Berlin - German Chancellor Angela Merkel has said that Egypt is a pivotal country in the Middle East and plays a key role in maintaining regional stability. Egypt has for long maintained peace with Israel, Merkel said in a speech in Berlin on Saturday, adding that Germany is acting to endorse a two-state solution. But Israelis and Palestinians should first sit down and talk with the support of neighboring countries, such as Egypt and Jordan, she noted. There is no other alternative to the two-state solution for peace to prevail, Merkel stressed. Berlin is also looking forward to achieving stability in Libya and is counting on Egypt to do so, the chancellor said. Without political stability in Libya, the influx of illegal migration and human trafficking will never stop, she added. Egypt has taken steps toward economic transformation, Merkel acknowledged, noting, however, that a big country as Egypt should make strides to be able to strike a balance between population growth and economic reform.