Merkel faces left threat in German state votes

German Chancellor Angela Merkel waves to supporters during an election campaign rally of her Christian Democratic Union party CDU in Bonn August 25, 2009.

SAARBRUECKEN, Germany (Reuters) - A new left-wing alliance could sweep Chancellor Angela Merkel's Christian Democrats out of power in two German states on Sunday in regional polls seen as a gauge of voter sentiment before a federal election next month.

The centre-left Social Democrats (SPD) may join forces with the far-left "Linke," or Left party, to knock out CDU state premiers in Saarland and Thuringia, possibly giving the SPD their first new state leaders since 2001.

Pollsters project Merkel's CDU, which is leading the SPD in national polls by a 12-15 point margin, will hold power in a third state election in Saxony. The CDU also looks sure to win the most votes in Saarland and Thuringia but may still be ousted by SPD-Left coalitions.

The loss of Saarland and Thuringia would rattle nerves in the CDU, a party easily spooked after squandering big leads just before the 2002 and 2005 elections. Merkel could then face pressure to run an aggressive campaign less suited to her style.

Saarbruecken, a quiet university town near the French border and capital of the small western state of Saarland, does not look like the sort of place to shake up German politics.

But it could be the trigger for a radical realignment among Germany's biggest left-leaning parties ahead of the September 27 national vote.

Heiko Maas, SPD leader in Saarland, is mulling a coalition with the Left, a direct descendant of communist East Germany's ruling SED party which built the Berlin Wall.

It would be the first such coalition in western German and could pave the way for a more unified left bloc throughout the country.

FEARS OF A 'RED-RED' SAARLAND?

Maas told Reuters he would prefer a three-way alliance with the Greens and Free Democrats (FDP) to a "red-red" government with the Left and its leader Oskar Lafontaine, a former SPD chairman who ruled Saarland for 14 years but later split with the party and became its chief critic.

Hungry for power after 11 years in opposition, the FDP may be a catalyst for economic and fiscal reform if they forge a coalition with Merkel's conservatives after the federal vote.

But Maas, an easy-going, 42-year-old lawyer, is ready to take the step no SPD leader in western Germany has before -- joining with the Left to run a state government.

"There's a clear majority for a change in Saarland," he said after a campaign stop in the state of one million, which was once dominated by coal but has reinvented itself as a services and high-tech centre.

"The CDU and the FDP have not had a majority in any opinion poll for the last three years," said Maas, a triathlete and former state environment minister. "We're confident we can put together a coalition for change on Sunday."

The SPD controls five of Germany's 16 states, down from 11 in 1998. They last unseated the CDU in a state vote in 2001.

Maas's flirtation with the Left would have been tantamount to treason in the SPD two years ago and could still reverberate back to Berlin. Merkel's SPD challenger Frank-Walter Steinmeier has ruled out the "red-red" option at the federal level because of major differences on foreign and economic policy.

The Left and Lafontaine, who want German troops pulled out of Afghanistan and a radical redistribution of wealth, are loathed by many SPD members and cooperation in Saarland could come back to haunt Steinmeier in the national poll.

Merkel's conservatives are sure to seize on the issue and try to paint the SPD as irresponsible. But closer ties between the German left could ultimately pose a major threat to her party at regional and national level.

"She will try to exploit fears about 'red-red' in the west this time but in the long run it's a coalition option for the SPD that will have negative consequences for the CDU," said Oskar Niedermayer, a political scientist at Berlin's Free University.

"It will hurt the CDU and they'll have to consider other options."

(Editing by Noah Barkin and Michael Roddy)