“I can clearly see that Putin feels insulted by the fact that the western powers don't take his concerns seriously enough,” said Schmidt, who was Chancellor from1972-82.
He said he believed that Putin would have accepted an invitation if it had been offered in the right way.
“My expectations [of the summit] are low,” said the ex-Social Democratic Party (SPD) leader. “If the western states don't pour oil on the fire [of the Ukraine conflict] then I'll be happy.”
Speaking from his office at Zeit Magazine, Schmidt showed a certain understanding for Putin's politics.
“Putin is the man who had to put the Russian state back on its feet after the wild west years of [Boris] Yeltsin. That's how he sees his role.”
The Russian president had inherited the last European colonial empire and was trying to maintain it, said Schmidt. He is acting from a position that is seemingly strong, “but he, as the person who inhabits this position, knows he can't use the strength he has.”
But Schmidt said he was confident no military confrontation would develop out of the current tension between Russia and the West.
“I assume that neither Putin nor [Barack] Obama want to have a war. The Crimea is not a reason for war. The Ukraine in its entirety is no real reason for war for either man.”
There will instead be negotiations over the issue between Russia and the western powers lasting for years and in all likelihood without concrete results, Schmidt argued.
On Sunday the leaders of Germany, the USA, Canada, Japan, the United Kingdom, Italy and France will meet in the Bavarian castle of Elmau at the invitation of Chancellor Angela Merkel. Russia was accepted into the G8 in 1998 but was excluded in 2014 after it annexed the Crimea from Ukraine.