"I myself have also experienced a part of Germany being occupied by the Soviet Union," Merkel, who grew up in communist East Germany, said as she arrived at a tense NATO summit.
"I am very glad that we are united today in freedom as the Federal Republic of Germany and that we can therefore also make our own independent policies and make our own independent decisions."
US President Donald Trump earlier launched a blistering attack on Germany at the start of a tense NATO summit, accusing Berlin of being "captive" to Russia and demanding it and other allies immediately step up defence spending.
The two-day meet in Brussels was already shaping up to be the alliance's most difficult in years, with Europe and the US engaged in a bitter trade spat and Trump demanding that NATO allies "reimburse" Washington for the cost of defending the continent.
European alliance members were braced for criticism from Trump on defence spending, but his furious tirade at what should have been an amicable breakfast meeting appeared to take even NATO chief Jens Stoltenberg by surprise.
"Germany is a captive of Russia because it is getting so much of its energy from Russia," Trump said, taking particular aim at the proposed Nord Stream II gas pipeline, which he has previously criticised.
"Everybody's talking about it all over the world, they're saying we're paying you billions of dollars to protect you but you're paying billions of dollars to Russia."
The US president will hold a one-on-one meeting with German Chancellor Angela Merkel at the NATO summit on Wednesday, the White House said.
Trump has long complained that European NATO members do not pay enough for their own defence, accusing them of freeloading on America and singling out Germany for particular criticism.
NATO allies agreed at the Wales summit in 2014 to move towards spending two percent of GDP on defence by 2024. But Germany, Europe's biggest economy, spends just 1.24 percent of GDP on defence, compared with 3.5 percent for the US.
"These countries have to step it up -- not over a 10 year period, they have to step it up immediately," Trump said.
"We're protecting Germany, France and everybody... this has been going on for decades," Trump said. "We're not going to put up with it, we can't put up with it and it's inappropriate."
Stoltenberg acknowledged that Trump had expressed himself in "very direct language" but insisted that away from the fiery rhetoric the allies all agree on fundamental issues: the need to boost NATO's resilience, fight terror and share the cost of defence more equally.
Canadian Prime Minister Justin Trudeau, whose country also lags on the two percent pledge, said the focus should be on "outputs" rather than on how much is spent.
"You can try to be a bean-counter and look at exactly how much of this, and how much that, but the fundamental question is: is what you are doing actually making a difference?" Trudeau said.
NATO officials and diplomats will try to promote an image of unity at the summit in the face of growing unease about the threat from Russia, but after Trump's attack it may prove difficult to paper over the cracks.
The mercurial tycoon said before leaving Washington that his meeting in Helsinki with Russian President Vladimir Putin on Monday "may be the easiest" part of his European tour, which also includes a trip to Britain, where the government is in crisis over Brexit.
'Appreciate your allies'
The meeting of 29 Western leaders has the potential to descend into another public bust-up following a divisive and bad-tempered summit of G7 nations in Canada last month.
Trump ramped up his rhetoric ahead of the talks, explicitly linking NATO with the transatlantic trade row by saying the EU shut out US business while expecting America to defend it.
EU President Donald Tusk stepped up to the fight with his own salvo against Trump on Tuesday.
"Dear America, appreciate your allies, after all you don't have that many," Tusk said, before reminding Trump that European troops had come to America's aid following the September 11, 2001 attacks on the United States.
"Please remember this tomorrow when we meet at the NATO summit, but above all when you meet President Putin in Helsinki. It is always worth knowing who is your strategic friend and who is your strategic problem," he said.
Trump will meet the Russian leader in the Finnish capital on July 16 for their first summit amid an ongoing investigation in the US into possible Trump campaign collusion with Russia.
European diplomats fear a repeat of the G7, when Trump clashed with his Western allies before meeting North Korean dictator Kim Jong Un at a summit and praising him as "very talented".
There have been fears that Trump, keen to be seen to make a breakthrough with the Kremlin strongman, might make concessions that would weaken Western unity over issues such as Ukraine and Syria.
US ambassador to NATO Kay Bailey Hutchison urged allies to look beyond Trump's rhetoric and focus on the summit declaration -- which the US is expected to back -- which will be the basis for the alliance's work over the coming years.
And she said she expected Trump to recommit to one of the founding articles of NATO -- Article 5 -- which holds that an attack on one member is an attack on them all.
