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BERLIN (Reuters) - Angela Merkel's center-right coalition seemed dangerously close to rupture when her Free Democrat (FDP) partners defied the chancellor and backed an opposition candidate for the German presidency, coalition sources said Monday.
Conservative leaders warned the FDP Sunday there would be "serious consequences" - language party officials understood to mean the end of the coalition - if they refused to drop support for former East German rights activist Joachim Gauck, the sources told Reuters. But the FDP did not blink and it was Merkel who ended up backing down and agreeing to support Gauck, whose candidacy she had publicly opposed in 2010.
"It was indeed quite serious," said one senior conservative source close to Merkel.
Merkel's own spokesman, Steffen Seibert, and other conservatives have tried to play down the suggestion the coalition was on the verge of breaking apart.
Merkel's retreat kept her center-right coalition together but the episode appears to have seriously poisoned relations and may herald more tensions in the run-up to next year's general election, possibly over euro zone rescue efforts.
Merkel's Christian Democrats (CDU) and their Christian Social Union (CSU) sister party have run roughshod over the FDP since the coalition was formed in 2009, confident the liberal party -- whose support has plunged to 2 percent in opinion polls -- would swallow anything to avoid new elections.
When the FDP surprisingly drew a line in the sand over the coalition's candidate to replace Christian Wulff, a hand-picked Merkel choice for president who resigned Friday over a financial favors scandal, the conservatives switched to hardball tactics, according to sources in the FDP.
"They were caught off guard when we came out for Gauck," said one senior FDP source. "Merkel and others warned about 'consequences', which we all understood to mean a threat to end the coalition (and call new elections)."
One source said Bavarian premier Horst Seehofer of the CSU had even threatened the FDP's leader in the state, Justice Minister Sabine Leutheusser-Schnarrenberger, with an end to their ruling partnership in the southern region if the party refused to reverse.
Merkel spokesman Seibert played down the row at a news conference Monday when asked if the government had come close to breaking point. Gauck will now likely be elected at a special session of the Federal Assembly set for March 18.
"You don't need to worry about the coalition, its composition or about the government in general," he said, not answering the question directly while describing the decision to back Gauck as a "good result" for government and the country.
But opposition parties seized on the episode as another example of mistrust within Merkel's coalition.
"The trust between the Soviet Union and United States during the darkest days of the Cold War was greater than the trust between the CDU/CSU and the FDP right now," said Greens leader Cem Oezdemir.
Wolfgang Kubicki, the leader of the FDP in Schleswig-Holstein, a state where a crucial election will be held in May, said the confrontation showed that his party was no longer inclined to rubber stamp decisions by Merkel's conservatives.
"A coalition doesn't work when the conservatives make the calls and the FDP has no say in the matter," Kubicki told Reuters.
Gauck, 72, was nominated by the opposition Social Democrats (SPD) and Greens in 2010 and supported by a majority of Germans for the presidency. But Merkel defied public opinion and pushed Wulff into the post.
The German president has no power over policy, but those who have held the post have striven to be a moral compass for the nation and some have influenced political debates through their speeches.
Political scientists said the Gauck decision was a major defeat for Merkel and an improbable victory for the FDP, which after two years of humbling setbacks might now feel emboldened to flex its muscles on other issues.
The German parliament is due to vote on a second aid package for Greece on February 27 and months later on the establishment of a new permanent rescue facility for the bloc, the European Stability Mechanism (ESM).
"The coalition would have been finished if Merkel didn't cave in," said Gero Neugebauer, political scientist at Berlin's Free University. "It was a risky strategy by the FDP. They were afraid Merkel was going to cut a deal with the SPD or Greens over their heads. The FDP can't afford new elections now but they knew that Merkel can't afford them either."
A number of Merkel allies criticized their FDP coalition partners in unusually harsh language Monday, even as they acknowledged that the conservatives had not treated the FDP with the utmost respect in recent years.
Finance Minister Wolfgang Schaeuble has made life particularly difficult for the FDP by repeatedly blocking the party's demands for tax relief, the main pledge of their 2009 election campaign.
"To be fair, we have to acknowledge that we've treated the FDP quite poorly on a number of occasions," said one senior CDU official close to Merkel. "The FDP got a bit of revenge."
But other Merkel allies were less gracious.
Michael Kretschmer, a lawmaker from Merkel's CDU, spoke of a "massive breach of trust" by the FDP that would have serious consequences for future cooperation. Bavarian Finance Minister Markus Soeder of the CSU accused the FDP of "extortion" in comments reported by the Bild newspaper.
If Merkel had not backed down and agreed to support Gauck, she would have faced a fight with opposition parties and within her coalition that might have become a major distraction in the midst of the debt crisis.
Gauck, a Protestant pastor, was a leading figure in the peaceful protest movement that led to the fall of the Berlin Wall and set the stage for the reunification of Germany in 1990.
After the Wall fell, he ran the state-run archives on the Stasi, earning recognition for exposing the crimes of the East German secret police.
Additional reporting by Andreas Rinke and Alexandra Hudson; writing by Erik Kirschbaum; Editing by Noah Barkin