German Chancellor Angela Merkel has offered the Russian government negotiations with the European Union on the "possibilities of a cooperation in a joint trade area" in exchange for a comprehensive resolution of the conflict in eastern Ukraine, the daily Süddeutsche Zeitung reported on Friday.
The paper said Merkel's offer was made at the World Economic Forum in Davos, Switzerland.
According to the paper, German Economy Minister Sigmar Gabriel also proposed "discussion about a free-trade zone" as a "next step" in efforts to bring Russia back into the European fold after the war in Ukraine comes to an end.
Both Merkel and Gabriel, who is also vice chancellor, described the free-trade zone as extending from "Lisbon to Vladivostok," the paper said - a formulation first used by Russian President Vladimir Putin in an interview with the daily in 2010.
However, the paper said the German leaders insisted that Russia first had to comply with the Minsk Agreement, a ceasefire deal signed in September in the Belarusian capital by Ukraine, Russia and pro-Moscow rebels who are waging an insurgency in eastern Ukraine.
Sanctions in force
Ukraine and many Western countries accuse Russia of supporting the separatists, charges that Moscow denies.
The EU and the United States have imposed heavy economic sanctions on Russia over its alleged role in the crisis.
Eckhard Cordes, the chairman of a major business lobby, the Committee on Eastern European Economic Relations, has told another German newspaper that the sanctions were harming German exports.
In an interview for the Friday edition of the daily Rheinische Post, Cordes said German exports to Russia had gone down by 18 percent in 2014 - the equivalent of 6 billion euros ($6.8 billion).
Spiral of violence
The Süddeutsche Zeitung report comes as Ukraine on Thursday experienced its deadliest day of fighting since the shaky September truce was agreed.
Kyiv and rebel authorities said violence across the separatist regions of Donetsk and Lugansk killed 10 soldiers and some 35 civilians. Thirteen more civilians were killed in a trolleybus shelling in the rebel stronghold of Donetsk that has brought accusations of responsibility from both sides.
The Kyiv administration also suffered a major psychological blow after being forced to cede Donetsk's now-ruined international airport to rebels after defending it for 242 days.
The renewed violence came just hours after the foreign ministers of Russia and Ukraine met their counterparts from Germany and France for talks in Berlin aimed at bolstering the September ceasefire and agreements to withdraw weapons from defined zones.
German Foreign Minister Frank-Walter Steinmeier on Thursday evening appealed to both Russia and Ukraine to uphold the agreements made at the meeting on Wednesday evening.
Anyone in Moscow and Kyiv who was serious about a peaceful resolution must "do everything to stop the spiral of violence and counter-violence," Steinmeier said on a visit to Morocco.
"If we want to use what is perhaps the last chance for a political solution, then there is not much time left," he added.
The ministers had agreed among other things on a 30-kilometer-wide (18.6-mile-wide) buffer zone in eastern Ukraine from which all heavy weapons such as mortars were to be withdrawn.
The Organization for Security and Cooperation in Europe said on Thursday that more than 5,000 people were confirmed to have been killed in the nine-month-long war.
tj/sms (AFP, dpa)