"We need to build trust in Europe again and move away from a system of punishment to a system of incentive," Kurz told the German news magazine Der Spiegel.
Since the beginning of the Ukraine crisis, there has been a return to the mindset of the Cold War, Kurz added. But he said it's time for a change in the attitude towards relations with Russia. "For any positive developments to happen on the ground, there needs to be a gradual relaxation of sanctions,” he said.
Earlier this month EU leaders agreed to extend economic sanctions against Russia for six more months. The sanctions have cost EU exporters billions of euros.
France and Germany have complained that the Minsk peace deal for Ukraine is still not being fulfilled. However, Italy and Slovakia want the sanctions eased.
Russia's annexation of Ukraine's Crimea region in 2014 triggered the first round of sanctions. They have since been increased to target Russian arms exporters, banks and individuals blamed for the pro-Russian insurgency in Ukraine.