State vote seen boosting tensions in Merkel govt

By Noah Barkin and Sylvia Westall

BERLIN (Reuters) - German Chancellor Angela Merkel's conservatives retained power in a regional election in Hamburg on Sunday which also dealt a blow to the Social Democrats (SPD) and could heighten tensions in Berlin's "grand coalition".

Preliminary results showed Christian Democrat (CDU) Premier Ole von Beust, who has ruled the northern port city since 2001, with 43 percent of the vote, down from 47 percent four years ago, but a stronger result than polls had indicated.

He looks sure to lose his absolute majority in the state parliament and will now look to forge a coalition with either the Greens or possibly the SPD, which scored 34 percent.

Merkel, who has presided over a robust economy, remains popular two years after narrowly beating Gerhard Schroeder and taking power atop an awkward CDU-SPD national coalition.

Her Christian Democrats have seen their support dip in three straight regional elections this year, but their longtime rivals, the SPD, look much weaker and SPD Chairman Kurt Beck could come under pressure after the Hamburg result.

Trouble in the SPD could bring more sniping within Merkel's government in the run-up to the next federal vote in 2009, although few people think the coalition will break apart.

"The grand coalition will continue but relations will get nastier," said Gerd Langguth, a political scientist at Bonn University.

Heightened tensions would make it more difficult for Merkel to push through tax and labor market reforms that economists say are crucial for shoring up an economy facing threats from a strong euro, financial market turbulence and a U.S. slowdown.

LEFT GAINS

The rising Left party, a group of ex-communists and SPD deserters whose appeal appeared limited to poorer eastern regions until last month, are a major reason for the SPD's woes.

The Left scored 6.5 percent in Hamburg to enter its fourth state parliament in the west, following strong performances in the states of Hesse and Lower Saxony last month.

"Now they are established," said Hajo Funke, a political scientist at Berlin's Free University. "There is now going to be debate, especially in the SPD, about how to relate to the Left."

The SPD has ruled out cooperating in Hamburg with the Left, which is run by Oskar Lafontaine, a fiery ex-finance minister who bolted the SPD and is now despised by much of his old party.

But over the past week, SPD Chairman Beck has been flirting with the idea of using Left party votes to help the SPD seize power in Hesse after a deadlocked vote there in January.

This may have alienated the SPD's more moderate base in Hamburg, a city of contrasts which is home to some of Germany's wealthiest people but also a sizeable immigrant community and blue-collar workforce thanks to its port and big Airbus factory.