By Stephen Brown and Noah Barkin
HANOVER, Germany (Reuters) - Angela Merkel launched her re-election campaign on Tuesday at the height of her popularity, with a speech to a congress of her conservative Christian Democrats that showed off the party unity she will need to prevail in next year's vote.
Delegates stood and applauded for eight minutes after Merkel told them they were the only party that could steer Germany through the "stormy waters" of economic crisis and geo-political change.
With approval ratings near 70 percent, the 58-year-old chancellor struck a triumphant tone at the party congress in Hanover, repeating that hers was the "most successful government" since German reunification in 1990.
"These are turbulent times and sometimes we find ourselves in stormy waters. But it is the German CDU that has the clear direction to steer our country through these seas," Merkel said.
Merkel, a physicist from East Germany who has become a towering figure in a traditionally West German party, wants to beat the score of just over 90-percent of votes by which she was last re-elected as party chairman two years ago.
Often criticized abroad but feted at home for defending her country's interests in the euro crisis, Merkel has a good shot at winning a third term next September despite a sharp slide in support for her current coalition partner, the liberal Free Democrats (FDP).
"Maybe God created the FDP just to test us," she said in a rare public dig at the party which polls show could fail to make the 5 percent mark next year that it needs to remain in the Bundestag lower house.
This may force her to consider other options like reviving the "grand coalition" with the Social Democrats (SPD) she ran between 2005 and 2009, or trying an unprecedented alliance with the Greens.
Talk of a "black-green" coalition, named for the parties' respective colors, had grown in the run-up to the congress, held in the capital of Lower Saxony where a state election next month could set the tone for the federal vote next autumn.
MAC'S BEHIND MERKEL
The CDU under regional leader David McAllister is on track to win the biggest share of the vote but could still be pushed from power by the SPD and Greens. This could damage Merkel's hopes of reelection as her party has lost control of a handful of states since 2009.
McAllister, whose father was Scottish and whose supporters waved banners that proclaimed "I'm a Mac!", said his state had record employment and solid finances thanks partly to the leadership from Berlin.
"Dear Angela Merkel, we thank you and stand as one behind you," said McAllister, stressing the message of party unity.
Merkel said any one of the challenges she has faced since being elected to a second term in 2009 - the debt crisis, unrest in North Africa and the Middle East, a U-turn on nuclear power - would have been enough for an entire four-year term in office.
A year ago, at the CDU's last congress in the eastern city of Leipzig, the euro zone crisis was at a peak and people could speak of nothing else. At the time, Merkel warned that Europe faced its "toughest hour" since World War Two.
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 warned in her speech against complacency, saying she was "very cautious" about declaring an end to the worst of the crisis.
In Germany 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.
"I want the euro to come out of the crisis stronger than when the crisis began," Merkel told the party congress.
Last week, she won a broad majority in parliament for Europe's plan to ease the terms of Greece's bailout. Even her acknowledgment this weekend that further relief for Greece may be needed, possibly in the form of a write-down of European loans to the country, does not appear to have done irreparable damage.
At this congress, the CDU is more focused on containing internal rows on a range of domestic issues. Since she first came to power in 2005 Merkel has pulled her conservative-minded, Christian party to the center 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.
(Additional reporting by Andreas Rinke and Thorsten Severin; Writing by Noah Barkin and Stephen Brown; Editing by Peter Graff)
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