"The situation in Luhansk and Donetsk remains far from armistice. Therefore, economic sanctions have been and still are inevitable," Merkel told German lawmakers.
According to the chancellor, Germany and the European Union want to see a sovereign and territorially intact Ukraine.
The chancellor stressed the importance of complying with the Minsk agreements and stated that she, alongside German Foreign Minister Frank-Walter Steinmeier, used every opportunity to engage in talks with the Russian delegation at the recent G20 summit in Brisbane.
"This conflict cannot be solved by war," she underlined, adding that "we will try all ways of negotiating with Russia in order to reach a diplomatic solution."
Over the past few months, the European Union, the United States and a number of their allies have imposed several rounds of sanctions targeting Russia's banking, energy and defense sectors, as well as a number of high-ranking officials over Moscow's alleged involvement in the Ukrainian crisis. Russia has repeatedly denied the claims.