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Merkel and Hollande edge closer after tragedies

French President Francois Hollande (R) shakes hands with German Chancellor Angela Merkel following their news conference during a joint Franco-German cabinet meeting at the Chancellery in Berlin March 31, 2015. REUTERS/Hannibal Hanschke

By Noah Barkin

BERLIN (Reuters) - The leaders of Germany and France announced plans on Tuesday to work more closely on economic and security issues after years of strain, saying the tragedies of the Charlie Hebdo killings and air crash in the French Alps had brought them closer.

Chancellor Angela Merkel and President Francois Hollande, whose relationship has sometimes been tense since the French Socialist took power in 2012, met in Berlin on Tuesday, a week after a German pilot with a history of depression steered an airliner into a mountain in southern France, killing 150 people.

The disaster came two months after Islamist gunmen killed 17 people in Paris at the satirical weekly Charlie Hebdo and a Jewish shop.

"Looking back, Germany and France were tested in the first three months of 2015 and we moved closer to each other," Merkel told a joint news conference.

"I remember the horrible events around Charlie Hebdo, but also the decisive response in favour of free speech, democracy and the fight against terrorism. Together we sent a signal about how we will deal with the challenges of our time."

Hollande said the Franco-German friendship had "evolved" over the past days and weeks into one of "brotherly closeness".

In a sign that Berlin and Paris are trying to bridge differences, which have centred on economic policy, they announced nine joint investment projects focused on the energy and digital economy sectors.

These include joint efforts to encourage investment in startups and strengthen cooperation in setting standards for cloud computing and "big data". The initiatives are to be pursued at the European level.

Separately, the two countries agreed to cooperate on a new military observation satellite programme and to start the development of a European drone, together with Italy.

Though largely symbolic at this point, the plans suggest the Franco-German motor that has powered European integration since World War Two may be shifting up a gear.

For much of last year, politicians in Berlin were highly critical of the pace of Hollande's economic reform drive. The French, meanwhile, pressed Germany to invest more public money in infrastructure and other areas.

Both sides have shown signs of movement in recent months. Merkel's cabinet approved plans earlier this month to boost spending by 15 billion euros over the next four years. In February, French Prime Minister Manuel Valls rammed an economic reform bill through parliament by decree.

Merkel and Hollande have also taken the lead in the Ukraine crisis, negotiating a fragile ceasefire deal with Moscow and Kiev last month.

On Tuesday, they presented a united front on Greece, demanding that it fulfil its reform obligations, and on Iran, saying any deal on the country's nuclear programme must ensure Tehran cannot develop a nuclear weapons capability.

Despite the signs of unity, analysts say the relationship is no longer one of equals. Germany's economic success and France's malaise have created an imbalance that has aggravated tensions.

In her tenth year as chancellor, Merkel enjoys the support of nearly three in four Germans, while Hollande has the support of just one in four French. His Socialists received a drubbing in local elections on Sunday, losing ground to former president Nicolas Sarkozy's conservatives.

"The course has been set and we will stick to it," Hollande said in Berlin.

(Additional reporting by Michelle Martin, Victoria Bryan, Erik Kirschbaum, Michael Nienaber and Andrew Callus; Writing by Noah Barkin; editing by David Stamp)