While expressing his hope for the working subgroups of the three-party Contact Group on the Ukraine crisis, Putin vowed to exert all possible influence on Donetsk and Lugansk to ensure the effective work of the subgroups.

He also noted that the success of a peaceful settlement in Ukraine depends mainly on the Kiev government, calling for constitutional reforms and economic restoration in the country.

Moreover, Merkel urged all the relevant sides to do everything possible to improve the humanitarian situation in the country's eastern Donbass regions.

The two leaders also discussed bilateral cooperation and the Russia-EU relations. They agreed that the current problems should be solved through "diplomatic paths."

According to Merkel, Russia and Germany need to cooperate when facing "difficult situations." She suggested that economic spaces of the European Union and Russia should move closer gradually.

"I think in a current globalized world there are reasons to work on this so that the Russian-German bilateral relationship fits well into the context," Merkel said.

Lamenting the slump in bilateral trade with Germany, Putin pointed out that there are still German companies investing in Russia's economy and called for "removing artificial barriers on the path of the development of mutually beneficial trade and economic ties."

"(The dramatic trade drop) is clearly not in the interests of either Russia or Germany," Putin said.

Putin also urged efforts to renew the global security system, saying it should be based on nonalignment and impartial criteria under the leadership of the UN.