Germany's Steinmeier takes aim at Merkel on crisis

BERLIN Sat Oct 18, 2008 11:28am EDT

BERLIN (Reuters) - German Foreign Minister Frank- Walter Steinmeier won his party's support on Saturday to face Chancellor Angela Merkel in 2009 elections, saying Social Democrats could best curb excesses behind the financial crisis.

In a fiery speech to an SPD congress where 95 percent of delegates crowned him as their chancellor candidate, Steinmeier tried to link Merkel's conservatives to turmoil that compelled Berlin to launch a 500 billion euro rescue for its banks.

The SPD was forced into an uneasy "grand coalition" with Merkel's Christian Democrats (CDU) after narrowly losing the last federal election in 2005. It has spent the last three years racked by internal battles between the left and right wings.

"We're at the dawn of a new era," Steinmeier, 52, told 500 party delegates in high spirits at the congress in Berlin.

"This upheaval we're going through is the biggest change since the Berlin Wall fell. The rule of the free-market radicals that started with Margaret Thatcher and Ronald Reagan has ended with a big bang."

The financial crisis has transformed the German political landscape and the SPD, which favors a bigger state role in the economy than Merkel's CDU, hopes to profit.

The center-left party has found itself squeezed between Merkel's compassionate conservatism on the right and a rising new far-left party led by ex-SPD chief Oskar Lafontaine.

It is trailing Merkel's conservatives by double-digits in opinion polls less than a year before the September 2009 election.

In a bid to revitalize the party, unpopular chairman Kurt Beck was ousted last month, and the leadership handed to Steinmeier and party veteran Franz Muentefering.

"The time is ripe for the SPD," said Muentefering, who received the backing of 85 percent of delegates and replaces Beck as party chairman. "No one has the answers for the challenges of our times better than us."

CHEERS FOR IRAQ WAR STANCE

Former SPD chancellors Helmut Schmidt and Gerhard Schroeder had front row seats for the speeches. They were both captured on giant TV screens applauding Steinmeier's 88-minute address, which many SPD delegates called his best speech ever.

A former chief of staff to Schroeder, Steinmeier has never been elected to public office and was under pressure to show he has the combativeness for a grueling election campaign.

"People are looking to us to lead them through the crisis and we can do it," he said. "We've buried our differences. We believe in ourselves again and that's making us strong."

He attacked Merkel for poor leadership and drew applause pointing out Schroeder's staunch opposition to the U.S.-led Iraq war, a stance that helped him win re-election in 2002.

"At crucial times we have been the ones that provided the answers and that is true now as well," Steinmeier said.

He did not explicitly endorse demands from the SPD's left wing that the government launch a stimulus package to complement the bank rescue, but said new measures were needed to protect ordinary Germans from the turbulence that has forced bank bailouts and shaken stock markets across the globe.

"There's a bumpy road ahead of us. After the rescue shield for the banks, we need a protective shield for jobs," he said.

"The job's not done with the financial rescue. The crisis will hit the economy. How hard and for how long depends on us."

(Editing by Noah Barkin and Charles Dick)

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