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Chancellor Merkel faces challenges with nine months to go until election.
BERLIN, Jan 9 (Reuters) — Call her "Teflon Angie".
German Chancellor Angela Merkel is in the midst of what, on the face of it, should be one of her toughest stretches since coming to power in 2005.
The economy is in a tailspin, her cautious reaction to the financial crisis has been widely criticised. And this week she made the latest in a series of abrupt policy reversals, agreeing to include tax cuts in a new German stimulus package that as recently as last month she had argued was unnecessary.
But with less than nine months to go until the next federal election in Germany, Merkel's popularity remains high and her chances of a new four-year term look brighter than ever.
This strange dichotomy was highlighted in two new surveys from the Forsa polling group this week.
The first showed that 63 percent of Germans believe her government's stop-start response to the crisis has been inadequate. The second showed the lead of Merkel's conservatives over their chief rivals and coalition partners, the centre-left Social Democrats (SPD), rising to a robust 14 percentage points.
If the election were held now, the poll showed, Merkel would have enough votes to ditch the SPD and form her centre-right coalition of choice with the liberal Free Democrats (FDP).
A separate "Politbarometer" poll for ZDF public television on Friday showed Merkel leading Frank-Walter Steinmeier, her foreign minister and designated SPD challenger, 55 to 32 percent in a theoretical vote for chancellor.
In what has become a huge source of frustration for the SPD, bad news just hasn't stuck to Merkel -- a resilience reminiscent of the original "Teflon President" Ronald Reagan and Britain's "Teflon Tony" Blair, before Iraq hurt his image with voters.
"Merkel is what the Germans want — no more Wilhelm II and certainly no Fuehrer", or strong leader, Josef Joffe, publisher and editor of respected German weekly Die Zeit, told Reuters.
"They want somebody who rolls with the punches, doesn't impose her power and generally demands little from them."
That is a harsh, but in some ways apt, description of Merkel's performance over the past few months.
As her counterparts in Britain and France moved aggressively, in words and actions, to shore up their economies, she opted for a wait-and-see approach to the crisis that has led to a series of embarrassing reversals — first on a rescue for banks and recently on a second stimulus package and tax cuts.
Yet her political prospects look bright for a number of reasons, despite expectations that Germany will suffer its deepest recession this year since World War Two.
First, she has tied her own policy approach closely to that of SPD Finance Minister Peer Steinbrueck, making it difficult for her challenger Steinmeier and the broader SPD to openly criticise her without shooting themselves in the foot.
The fact that Steinmeier remains in her cabinet has also worked to her advantage. He is intimately tied to the government's policies and would risk turning off voters if he openly attacked Merkel.
As a result, he has been overshadowed and his repeated attempts to seize the initiative — like a clumsy offer to mediate a public row between German bishops and bankers over the causes of the financial crisis — have backfired.
"Merkel is popular because there is no one else," said Wolfgang Nowak, head of the Alfred Herrhausen Society, a Deutsche Bank think tank.
"Nobody is really challenging her. No one is criticising her. Even Steinmeier has to be friendly until just before the election."
Halting Merkel's momentum may prove difficult for the SPD in a year chock-full of regional votes that would appear to carry more risks for the centre-left party than the conservatives.
Merkel ally Roland Koch is widely expected to win an election in the state of Hesse later this month after voters turned away from the SPD and its repeated flirtations with a rising far-left party, "Die Linke" or The Left, that includes former East German communists.
In three other state votes that will take place before the federal election, it appears the only way the SPD can hope to oust Merkel's conservatives is by partnering up with the Left.
"Every victory of the SPD will be a poisonous one," said Nowak. "The more they work together with the Left at the regional level the more it hurts them nationally."
Against this backdrop, expect Merkel to sit tight and shy away from bold initiatives as her first term winds down.
Change-wary German voters have given their last four chancellors second terms and have a long history of backing incumbents in times of turmoil.
"What we've seen in this crisis is that Germans don't like bold action," said John Kornblum, U.S. ambassador to Germany under President Bill Clinton. "They are much happier with the cautious, step-by-step approach we've seen from Merkel."