Munich: Nato remains the central pillar of transatlantic relations but must broaden its scope to address post-Cold War security threats like global terrorism, German Chancellor Angela Merkel said on Saturday.

Merkel urged the 26-member alliance to forge closer security ties with non-Nato countries and called for a review of strategy by 2009, the body's 60th anniversary, to reflect the world after the 9/11 attacks on the United States.

The speech won warm applause at a top security conference in Munich, an annual event at which a call last year by her predecessor Gerhard Schroeder for a revamp of Nato dismayed US officials, who saw it as an attack on the alliance.

"Nato is the cornerstone of the transatlantic community of values ... it must be the place in which political consultations about new conflicts are held," said Merkel.

The European Union's fledgling defence capability should be developed "not as a counterweight but a complement" to combined US-European military resources within Nato, she said.

Merkel firmly backed the push by some in the alliance, including the United States and Britain, to reach out to potential partners such as Japan and South Korea, insisting Nato could not deal with global terrorism threats alone.

"It is important that Nato develops a wide network of partners in other parts of the world," she said.

Merkel said the last major change in Nato's strategy took place at the end of the 1990s, when it began developing abilities for rapid-reaction in crisis spots around the world.

She said its strategy now needed updating to reflect global threats highlighted by the September 11 attacks on the United States, and urged allies to embark on a wide-ranging debate on Nato's future aims in 2008 or 2009.

"She gave a clear commitment to the transatlantic relationship and emphasised the primacy of Nato. I am a happy secretary-general," Nato chief Jaap de Hoop Scheffer said after the speech.

Other reactions were also positive, in sharp contrast to those to Schroeder's call last year for an overhaul of Nato. Aides to the ex-chancellor said then that he was misinterpreted and that he only meant to prompt debate on strengthening Nato.

Tensions between the United States and European opponents of the Iraq war including France and Germany have since eased, and Merkel is widely seen to have made a good start in further healing the transatlantic rift which opened up during 2003.

The conference heard a call from US Defence Secretary Donald Rumsfeld for Nato allies like Germany to spend at least 2 per cent of GDP on defence. Berlin last year spent just 1.4 per cent.

But Merkel said Germany's battle to bring its budget deficit within EU limits meant she could make no promises to raise spending in the short term.