Germany's Merz urges western unity on Ukraine on eve of peace talks

By Sarah Marsh and Matthias Williams

BERLIN (Reuters) -Germany's new Chancellor Friedrich Merz on Wednesday urged the West not to be divided on Ukraine and vowed to provide the financial means needed to build Germany's conventional army up into Europe's strongest.

In his first major speech to parliament since taking office that laid out his government's priorities, Merz said a dictated peace for Ukraine or a submission to the status quo achieved by Russian military forces was unacceptable.

"We hope and are working hard to ensure that this clear stance is not only upheld throughout Europe but also by our American partners," said Merz, who has promised to give Germany a bigger role on the global stage.

The veteran conservative was speaking a day before Ukrainian and Russian delegates may yet meet for peace talks in Istanbul, more than three years after the start of the deadliest conflict in Europe since World War Two.

After winning elections in February, Merz publicly castigated U.S. President Donald Trump's administration as an unreliable ally. In Wednesday's speech he said it was "of paramount importance that the political West does not allow itself to be divided".

Merz had last weekend travelled with his French, British and Polish counterparts to Kyiv where they declared that Russia would be hit by new punitive measures if it did not heed calls for a 30-day ceasefire within days.

That pledge failed to move Putin, who instead called for direct talks with Ukraine in Istanbul on May 15. U.S. President Donald Trump backed that call, undermining the European leaders' efforts to show that Trump was firmly on board with their threat.

"This terrible war and its outcome will not only determine the fate of Ukraine," Merz told lawmakers. "The outcome of this war will determine whether law and order will continue to prevail in Europe and the world, or whether tyranny, military force, and the sheer right of the strongest will prevail."

Still, strengthening the long underfunded and neglected German military is a top priority as deterrence is the best defence, Merz said.

"The government will provide all the financial resources that the Bundeswehr needs in order to become the strongest conventional army in Europe," he said.

Merz was blunt about Russia, accusing it of involvement in state-sponsored killings and poisoning in European cities, cyber attacks and the destruction of infrastructure, including undersea cables.

He was speaking as German prosecutors announced the arrest of three individuals for their suspected involvement in the shipment of exploding parcels, after a series of fires at European courier depots pointed to suspected Russian sabotage.

The growing closeness between Russia and China was also concerning, Merz added, noting Germany's China policy would be embedded in its Indo-Pacific policy.

"Free navigation and secure trade routes are in our foreign policy and economic interest," he said.

BOOSTING GROWTH

With Trump's tariff plans threatening a third year of downturn in Europe's largest economy, Merz said he aimed to avoid a protracted trade conflict with the United States and would help the EU agree as many trade deals as possible.

His coalition of conservatives and centre-left Social Democrats will reduce red tape, energy prices and corporate taxes in an ambitious bid to boost growth, he said.

It will also invest up to 150 billion euros from the 500 billion euro fund for infrastructure he pushed through parliament in March before even taking office.

"We have the strength to once again become a growth engine that the world looks upon with admiration," he said to applause.

Despite immigration taking centre stage in his election campaign amid a surge in support for the anti-migrant, far-right Alternative for Germany, the issue was relegated to the end of his speech on Wednesday.

His government will increase border controls, turn back attempts at illegal entry and step up deportations, while acting in accordance with EU law, Merz said.

(Reporting by Sarah Marsh and Matthias Williams, Additional Reporting by Thomas Escritt and Andreas Rinke; editing by Thomas Seythal, Toby Chopra and Hugh Lawson)