The meeting in the Black Sea resort of Sochi will be Putin's sixth with the German leader since she took office in November 2005, and comes during Germany's presidency of both the EU and the Group of Eight leading industrialized nations.
"The agenda will involve reviewing Russian-German cooperation in 2006, agreeing a schedule for the coming year, specifying cooperation areas in the context of Germany's parallel presidency of the G8 and the European Union, and sharing perspectives on topical issues of international and bilateral relations," a Kremlin source told RIA Novosti in an interview.
He said Putin and Merkel will discuss options for building on the agenda set by Russia during its G8 presidency in 2006, which included issues such as energy security, education, and the treatment and prevention of infectious diseases.
The meeting will also address the launch of talks on a new strategic partnership treaty between Russia and the EU, to replace the existing accord when it expires at the end of this year.
Merkel is set to kickstart negotiations despite opposition from EU-member Poland, which last November vetoed talks on a new cooperation deal with Russia over Moscow's year-long ban on Polish meat imports. The former Eastern Bloc country's resistance to close partnership with Russia was exacerbated in early January by a three-day disruption of Russian oil deliveries during a row with Belarus.
The ex-Soviet republic is the main transit route for Russian crude and natural gas exports to Germany and Central Europe, and the supply suspension has raised doubts in Poland and other EU nations that Russia is a reliable supplier. At present, a quarter of the EU's energy comes from Russia.
International issues to be raised at the Putin-Merkel meeting will include a peace settlement in the Middle East, the international standoff over Iran's nuclear program, and developments in Iraq, Afghanistan, and the Balkans, the Kremlin source said.
Discussions of bilateral issues will center around industrial cooperation in high-tech sectors, such as power engineering, aerospace, car manufacturing, and telecommunications.
Germany is a key trade partner for Russia. Bilateral trade reportedly grew 30% to $36.05 billion in January-November 2006, and the year-end figure may reach a record $40 billion.
German investments in the Russian economy totaled $2 billion in the first nine months of 2006, a 53% increase on the previous year.
Humanitarian and cultural cooperation will also be high on the agenda in Sochi, including through a Russian-German youth exchange program being run under the two leaders' patronage.
"In the offing are new joint programs to step up inter-parliamentary cooperation and interregional relations," the source said. "The year 2007 will see an ambitious presentation of economic, scientific and cultural potential within the framework of the Year of Siberia in Germany project."
