Receiving the Franciscan award Saturday, Merkel said the route to peace and reconciliation was often only navigable with "great effort and much perseverance," stressing it did not hinge on religious conviction.
Referring to strains in a supposedly united 28-nation EU, Merkel said it was necessary to look beyond the national rim, adding it must again be possible "to give Europe a soul."
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How fragile peace had remained was exemplified, she said, by the Balkans war in ex-Yugoslavia in the nineties.
Russia's annexation of Crimea in 2014 was a more recent "deep slash," civil war-shattered Syria was enduring the "greatest humanitarian tragedy of our times," and US President Donald Trump's pullout from the major powers' 2015 nuclear restraint deal with Iran had left the Middle East "even more tense," she added.
Simple, small replica
The Franciscan "Lamp of Peace" is a replica of a local glass oil lamp that glows at the monastic grave of Saint Francis of Assisi, who lived until 1226 and whose observations of wildlife inspired environmental ethics.
The award was first presented in 1981 to the Polish trade union leader Lech Walesa. Subsequent recipients include Pope John Paul II, the Dalai Lama, Saint Teresa of Calcutta and Russia's political leader Mikhail Gorbachev.
President Santos received the Nobel Peace Prize and the Franciscan award in 2016 for his civil-war reconciliation efforts in Colombia.
Saturday's rites began with a visit to Saint Francis' grave in the crypt of the monastery, followed by the choral ceremony in its main basilica.
Later, Merkel and Santos were due to converse with 200 young people and 19 male Franciscan novices from Europe.
Accompanying Merkel was Germany's ambassador to the Vatican, Annette Schavan.
Oil from tree of peace
Prefacing the event on Friday, Friar Thomas Freidel told Dom Radio based in Cologne, Germany, that the award was symbolized by a "very simple small lamp" traditionally used in Italy's central Umbria region, which includes Assisi.
"The olive oil [inside] is a precious product of the oil trees of Umbria, which are similarly a symbol for peace," Freidel said.
Light, he said, was also a "symbol that is understood across religious boundaries" and a reminder of what "underpins and sustains us here in Europe."
Merkel was widely regarded in Italy as an important "shaper" of a Europe beset by problems but also facing a common future. So, she had been chosen by the monastery as an "important representative" of Europe, Freidel concluded.
ipj/jm (KNA, dpa)