Germany on Monday said its continued support for Iraq and the semi-autonomous Kurdistan Regional Government was contingent on peaceful efforts by both sides to resolve their differences.
The German government has provided more than 1 billion euros ($1.2 billion) in humanitarian, development and stabilisation aid to Iraq since 2014, making it one of the biggest international donors.
"Our support is for Iraq as a unified state," Foreign Minister Sigmar Gabriel told reporters after meeting with KRG Prime Minister Nechirvan Barzani in Berlin.
"We want to continue that, but the precondition is that Iraq solves its internal conflicts peacefully and democratically, and that we find a way out of the tense situation we are in now."
Gabriel noted that Germany had warned the Kurdish region against holding the Sept. 25 referendum, in which Iraqi Kurds voted overwhelmingly to break away from Iraq, and said the goal was to restore dialogue between the two sides.
The Kurdish vote was rejected by Baghdad and triggered an Iraqi military offensive that recaptured disputed areas of the north from Kurdish Peshmerga fighters.
Gabriel said Berlin would push the government in Baghdad to respond to offers of dialogue by the KRG.
Barzani urged Germany to "play a stronger role in bringing us together".
Barzani also thanked Germany for supporting his region's fight against Islamic State, and training Peshmerga fighters.
The German parliament voted last week to extend its military mission in northern Iraq, around 150 strong, to the end of March to allow a new government to weigh a longer extension.
But the rise in tensions between Kurds and Baghdad has raised concern in Germany about the mission's future.
After failing to agree on a new government with two smaller parties, Chancellor Angela Merkel is now trying to rebuild the "grand coalition" with the Social Democrats (SPD) that has ruled Germany for the past four years.
It is unclear if Gabriel, a former SPD leader, would stay on as foreign minister if the two blocs reach a deal.