Russian President Vladimir Putin and German Chancellor Angela Merkel say diplomacy is the best way to resolve the standoff with Iran over its nuclear program.  After a two-day summit in central Russia, the two leaders also called on Iran to fulfill its international obligations in the nuclear sphere.

Angela Merkel, right, and  Vladimir Putin during signing ceremony at German-Russian summit in Tomsk, April 27, 2006

President Putin and Chancellor Merkel made their comments on Iran after attending a Russian-German business forum in the Siberian city of Tomsk.

At a news conference, the two leaders said Iran must fulfill its international obligations, a clear reference to its ongoing nuclear program.

Their comments come one day before the U.N. Security Council deadline for Iran to suspend its enrichment of uranium, and process that can eventually lead to the production of nuclear weapons.

Pressure has increased on Tehran over the issue, with the United States and Britain favoring possible sanctions if Iran fails to comply, as seems likely.

Russia and China have long opposed sanctions, and as permanent members of the Security Council they have the power to veto any resolution on them.

But President Putin says he hopes it will not come to that.  He and Ms. Merkel say that while Iran should honor its commitments, the diplomatic route has not been exhausted.

He says the world community must reach consensus on the issue, adding that Russia feels Iran does have the right to develop nuclear energy for peaceful purposes.

Russia is Iran's chief supplier of nuclear technology, and is currently building a nuclear power plant in Iran.

Mr. Putin and Chancellor Merkel also discussed energy security, including the pipeline both nations plan to build under the Baltic Sea to bring Russian natural gas directly to Western Europe.

Mr. Putin sought to reassure Germany and the rest of Europe that Russia is a reliable source for its energy.

His comments come several days after two top officials with the Russian gas monopoly Gazprom warned Europe that its share of gas might decrease in favor of Asian clients such as China.

Gazprom supplies around 25 percent of Europe's gas, and has signaled it wants to expand its network by acquiring western European gas distribution companies.

Various EU leaders express unease at this prospect, and say that instead they want to decrease dependence on Gazprom for energy supplies.