MUNICH, Feb 12: German Chancellor Gerhard Schroeder on Saturday soured the mood before a NATO summit aimed at relaunching transatlantic ties by declaring the 56-year-old alliance was outdated and in need of a revamp.

His call at a defence meeting in Munich brought a stinging response from NATO Secretary-General Jaap de Hoop Scheffer and got short shrift from US Defence Secretary Donald Rumsfeld, who insisted the 26-member body was working well.

In a speech which called for a new start in US-EU relations, Mr Schroeder said events such as the end of the Cold War and the emergence of India and China as economic powers had changed the world.

"I believe the transatlantic partnership must take such changes into consideration. And to be honest, it does so insufficiently at present," he said in the speech delivered in his absence, due to a bad cold, by his defence minister.

"It is no longer the primary venue where transatlantic partners discuss and coordinate strategies," he said.

Referring to a commission which has just put forward reform ideas for the United Nations, he suggested that a similar panel of top-ranking experts could be created to produce proposals on revamping NATO by early 2006.

Mr Schroeder, who with French President Jacques Chirac fell out with US President George W. Bush over the Iraq invasion, hoped the idea could be discussed with the US leader at a Feb. 22 summit at NATO headquarters in Brussels.

But de Hoop Scheffer bluntly dismissed the idea.

"NATO is functioning fine and it doesn't need a panel of experts to analyse and advise on what we are doing," he said on the margins of the conference, an annual draw for top defence officials and analysts.

"NOTHING PERSONAL": Mr Rumsfeld, whose advocacy of "coalitions of the willing" in Iraq and Afghanistan has in the past caused resentment in the alliance, immediately distanced himself from Mr Schroeder's call.

"I think there is enormous value in NATO ... I don't find myself inhibited sitting in North Atlantic Treaty Organisation meetings and talking among 26 countries," he said in a panel debate after the speech.

Aides to the chancellor denied Germany had massively misread the mood before the carefully orchestrated summit but acknowledged the proposal - which was not discussed with de Hoop Scheffer beforehand - could have been floated better.

"The secretary general wrongly thought that the chancellor criticized him personally in his job. We are not saying he did not perform his job ... We want to revitalise the operation, make it fitter than it is," said one aide who declined to be identified.

However, the aide did not go back on the German criticisms of NATO, saying it had become unwieldy after last year's inclusion of former Soviet Union states and that it should not shy away from debating issues such as concerns over Iran's nuclear programme. -Reuters