BERLIN/MOSCOW (Reuters) - German Economy Minister Sigmar Gabriel said on Wednesday as he headed to trade talks with Russian President Vladimir Putin that he favored lifting EU sanctions on Moscow but that would require progress on peace in Ukraine.
The European Union imposed the sanctions after Russia annexed Ukraine's Crimea peninsula in 2014. Soon afterwards, conflict broke out in eastern Ukraine between government forces and separatists, but a fragile ceasefire is in force under the so-called Minsk agreement which Germany helped to broker.
"I am doing what I can so that the sanctions, imposed after the annexation of Crimea, can be lifted step-by-step, and in the same measure as there is tangible progress in implementing the Minsk agreement," Gabriel said.
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"If that succeeds, we can start to ease relations that would help both sides," he said, adding that German-Russian economic ties had great potential. Trade between the countries fell by 13.7 percent in the first half of this year.
At the beginning of his meeting with Gabriel in Moscow, Putin said trade between Germany and Russia was disappointing.
"Unfortunately, the trade turnover has fallen. Last year it was down 40 percent; in the first half of this year, it is down 35. We are making some efforts - you know that we try on both sides," he said.
Putin added that Germany, Europe's largest economy, remained one of Russia's most important trade and economic partners.
Gabriel said both Russian and German companies had a great interest in boosting cooperation.
Gabriel's Social Democrats are junior partners to Chancellor Angela Merkel's conservative bloc in the coalition government, with an election due a year from now. He has taken a more conciliatory stance toward Moscow than Merkel, who says Russia must do more to help the shaky Ukraine peace process.
The conservatives - Merkel's Christian Democrats (CDU) and their Bavarian allies, the Christian Social Union (CSU) - pushed back after Gabriel's comments.
"The CDU/CSU parliamentary group cannot understand the remarks by minister Gabriel on the sanctions against Russia being phased out," said Juergen Hardt, the group's foreign policy spokesman. "We strongly support the view of the G7 countries - that a lifting of the sanctions is coupled with the full implementation of the Minsk agreement."
Russia has retaliated against the sanctions by banning food imports from a range of Western countries including the EU.
"My trip to Russia takes place when we have a very tense situation with no quick or easy results expected," said Gabriel, who took a business delegation with him to Moscow.
"But for that very reason, isolation and confrontation offer no prospects and are not a sensible policy."
At the start the meeting with Putin, Gabriel said he also wanted to talk about Syria. Recent incidents there like the attack on an aid convoy had "caused incredible concern" in Germany, he said. Putin assured him they would talk about it.
(Reporting by Rene Wagner and Denis Pinchuk; writing by Madeline Chambers; editing by Mark Heinrich)