Angela Merkel made her first speech to parliament as German chancellor Wednesday, facing an urgent test over a kidnapped German woman in Iraq and the long-term challenge of reviving the country's moribund economy.
Merkel began the address with a tough message for the captors of aid worker Susanne Osthoff and her driver, missing in Iraq since Friday. "We will not be blackmailed," Merkel said.
"The federal government and this chamber, I am sure, strongly condemn this act."
The kidnapping has plunged Merkel into her first crisis a week after she was sworn in at the helm of a fragile power-sharing coalition with her political rivals, the Social Democrats.
Merkel said the left-right government, the product of an inconclusive general election in September, would now set to work to return the country to its status as an economic powerhouse.
"We want to create the conditions for Germany to be among the top three in Europe in 10 years" in terms of economic growth, Merkel told deputies in a keenly awaited address.
Merkel said her administration had taken office with a mandate to slash the 11-percent unemployment rate, jumpstart the moribund economy and tame the spiralling public deficit.
"We want to get the labour market in shape, we want to make our schools and universities world-class, we want to bring the deficit under control and repair our health, pension and nursing systems," she said to applause.
"No one can stop us in this effort - apart from ourselves."
Merkel threw down the gauntlet to Germany's powerful lobbies, including industry groups and trade unions.
"Let us do without the traditional rituals in which everyone cries out like a reflex when we want to change anything. It should really be possible to leave that behind us," she said.
She offered a tribute to her predecessor Gerhard Schroeder, a Social Democrat, for launching a "courageous" economic reform drive.
"He did a great service for our country. I would like to thank him in the name of all Germans for that," she said, in a pointed gesture of bipartisanism.
Merkel, 51, who is Germany's first female leader and the first from the former communist east, struck a personal note when she discussed her hopes for the country's future.
"The biggest surprise of my lifetime is freedom," she said, saying she had never expected to see the other side of the Berlin Wall before she retired.
"Let us dare to have more freedom," she said, including loosening some of the notoriously rigid bureaucratic rules that she said snuffed out economic growth.
Merkel also savored her own historic rise to power.
"Who would have thought that the highest governmental office would be given to a woman this year already," Merkel said.
She said her foreign policy would be driven by human rights concerns, "even with trade partners with great potential," in a veiled reference to China and Russia.
She called for a "close, honest, open and trusting relationship" with the United States and said she expected a quick response to European demands for information on reports of secret CIA prisons for terror suspects in Europe and clandestine transports of prisoners via Europe.
On Iran's controversial nuclear program, Merkel said Germany was committed to working with its European Union partners Britain and France to find a peaceful solution to the conflict with Tehran.
She said recent calls by hard-line Iranian President Mahmoud Ahmadinejad for Israel to be "wiped off the map" were "unacceptable in every sense."
Merkel said she was committed to social justice in Germany, brushing aside criticism from the political left that she would dismantle the country's vaunted welfare system.
"We will not close our eyes or our hearts to the suffering of other people," she said.
"Helping the weak is just. What is unjust is when the strong pretend to be weak and thus exploit society," she said, referring to a plan to crack down on abuse of the country's generous benefits system.
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