Gerard Schroeder, the former German chancellor whose Social Democrat party is now in coalition with Angela Merkel’s Christian Democrats, has been pictured embracing Vladimir Putin after a party in St Petersburg.

The embrace, which has attracted widespread criticism in Germany, took place Monday night on the steps of the Yusupov Palace in which the infamous monk Rasputin was murdered in 1916.

The photograph was condemned as “playing into the hands of Putin’s propaganda” as the German government worked to keep the EU united in its response to the Ukraine crisis.

A photograph of the two men in a bear-hug, apparently after celebrating Schroeder’s birthday, emerged as NATO forces were being ramped up in Europe in response to the Russian threat to Ukraine.

Yet in 1999, the then-Chancellor insisted the Eurocorps, a military force made up of nine EU member states and meant to work with Nato and other international organisations, should be used in European crisis zones.

The Frankfurter Allgemeine Zeitung newspaper finds it “ghoulish” for Schroeder to “hug his friend Vladimir when German soldiers (observers in east Ukraine) are being held hostage by pro-Putin fanatics.”

Schroeder has earned a reputation as Putin’s best friend in the West. He stood with Putin in opposition to the invasion of Iraq led by George W Bush and Tony Blair.

The former Chancellor has been chairman of Nord Stream AG, a Russian-German joint venture pipeline through the Baltic which will transport natural gas from Russia to Europe.

The Berlin government quickly distanced itself from Schroeder, with one report quoting a senior government official saying: “He does not represent the German government. It should be clear to everyone that Mr Schroeder left active politics some time ago.”

However, since Schroeder’s centre-left Social Democrat party is in coalition with Angela Merkel’s conservative Christian Democrats, critics in Berlin warn that Schroeder’s closeness to Putin risks undermining the government.

In particular, Schroeder’s bear-hug may undermine the German foreign minister Frank-Walter Steinmeier, known as his former protégé.

According to Reuters, Andreas Schockenhoff, deputy parliamentary floor leader for Merkel’s party said: “The chancellor and foreign minister have tried to help stabilize Ukraine for weeks and keep the EU together while Putin is trying to destabilize Ukraine and divide the EU. Pictures like this play into the hands of Putin’s propaganda.”