* German centre left heads into Merkel-led government
* Grassroots SPD supporters to vote on coalition deal
* Congress reflects fears SPD will lose more support
By Stephen Brown
LEIPZIG, Germany, Nov 15 If you want to know how
rank-and-file Social Democrats (SPD) regard the prospect of
another 'grand coalition' government under Chancellor Angela
Merkel, look for the red hedgehog.
Listening to speeches at a party congress in Leipzig from a
stand emblazoned with their cute logo, four members of the "Over
60s Working Club" from the northern town of Schortens summed up
grassroots sentiment in one word: scepticism.
"We don't need a repeat of the last coalition," said Holger
Krahe. The SPD's reward for a 2005-2009 alliance with Merkel's
conservatives was their worst election result in the post-war
era - 23 percent. They only improved on that score by a few
points in this September's election.
Now the SPD is on the verge of repeating what many in the
party believe was a colossal mistake. From local activists like
Krahe to senior figures in the party, the mood here was a mix of
resignation and dread.
"You can't talk with the conservatives about what Germany
will be like in 10 years' time. They're not interested," said
one SPD heavyweight who may end up in Merkel's cabinet.
Chairman Sigmar Gabriel held onto his job but his lukewarm
reelection in Leipzig was a message from the 600 delegates, and
nearly half a million card-carrying members whom they represent,
to put the party's interests first in negotiations with Merkel.
The chancellor, reelected for a third term in September but
short of her own majority, wants a government by Christmas.
Her Christian Democrats and their Christian Social Union
partners from Bavaria have set up 12 working groups with the SPD
to seek compromises on a mind-boggling range of issues from
big-ticket economic and social policies to protection for bees.
Despite some tantrums by SPD negotiators timed to provide
headlines for Leipzig, the party has dropped one of its main
campaign promises, higher taxes on the rich, and there is slow
but steady progress in other areas like how to manage the switch
from nuclear energy to renewables.
But the final coalition agreement, which could total 150
pages or more, may end up in the bin if it is not approved by
about 470,000 SPD members in a ballot by early December, adding
uncertainty to a process that is already trying the patience of
Germany's European partners.
This being Germany, where politicians are expected to argue
the details of policy rather than just score points in
parliamentary debates, SPD members told Reuters they would not
decide how to vote until they had read the document.
"I honestly won't know how I'll vote until I've read the
coalition agreement," said Rita, a 29-year-old from the SPD
youth wing which tends to be more leftist than most of the
She was adamant, like most delegates, that the deal-breaker
was a legal minimum wage of 8.50 euros per hour across the
board. Merkel wants minimum wages to be set by sector, agreed
between workers and employers rather than politicians in Berlin.
But she may be forced to concede on this point.
Rita, who declined to give her last name, was also agitated
by suggestions that the SPD bigwigs' ambitions for cabinet posts
were driving the talks.
Party chairman Gabriel, a 54-year-old who was environment
minister in the last grand coalition and could get the
vice-chancellorship and a major ministry, denied this, telling
the party: "Keeping the SPD together is more important than
being in government!"
But the senior SPD politician who may join the government
said there was no choice: "Everybody knows what the alternative
is - a new election and a coalition of conservatives and
Convinced that members who read the agreement will accede,
SPD leaders are more worried about hardliners who dismiss a deal
out of hand. Delegates estimated their strength at anywhere from
10-30 percent of grassroots supporters, who could create trouble
by mobilising the "no" vote or denying a quorum.
One such person accosted a former minister on a railway
platform early one morning to say: "Negotiate what you like, but
I won't vote for it."
The SPD has marked its 150th anniversary with merchandising
like a bright red SPD toaster with the party logo popping out on
a piece of toast - an unfortunate choice, given the election
result which confirmed its sharp decline.
Supporters first blamed a clumsy campaign by Peer
Steinbrueck, who as a former finance minister under Merkel
proved deeply unconvincing to the party's left wing.
But on reflection, they know the reason millions of members
have left is the "Agenda 2010" economic reforms launched by SPD
chancellor Gerhard Schroeder a decade ago.
They turned the "Sick Man of Europe" into an economy accused
of being too competitive. But for a party which won 40 percent
of the vote in past decades, on equal footing with the
conservatives, the consequences have been disastrous. Many on
the left of the SPD, uncomfortable with the reforms, have
abandoned the party.
Economists now warn those hard-won gains in competitiveness
could be at risk if Merkel cedes too much to the SPD in terms of
pay, pensions and infrastructure projects.
"A grand coalition is not justified by big spending but by
big reforms," said Joerg Asmussen, a board member of the
European Central Bank and SPD member.
But the SPD is looking inwards, flailing right and left to
offer supporters some hope that the future holds more in store
than subservience to the cocksure conservatives.
Gabriel dangled the prospect of an SPD-led majority in 2017
with the far left - pariahs since German reunification - and the
Greens. The SPD, Left and Greens won a majority in the
Bundestag, the lower house, in September, but the SPD had ruled
out such a partnership before the vote.
Under the sign of the hedgehog, the SPD oldies dismissed the
hard left as "blockheads" and ruled out courting small-business
voters from the Free Democrats, who bombed out of parliament for
the first time after four years with Merkel.
With foreboding, they knew their party was heading for
another partnership with Merkel. They may end up winning few big
concessions beyond the minimum wage.
"We have to be realistic," said Renate Moegling. "We are the