While touting bilateral cooperation in trade, humanitarian efforts, and foreign relations, Merkel also brought up points of contention between the two states.
High on the agenda was Iran and the question of whether to refer it to the UN Security Council over its refusal to abandon uranium enrichment technology. During her visit to Washington late last week, Merkel agreed with President George W. Bush that the time had come for more decisive action.
Putin said during a post-meeting news conference that Russia's views on Iran were "very close" to those of the West, and said he and Merkel had found common ground on the issue. However, Putin warned against taking action that might have "unforeseen consequences."
The Russian president also said that Iran has not excluded Russia's proposal the Iran conduct its uranium enrichment in Russia.
"We proposed to our Iranian partners setting up a joint (uranium) enrichment venture on Russian territory," Putin said. "We have heard various opinions from our Iranian partners on that issue. One such opinion has recently come from the (Iranian) Foreign Ministry: our partners told us they did not exclude the implementation of our proposal. In any case, it's necessary to work carefully on the Iranian nuclear issue and avoid any sharp, erroneous moves."
Today's meeting came after Merkel told the German weekly news magazine "Der Spiegel" last week that Germany enjoyed a "friendship" with the United States but a "strategic partnership" with Russia.
"I don't think we share that many values with Russia," she told the magazine, "but we do have a vested interest in seeing Russia develop in a reasonable manner."
During her three-hour talks with Putin, Merkel today voiced some of Germany's main concerns in terms of Russia's development. The two leaders discussed new Russian legislation on NGOs that opponents fear could harm the development of the country's nascent civil society. And they also spoke about Russia's role in Chechnya and elsewhere in the North Caucasus.
"We have also discussed subjects where we do not immediately find common ground, for example the situation in Chechnya and in the North Caucasus," Merkel said. "I stressed that I will make every effort to promote programs proposed by the European Union to help the positive development of that region. I expressed this clearly and we had an open and thorough discussion about it."
Stressing the more positive aspects of Germany's relationship with Russia, Merkel noted what she called the "breathtaking increase" in bilateral trade. Volume rose last year to a record $32 billion -- marking a 30 percent increase over the previous year.
She also tried to allay fears regarding her country's partnership with Russia on the North European pipeline project. The project has faced strong opposition by Eastern European states that believe it constitutes an effort to bypass them.
"The Baltic Sea gas pipeline is indeed an investment in Europe's energy security," Merkel said. "I have already said that it should be made clear to the Baltic countries and Poland that this project is not aimed against anyone."
Alexander Rahr, a Russia expert at the German Council on Foreign Relations, told RFE/RL today said that while the German-Russian relationship might not be as cozy as it was during the Schroeder era, "relations will continue to be important and strategic."
Rahr noted that Germany continues to have a vested interest in economic cooperation with Russia, especially in energy, and that Russia regards Germany as its advocate in the West. So, while the tone might change, he said, the substance of the German-Russian relationship will largely remain the same.