The former politician, who has been condemned across Europe for his friendship with the Russian leader, has spoken out about the possibility of a ceasefire, over five months since the conflict began.
He said that the recent agreements over grain exportation could be expanded into a full-blown peace arrangement.
Mr Schröder told Stern magazine: “The good news is that the Kremlin wants a negotiated solution.”
He also revealed that he had visited Moscow to meet with Putin last week.
This comes as a diplomatic breakthrough was brokered by Turkey and the UN between Russia and Ukraine to allow ships carrying grain to leave Ukrainian ports.
Turkish President Erdogan is expected to visit Sochi on Friday, the first NATO leader to visit Russia since the invasion.
Gerhard Schröder has faced intense backlash for refusing to break ties with Putin, being strippeed of his right to a German government-funded office and facing expulsion from his party the Social Democrats, reported The Times.
The 78-year-old has stood down from the board of Russia’s state-owned oil company Rosneft and declined a nomination for a board position at Gazprom.
However, he still remains chairman of the shareholders’ committee of Nord Stream AG, the operators of the Nord Stream 1 pipeline carrying Russian gas to Germany via the Baltic Sea.
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“But I also get many letters from Germany that say it is good that there is still someone who keeps open dialogue channels with Russia in the current conflict.”
He added: “I don’t want to take the mediation job away from anyone in the government.
“But why should I stop holding talks that are legally possible and don’t bring me or my family into difficulties?”
Focus magazine criticised the former Chancellor, who held the position from 1998 to 2005, of promoting Russian propaganda, saying: “The former chancellor is defending the Kremlin warmonger so vehemently that Putin’s spokesman should be worried about losing his job.”