antagonistic to each other for years. And so I've tried to work hard with Vladimir Putin to put the Cold War behind us, and focus on a positive future. There are still suspicions about U.S. intentions inside the Russian system.

You know, for example, as you know, I'm a big advocate of democracy; I believe democracies enhance peace. And I think that some view the democracy movement as a way to surround Russia. I try to work hard with Vladimir Putin and make it clear to him that this is nothing more than spreading peace. They didn't particularly care for the expansion of NATO, which I'm a strong believer in.

And so we've had our friction, but, no, I wouldn't --

Q And when you see him now, testing new missiles, or testing new bombs, is that flexing muscle, or is that just showing off? Or do you think it's serious?

THE PRESIDENT: I don't view that as a threat. I really don't view Russia as a threat, a military threat. I don't think -- I'm pretty confident President Putin does not want to have any military conflict. I think the bigger threat is the use of energy, which is really a direct problem for the EU. As I say, I try not to have antagonistic relations with President Putin. We've got a good personal relationship. We don't always agree eye to eye. Kosovo is an area where we don't agree eye to eye. But that doesn't -- just because you don't have a -- just because you have a disagreement doesn't mean that you can't work together.

Q You will probably see him longer as a, whatever, strong force in Russia, (inaudible) right now.

THE PRESIDENT: Yes. (Laughter.)

Q Isn't that fascinating? Is that something you would have expected, that he would stay in there as a Prime Minister, then? But he is not voted in yet, but it might happen.

THE PRESIDENT: I know. I haven't had a really good chance to sit down and talk with him about his ambitions and plans. He did tell me that he wasn't going to run for President again. But clearly he likes to be influential inside the Russian system, and I don't know what he's going to do.

My hope, of course, is I've tried to work with him as best as I can to understand the checks and balances. And democracy requires a certain balance in society. And I would hope that he would make decisions that enhanced institutional reform, enhanced the institutions necessary for a free society. As I say, sometimes he listens, sometimes he doesn't.

Q Almost a day to the date, in one year we will have presidential elections again in the United States. What are your three, let's say, main tasks, goals that you have set for yourself for the last 12 months of your presidency?

THE PRESIDENT: Oh, I appreciate that. One is to continue to protect our country from harm. I absolutely know for certain there is a group of extremists who would like to attack us again. Second -- this is all on foreign policy initially -- work with our friends and allies on Darfur, Burma -- I'm afraid I'm going to leave something out -- Iran. Continue to make sure our foreign policy in the Far East focuses not only on North Korea -- and working, by the way, collaboratively with Japan and China and South Korea to deal with North Korea -- but also to maintain good, constructive relations throughout the region.

Continue on the HIV/AIDS initiative. One of the really interesting initiatives that my wife and I are working on is a malaria initiative. There's just too many babies dying on the continent of Africa, for example, because of mosquito bites.

Q Yes, I've talked to your wife about that.

THE PRESIDENT: Oh, did you? Good. And then at home, keep taxes low and keep the economy growing. The two big issues, by the way, for this presidential campaign, are who can best protect America from attack. Now I don't know if --

Q That's what I wanted to ask you next; what will be the three tasks for the next President?

THE PRESIDENT: Well, who can keep people -- same thing. And who can keep taxes low? See, we've got a bunch of people here in America that want to raise taxes. I'm, as you know, a tax cutter. I believe the private sector is -- needs to be enhanced by keeping the size of government reasonably in balance and keep taxes low. Same thing for the next President.

You know, the biggest issue facing a President going forward will be whether or not we can deal with our, you know, our Social Security and Medicare, our health care and pension plans for the elderly, because like other parts of the world -- I presume Germany, as well -- baby boomers relative to people contributing to the system -- so you have baby boomers like me retiring and not enough young workers, and we need to get the systems in balance. And it's very hard to get done because a lot of the politicians here in America really don't want to confront the problem until it becomes immediate. So I tried for seven years to get Congress to do the hard work. They didn't want to, and so the next President is going to have to try to do it.

Q Who do you think it's going to be?

THE PRESIDENT: Well, I can't tell you that because -- I think it will be a Republican. I truly do. I think someone from my party will win, but, you know, I'm not going to speculate because the American press, of course, would take my speculation; you know, "Bush is" --

Q Of course. But you think it's going to be a Republican?

THE PRESIDENT: I really do, yes. The economy is in pretty good shape, and we've got some issues, but the economy is pretty strong, which -- and the other side does want to raise taxes. And I do believe taxes are a big issue in America. And then the foreign policy -- and if you will listen to the debate, our candidates have got a strong, firm view of how to conduct foreign policy and the American people innately understand that there's -- there's still threats out there. And our biggest job is to protect our -- see, that's an interesting difference between, say, Germany and America. We've been attacked. We feel like another attack is coming, and therefore, you know, our actions ought to be to protect our country. And, you know, I'm not so sure that it's that same sense of anxiety in other parts of Europe or in Germany.

Q Well, we have some old fears. I mean, we were on the border of the Cold War. I mean, we had this Iron Curtain in our country, in that respect. We know a little bit about that, too. But I can understand your position as well, sure.

THE PRESIDENT: You know, look, there's -- and one of the things I would like to assure the German public about is that I really don't want to have increased tensions with Russia. As a matter of fact, I've worked hard to create an environment that is not hostile, but --

Q Also with the missile shield --

THE PRESIDENT: That's what I was about to describe -- that this is not aimed at Russia. I mean, it -- and frankly it's absurd for somebody to say it is aimed at Russia, because the number of interceptors that would be there -- the rockets to knock down the other rocket -- will be limited in number and therefore somebody who has got a handful of rockets can overwhelm the system. It's just really aimed at, you know, a rogue nation that wants to hold a --

Q Like Iran.

THE PRESIDENT: -- hostage. Like Iran, absolutely. And hopefully, again, you know, the system becomes moot or not needed, by getting the Iranians to back off their ambitions.

And, you know, we did something really interesting with Russia on this Iranian issue. The Iranians said, it's our sovereign right to have nuclear power. And I said, yes, it is; it is your sovereign right. But we can't trust you to enrich because you've been hiding your program from international inspectors, and so therefore we will join -- we agree with Russia when they said, you can have a plant and we, Russia, will provide you the fuel and collect the fuel; which I strongly support.

And so -- the only reason I bring that up is I know that people think that our relations with Russia are, you know, may not be conducive to constructive action, but we got -- we do -- and there's no question there's tensions on some issues.

Q Okay.

THE PRESIDENT: But we can work together as well.

Q Okay. Final question: You will have one year in office. How do you think you will be remembered as a President?

THE PRESIDENT: I think I'll be remembered as a guy who, you know, was dealt some pretty tough issues to deal with and I dealt with them head-on and I didn't try to shy away. I didn't, you know, I didn't sacrifice -- I was firm and that I made decisions based upon principles, not based upon the latest Gallup Poll. And that I helped this country protect itself, and at the same time was unashamed, unabashed at spreading certain values to others -- the main one being liberty, whether it be the freedom from forms of government or the freedom from disease and hunger. And that we had a very robust foreign policy in the name of peace.

And at home, that the cornerstone of my policy is to trust the individual American to make the best decisions for his or her family. And that I dealt with not only a tax, but recession and a lot of other challenges to our economy, and yet our economy is very strong. We've had 50 consecutive months of uninterrupted job growth, which is the longest in American history. So, you know something? But I'll be dead before they finally figure out my administration because history, it takes a while to get the true history of an administration.

Q Okay, first we both see how it's going to be. We might not be dead by then. (Laughter.)

THE PRESIDENT: I don't think so. I think -- listen, they're still writing books analyzing George Washington.

Q That's very true. That's right. And they come to different conclusions in every new book.

THE PRESIDENT: They do. And so therefore my attitude is if they're analyzing the first President, the 43rd President doesn't need to worry about it. The key thing that people need to know is, I make up my decisions based upon principles, not based upon politics -- you know, what's good for a political party -- or trying to be popular. If you chase popularity, you can't lead. And popularity is just like -- it comes and goes; and I've never been one to really worry about that, you know? Because when it's all said and done, I think the key thing in life is to look in the mirror and say, I didn't compromise my core beliefs. And I believe people will say that about me.

Q Thank you very much, Mr. President.

THE PRESIDENT: You're welcome. Thanks for coming.