She was speaking with foreign journalists in Berlin, Deutsche Welle reported.
Merkel said that owing to its geographical position, Ukraine is obliged to stay between the European Union and Russia in all senses of the phrase.
"Finally, Ukraine's long-term prospects depend much on how we manage to build our partnership and strategic relations with Russia. This is fully in Ukraine's interests," she said.
Speaking about Ukrainian-Russian relations, she pointed to the domestic crisis in the country and added that Ukraine's political situation is very difficult, and that it is very hard for the country's leadership to take any decisions.
"Of course, we would like to assist Ukraine in becoming more politically stable," she said.
Merkel said that Ukraine is unambiguously in the sphere of Germany's interests, and that it also belongs to countries of the Eastern Partnership initiative.
She said that a special EU summit on eastern policies is scheduled for May 7, 2009. She said that relations with Ukraine and the provision of assistance to the country to tackle the economic crisis would be discussed at the summit.
As reported, EU officials will participate in a conference in Brussels on March 23 dedicated to the modernization of the Ukrainian gas transportation system.