"We need a government in Iraq that embraces all parts of the population," Merkel said. "For years this has not happened and because of this the pressure needs to be raised." On another note, Merkel said new sanctions against Russia could be put back on the agenda if progress in stabilizing the situation in Ukraine does not speed up.
She praised Ukrainian President Petro Poroshenko's call for a unilateral ceasefire in the conflict with pro-Russian rebels and said Russian President Vladimir Putin's decision to renounce his right to intervene was "psychologically important".
But Merkel told parliament that there were still fatalities among Ukrainian troops despite the ceasefire and said: "Progress is slow ... Diplomatic solutions are always preferable but if nothing else works, sanctions can be put back on the agenda."
Separately, Merkel noted that her coalition government agreed that countries should use the flexibility built into Europe's Stability and Growth Pact to promote growth, competitiveness and create jobs.
"The German government agrees that the Stability and Growth Pact offers excellent conditions for that, with clear guard rails and limits on the one hand and a lot of instruments allowing flexibility on the other," she told Germany's Bundestag lower house of parliament.
"We must use both just as they have been used in the past." REUTERS