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Germany's SPD names former finance minister as Merkel challenger

Designated top candidate of the German Social Democratic Party (SPD) for the 2013 German general elections, Peer Steinbrueck speaks during t
Designated top candidate of the German Social Democratic Party (SPD) for the 2013 German general elections, Peer Steinbrueck speaks during t

By Erik Kirschbaum

HANOVER, Germany (Reuters) - Germany's opposition Social Democrats (SPD) formally nominated former Finance Minister Peer Steinbrueck on Sunday as their candidate to run for chancellor against Angela Merkel in next September's election.

Steinbrueck promised a more just society and called for a united fight against Merkel's centre-right coalition in a speech aimed at winning over the hearts of the oft-divided centre-left SPD at a special party congress.

"The financial crisis showed that things have got out of balance in Germany, in Europe and in our society," said Steinbrueck, who wants higher taxes on the wealthy and a minimum wage that Merkel's Christian Democrats (CDU) firmly oppose.

Political analysts say Steinbrueck faces an uphill battle to defeat the popular Merkel and win the chancellorship the SDP last held under Gerhard Schroeder from 1998 to 2005. The SPD does have a strong chance of forming part of a new "grand coalition" including the CDU, analysts say.

"Germany needs more 'We' and less 'I'," said Steinbrueck, a towering man with a booming voice who served as Merkel's finance minister from 2005 to 2009 in a former "grand coalition."

"The gap is growing between rich and poor because of a growing number of under-paying jobs and because of our poorly financed towns and cities."

His 100-minute long speech was interrupted at the start by Greenpeace hecklers who managed to outwit the SPD's careful choreography and security guards to unfurl a banner behind the podium that read: "Did you rake in enough dough?"

The 600 delegates booed before the banner was hauled off the wall. Steinbrueck, who momentarily stood in stunned silence, has come under attack for earning 1.25 million euros ($1.6 million) as an after-dinner speaker during the last three years.

FIGHTING SPIRIT

Merkel is seeking a third term and opinion polls show the CDU, with its Bavarian sister party, the Christian Social Union (CSU), holding a steady 10-point lead over the SPD -- about 40 percent to 30 percent.

But the CDU/CSU's coalition partners, the Free Democrats (FDP), have fallen below the 5 percent threshold needed to win seats in parliament. By contrast, the SPD's preferred partners, the Greens, are polling around 13 percent.

Political scientists say a "grand coalition" with the CDU/CSU and the SPD is the most likely outcome. But a new CDU/CSU-Greens coalition or an SPD-Greens coalition like the one that led Germany from 1998 to 2005 are two other possible outcomes.

Steinbrueck, 65, has ruled out serving in another grand coalition, a fighting spirit that has endeared him to the party's grass roots who fear other SPD leaders appear overly eager to rejoin Merkel as junior partners.

"I don't just want a partial change of government," Steinbrueck said to loud applause. "I want an entirely new government. I want an SPD-Greens government for our country. I'm not available for any grand coalition."

Steinbrueck, who ran unopposed, was elected candidate with the backing of 94 percent of SDP delegates. He has never won election in Germany and lost his one campaign as state premier of North Rhine-Westphalia in 2005.

His campaign got off to a dreadful start in October and he initially lost poll support with his abrasive style and the row over his speaking engagements. Especially disliked by women voters, he spent months defending himself for high earnings.

A November ARD TV poll showed only 30 percent of Germans find Steinbrueck likeable, down 7 points since September, while Merkel's rating rose 9 points to 51. He fell three pegs to be ranked the country's sixth most popular politician.

BOUNCE BACK

But Steinbrueck, a centrist whose candidacy is supposed to help the SPD siphon away middle-of-the-road voters, has bounced back with energetic speeches and hard-hitting interviews.

Gerhard Schroeder, 68, and the other living SPD chancellor Helmut Schmidt, 93, were sitting in the front row on Sunday -- the first time both have appeared together at an SPD party congress since 1998. Both have endorsed Steinbrueck.

Schmidt and Schroeder ultimately ran into trouble with the powerful left wing - which is why they the two men kept their distance from the SPD after leaving office ahead of schedule.

Steinbrueck, who has lost weight in the two months since he was first picked to run against Merkel, tried to imbue a sense of optimism in his party.

"It's time for change," he said. "I want to be the next German chancellor and I want Germany to find a new social balance. I want change instead of standstill. We can do it."

(Reporting By Erik Kirschbaum; editing by Jason Webb)

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