* Popular Merkel on track for third term, but coalition
* Anti-euro party could doom her hopes of centre-right
* Trailing SPD loath to enter another 'grand coalition'
* Partners hoping for euro policy shift may be disappointed
By Noah Barkin
BERLIN, Sept 22 In the first German election
since Europe's debt crisis erupted four years ago, voters are
likely to give Angela Merkel a third term on Sunday, but may
force her into a coalition with her leftist rivals and catapult
a new anti-euro party into parliament.
The vote is being closely watched by Berlin's European
partners, with some hoping Chancellor Merkel will soften her
approach towards struggling euro states like Greece if she is
pushed into a 'grand coalition' with the Social Democrats (SPD).
But major policy shifts seem unlikely because the
centre-left SPD, whose campaign stalled after a gaffe-prone
start by its lead candidate Peer Steinbrueck, agrees with the
thrust of Merkel's approach even as it accuses her of weak
Voting is due to begin at 8 a.m. (0600 GMT) and the first
exit polls will be published at 6 p.m. (1600 GMT). Some 62
million Germans are eligible to vote. Roughly a third described
themselves as undecided in the run-up to the election, adding to
The most recent opinion polls show support for Merkel's
conservative bloc - her Christian Democratic Union (CDU) and the
Bavarian Christian Social Union (CSU) - around 39 percent, some
13 points ahead of the SPD, the second-biggest party.
That virtually guarantees that Merkel, whose staunch defence
of German interests during the crisis has sent her approval
ratings soaring over 60 percent, will stay on as chancellor.
In power since 2005, the 59-year-old Protestant pastor's
daughter from East Germany has presided over a robust economy
and booming labour market.
Her modest "step by step" leadership style is criticised
abroad but applauded by many at home, where she was cheered as
"Mutti", or Mum, on the campaign trail.
What remains unclear is whether Merkel will be able to
continue atop the centre-right government she has led for the
past four years. Her current partner, the business-friendly Free
Democrats (FDP), has seen its support slide from a record 14.6
percent in the 2009 vote to just 5 percent in recent polls.
Unless they perform better on election day, Merkel will
probably be forced to court the rival SPD, with whom she
governed in a right-left coalition between 2005 and 2009.
Voters abandoned the SPD after that experiment, and there is
deep resistance within the party to working with Merkel again.
Should the SPD refuse altogether, she could turn to the
environmentalist Greens. A more likely scenario is that the SPD
swallows its pride and agrees to talks, while demanding a high
price in return for entering government with Merkel.
The party could come away with top cabinet posts such as the
finance ministry and force the chancellor to accept key parts of
its platform, like a minimum wage and tax hikes on the wealthy.
"They will be the most difficult coalition negotiations
ever," predicted Frank Decker, a political scientist at Bonn
RETURN TO DMARK
The wild card is the Alternative for Germany (AfD), a
seven-month-old party that has seized on voter fears about the
cost of euro zone bailouts, for which Germany, Europe's largest
economy, underwrites the biggest share.
Led by a group of renegade academics, laywers and
journalists, the AfD wants an "orderly dismantling" of the euro
and says Germans should consider returning to the Deutsche Mark.
If it nudges above the 5 percent mark needed to enter
parliament, it will be the first new party in the Bundestag
since 1990 and the only one to favour a breakup of the euro, the
currency created in 1999 and now shared by 17 countries.
"If the AfD enters parliament, it will change the euro
debate in Germany," a close aide to Merkel told Reuters.
Should the AfD win seats, Merkel could be denied her
centre-right government of choice.
Speaking to 4,000 supporters at the Tempodrom arena in
Berlin on Saturday, she seemed to acknowledge that risk,
departing from script to urge voters to stand by the euro.
"A stable euro is not only good for Europe, it is crucial
for Germany as well," Merkel said. "It guarantees our well-being
and our jobs."
Juergen Kafke, a 63-year-old business consultant at the
rally, applauded the message, saying: "I'm concerned the AfD
could siphon away important votes from Merkel."
Steinbrueck, 66, a straight-talking former finance minister,
staged a final rally in Germany's financial centre Frankfurt,
telling a crowd of 7,000 it was time for a change.
"In 28 hours you can get rid of them, you can get rid of the
most backward-looking, incapable, loud-mouthed German government
since reunification," he said.
Even if Merkel is able to preserve her centre-right
government with the FDP, she will probably have to rule with a
much smaller majority in the Bundestag and deal with an
SPD-dominated upper house that could block major legislation,
Regardless of her coalition, she faces major challenges in a
new term, from bedding down her shift from nuclear to renewable
power to fending off a demographic crisis, and setting out a
vision for Europe, which may be past the acute phase of its
crisis but is still plagued by recession and unemployment.
"The next ruling coalition will have to spend considerable
time and energy convincing German citizens about the need to
further strengthen the euro, which may be particularly difficult
if new rescue packages push onto the political agenda," said
Daniela Schwarzer of the German Institute for International and