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Merkel Center-Right Hopes At Risk As Germans Vote

German Chancellor Angela Merkel (CDU) and Social Democratic Party (SPD) leader and Foreign Minister Frank-Walter Steinmeier prior to the fourth-ever televised German election debate, in Berlin on September 13.

German Chancellor Angela Merkel (CDU) and Social Democratic Party (SPD) leader and Foreign Minister Frank-Walter Steinmeier prior to the fourth-ever televised German election debate, in Berlin on September 13.

BERLIN (Reuters) -- Germans have begun voting in an election that looks likely to return Chancellor Angela Merkel to power but may deny her the center-right government she says is needed to revive Europe's largest economy.

Four years after taking power atop an awkward "grand coalition" with the Social Democrats (SPD), Merkel enjoys high popularity ratings and opinion polls give her conservatives a healthy eight- to 11-point lead over to their traditional rivals.

But after running a cautious campaign that was widely criticized for lacking passion and substance, Merkel's Christian Democrats (CDU) have seen their support dip in the final weeks and she is no longer assured of her coalition of choice with the business-friendly Free Democrats (FDP).

Should she fail to win enough support to team up with the FDP, she will probably be forced into the same uneasy right-left partnership she has presided over since 2005, dooming her plans to cut taxes and extend the lifespan of German nuclear plants.

Security has been tight after a series of Al-Qaeda videos last week threatened Germany with a "rude awakening" if voters back a government that keeps troops in Afghanistan. Some 4,200 German soldiers are stationed there as part of a NATO-led force.

Polling stations for Germany's 62 million eligible voters opened at 8 a.m. and first exit polls were due at 6 p.m. local time, although it could take some time for the result to become clear.

It may not be immediately apparent whether Merkel's conservatives have benefited from a quirk in German election rules and received what pollsters say might be up to 20 extra "overhang" seats in parliament -- gains that could tip the scales toward a center-right majority.

An estimated one in five voters were still undecided on the eve of the vote, increasing the chances of a surprise.

"It's going to be another close race," said Manfred Guellner, head of the Forsa polling group, whose survey on Friday showed Merkel just shy of a center-right majority.

Crucial Time For Economy

The election comes at a crucial time for Germany, which is just emerging from its deepest recession of the postwar era.

The next government will have to get a soaring deficit under control and cope with rising unemployment as the impact of 81 billion euros ($119 billion) in government stimulus fades.

Germany's fragile banks have reined in lending, sparking fears of a credit crunch. Longer-term, Berlin must find solutions to an aging population that threatens to send public pension and healthcare costs soaring over the coming decades.

In spite of these challenges, the German vote is not seen as a "Richtungswahl," or turning-point election, and the next government is unlikely to push for radical new policies, regardless of its make-up.

Unlike voters in the United States and Japan, Germans do not seem keen for change. Many are content with the steady "small steps" leadership of Merkel, Germany's first woman chancellor and only one to have grown up in the former communist east.

In her first term, she patched up relations with Washington after the strains of the Iraq war and won respect for brokering deals on climate change during Germany's dual presidencies of the European Union and Group of Eight in 2007.

At home, Merkel adapted her policies to the shape of her coalition, shelving plans for far-reaching economic reform that she advocated in her first campaign and focusing on traditional themes of the left, such as family policy and the environment.

Last year, her government was accused of reacting too slowly to the financial crisis.

But it then pushed through two successive stimulus packages, including a car-scrapping scheme that shored up German automakers and was later copied by the United States.

Despite successes over the past four years, some analysts fear a new grand coalition would be less stable and harmonious than the first, possibly even breaking apart prematurely.

"A revival of the grand coalition would be no more than a marriage of convenience, bound to fracture quickly," said Carsten Brzeski, senior economist at ING.

If the race is tight, pollsters say Merkel may benefit from a quirk in German election rules that could give her conservatives extra "overhang" seats in parliament and tip the scales toward a center-right majority.