With Iran threatening to resume its nuclear program, Britain, France and Germany on Friday had offered Tehran a comprehensive package of incentives giving it access to "peaceful" nuclear power and economic and political aid.
The Iranian government wants to reopen its nuclear plant in Isfahan, which has drawn heavy criticism from the European Union and the United States.
Iran's newly elected fundamentalist president Mahmoud Ahmadinejad said Saturday that he would not be pressured by the West.
Schroeder said Sunday in a TV interview with German broadcaster ARD that if Iran maintained its hostile position, economic sanctions against the country were possible.
"But no one currently thinks about a military intervention," he said.
Germany's Foreign Minister Joschka Fischer, one of the key negotiators for the three European nations, said the Iranian nuclear program "makes no sense" if it were solely for peaceful purposes.