* Chancellor re-elected party leader with record 98 pct of votes
* Merkel says only CDU can steer Germany through “stormy waters”
* State election next month will set tone for federal vote
By Stephen Brown and Noah Barkin
HANOVER, Germany, Dec 4 (Reuters) - Germany’s conservative Christian Democrats (CDU) put on a show of total unity at a congress on Tuesday, re-electing Angela Merkel as party leader by a record margin as she prepares to fight for a third term as chancellor next year.
Merkel, at the height of her popularity, was returned as CDU chairwoman with 98 percent of votes from delegates who stood and applauded for nearly eight minutes after she praised Germany’s economic strength amidst the euro zone crisis and promised to fight for jobs and continued prosperity.
“These are turbulent times and sometimes we find ourselves in stormy waters. But it is the German CDU that has the clear direction to steer our country through these seas,” said Merkel.
She said repeatedly that hers was “the most successful government” since German reunification in 1990, a claim opposition parties have ridiculed but which her allies in Hanover cheered.
Merkel, a physicist and Lutheran pastor’s daughter from East Germany, has become a towering figure in the CDU, a party that before her had been dominated by men from western Germany.
One pin being given away at the congress pictured her with CDU legends Konrad Adenauer, West Germany’s first post-war chancellor, and Helmut Kohl, who led the country to reunification and was once Merkel’s mentor.
Merkel, known to colleagues as Mutti, or mummy, sent a reassuring message about where she would take Germany if she wins a third term, a feat accomplished only by Adenauer and Kohl.
She set out three main goals: equal opportunities for all, including immigrants; prosperity and job security with a legal minimum wage; and solidarity for the weaker elements of society, such as the elderly and depressed areas of the former East Germany.
Sarah Kohl, a 23-year-old student who was attending her first national party congress, credited Merkel with shielding Germany against the youth unemployment problems haunting other countries in the 17-nation euro zone.
“As a young person, I can say that I have no fears,” she said, likening Germany under Merkel to “a company that has a good boss - why should you change the management?”
“A leadership debate would be a sign that there is a leadership problem, but there isn‘t,” Defence Minister Thomas de Maiziere, one of Merkel’s closest allies, told Reuters.
Merkel has a good chance of winning a third term next September despite a sharp slide in support for her current coalition partner, the liberal Free Democrats (FDP).
In her speech, Merkel took a dig at the FDP, citing from a satirical magazine in joking that “God created the FDP just to test us”.
Conscious, however, that the CDU needs the FDP to retain power in a crucial state election next month in Lower Saxony, she also made clear that she believed her conservatives had much more in common with their current partner than the Social Democrats (SPD) or Greens.
Talk of a CDU-Green coalition has grown in the run-up to the congress, held in the capital of Lower Saxony to try to give a boost to local CDU leader David McAllister.
He is on track to win the biggest share of the vote but could still be pushed from power by the SPD and Greens, a result which could unsettle the CDU faithful before the federal election.
Merkel did not mention her top challenger, Social Democrat Peer Steinbrueck, by name but accused his party of being “obsessed with the past”.
MAC‘S BEHIND MERKEL
McAllister, whose father was Scottish and whose supporters waved banners that proclaimed “I‘m a Mac!”, said his state had record employment and solid finances thanks partly to the leadership from Berlin.
“Dear Angela Merkel, we thank you and stand as one behind you,” said McAllister, stressing the message of party unity.
A year ago, at the CDU’s last congress in the eastern city of Leipzig, the euro zone crisis was at a peak and people could speak of nothing else. At the time, Merkel warned that Europe faced its “toughest hour” since World War Two.
Now, thanks in large part to European Central Bank President Mario Draghi’s commitment to buy the bonds of stricken euro states, the crisis has calmed somewhat.
In Germany Merkel is widely applauded for having stuck to her principles, for example by resisting pressure for radical anti-crisis steps like the issuance of common euro zone bonds.
“I want the euro to come out of the crisis stronger than when the crisis began,” she told the party congress.
Last week she won a broad majority in parliament for plans in Europe to ease Greece’s bailout terms. Even an acknowledgment that Greece may yet need more help in the form of a writedown of European loans does not appear to have done irreparable damage.
In Hanover the CDU was more focused on containing internal rows on a range of domestic issues. Since she first came to power in 2005 Merkel has pulled her conservative, Christian party to the centre and attempted to modernise it.
That has left traditionalists grumbling over a push to give equal tax treatment to homosexual couples, boost pensions for mothers and introduce quotas for women on company boards.