(Fixes byline and typo in first paragraph)
By Christopher Alessi and Monica Raymunt
BERLIN, April 25 (Reuters) - In Berlin's immaculate Treptow Park, a towering statue of a Soviet soldier holding a German child on his arm and stamping on a Nazi swastika reminds Germans of the debt they owe Russians.
Willie Kern, a pensioner visiting the poignant memorial to the 80,000 Red Army soldiers killed in the battle of Berlin in 1945, looks at the well-tended gardens there and says he views Russian President Vladimir Putin as a dictator.
Yet Germany should hold back in punishing Russia too harshly for its annexation of Crimea and for the increasingly violent crisis in eastern Ukraine, he says.
"The aggression against Russia always comes from the West, Germany should exercise restraint," said Kern, adding Germany's place is between the United States and Russia.
"Why do we always have to establish democracy throughout the world? The citizens are supposed to decide," he said.
Despite tough rhetoric from Chancellor Angela Merkel and the threat of economic sanctions on Russia beyond the visa bans and asset freezes already in effect, Kern's cautious views are reflected in the wider population.
While almost half of Germans want Berlin to act as a bridge between the West and Russia, those in former Communist eastern parts are more sceptical about further sanctions, polls show.
With their misgivings articulated by left-wing politicians, including Gregor Gysi, a leading member of the Left party, who has accused Merkel of supporting "fascists" in Ukraine's government, some still harbour warmth towards Russia.
Add strong business ties and a growing disillusionment with the United States since the snooping scandal exposed by former U.S. intelligence contractor Edward Snowden, and the result is a deep ambivalence among voters over Berlin's response.
Some 49 percent of Germans want Berlin to be a mediator between NATO and the EU and Russia, a poll by Infratest dimap showed this month. Only 45 percent think Germany should position itself firmly in the western alliance.
"The majority of Germans ... want to see themselves as between the West and Russia, as building a bridge of understanding," said Infratest pollster Reinhard Schlinkert.
They are reluctant to enter a geopolitical conflict with Russia which could drive up energy prices, he added.
Some polls have put support for economic sanctions at just 38 percent.
This is partly down to business. About 6,200 German companies deal with Russia, and bilateral trade totals some 76 billion euros. Economic sanctions, say firms, would hurt Europe's biggest economy.
But it's not all about money.
History plays a big part, especially in eastern Germany where criticism of NATO is harsher and where feelings are stronger that the West must reach an understanding with Russia.
Merkel may have surprised observers with her tough line against Putin but, like many Germans who grew up in the former Communist East, she speaks Russian and is fond of Tolstoy and Dostoyevsky.
Paradoxically, many East Germans are even grateful to former Soviet leader Mikhail Gorbachev for backing German reunification.
"(East Germans) are not applauding what Russia is doing in Ukraine, but they don't want a new conflict," said Alexander Rahr, head of the German-Russian forum in Berlin. He also advises oil and gas company Wintershall, owned by BASF.
But it is not only easterners who are urging restraint.
Several former chancellors, including Gerhard Schroeder and Helmut Schmidt, both Social Democrats, and Helmut Kohl, from Merkel's conservative Christian Democrats, have questioned the West's treatment of Putin and Russia.
Differences are also mirrored in Merkel's cabinet.
While conservative Defence Minister Ursula von der Leyen has called for economic sanctions, Social Democrat (SPD) Foreign Minister Frank-Walter Steinmeier has said he wants the focus to be on preventing a further escalation rather than sanctions.
Nevertheless, few observers expect Merkel to change tack given international pressure, especially as her popularity as chancellor is undented.
"(Merkel) is leader of Europe and is not going to risk all that by taking an appeasement position," said Rahr.
A further factor is a cooling of relations with the United States, West Germany's strongest ally in the Cold War. Now, many Germans are wary of policy being dictated by Washington.
"We should not just follow (the United States). We have our own policies," said Erika Fritz, 43, a Bavarian mother-of-two visiting Berlin's Checkpoint Charlie museum where the Berlin Wall divided Europe just 25 years ago.
Revelations of widespread snooping on Germans by U.S. spies have put paid to hopes of an upturn in relations with Washington under U.S. President Barack Obama after a lowpoint due to strong German opposition the 2003 U.S.-led invasion of Iraq.
Revelations from Snowden that Washington monitored Merkel's phone enraged many Germans who are sensitive to surveillance due to abuses by East Germany's Stasi secret police.
In an article in weekly Die Zeit entitled "How Putin divides", columnist Bernd Ulrich wrote that the surveillance scandal hit Transatlantic ties even harder than the Iraq war.
"If Russia's president now claims that he feels hard-pressed by the West, many of us are thinking: me too," he wrote. (Writing by Madeline Chambers; Editing by Peter Graff)