By Noah Barkin
HANOVER, Germany (Reuters) - Angela Merkel kicks off her re-election drive on Tuesday at a congress of her conservative Christian Democrats (CDU), where the chancellor will be feted like a star for defending German interests in the euro zone crisis.
At the peak of her popularity, with approval ratings close to 70 percent, Merkel appears to have a good shot at winning a third term next year despite a precipitous slide in support for her current coalition partner, the liberal Free Democrats (FDP).
However, nine months before the general election, the FDP's collapse has forced her to consider other options, including allying with her leftist rivals, the Social Democrats (SPD) or an unprecedented tie-up with the environmentalist Greens.
Talk of such a "black-green" coalition, named for the parties' respective colors, has dominated media coverage in the run-up to the CDU congress. It is being held in Hanover, capital of Lower Saxony, where a state election next month could set the tone for the federal vote scheduled for September.
The local Christian Democrats, led by loyal Merkel ally David McAllister, are expected to take the biggest share of the vote but could still be pushed from power in Hanover by the combined SPD and Greens - a result which would rattle the CDU faithful and cast a cloud over Merkel's hopes of another term.
At the congress in the city, the party is determined to send a message of unity and confidence that carries into the Lower Saxony vote and into the big national test nine months later.
That begins and ends with Merkel, the 58-year-old physicist from East Germany who will try to rally CDU delegates with a speech on Tuesday and beat the score of just over 90-percent by which she was last re-elected as party chairman two years ago.
"It will be a big Merkel show," said Gerd Langguth, a political scientist at Bonn University and biographer of the chancellor.
"Calling it a cult is too much, but she is very popular in the broader population. In the CDU, she is more respected than loved."
EURO DEBATE FADES
A year ago, when the CDU held its last congress in the eastern city of Leipzig, the euro zone crisis was at a peak and people could speak of nothing else.
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.
Merkel cannot claim much credit for the easing of the crisis. Her cautious step-by-step leadership has been criticized by many outside of Germany.
But at home, she 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.
Last week, she won a broad majority in parliament for Europe's plan to ease the terms of Greece's bailout. And even her admission this weekend that further relief for Greece may be needed, possibly in the form of a writedown of European loans to the country, does not appear to have done irreparable damage.
At the congress, the CDU will be more focused on containing simmering rows on a range of domestic issues. Since coming to power in 2005, Merkel has pulled her conservatively-minded, Christian party to the left and attempted to modernize 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. Merkel has ended up siding with the conservative wing on most of these issues, in turn angering modernizers who want faster change.
But few expect these internal debates to distract the party from their main focus - celebrating their leader with all the pomp and spectacle of a U.S. presidential convention.
"She has no competitors within the party any more," said Mike Mohring, a CDU leader in the eastern state of Thuringia.
"That means policy debates are no longer colored by a behind-the-scenes battle for power. Everything is much calmer."
(Additional reporting by Stephen Brown and Andreas Rink; Writing by Noah Barkin; Editing by Alastair Macdonald)
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