Schroeder cloud hangs over German Social Democrats

BERLIN, Sept 2 (Reuters) Nearly two years after Gerhard Schroeder exited the political stage, his Social Democrats (SPD) are struggling to fill a void left by Germany's charismatic former leader and come to terms with his legacy of economic reform.

On Monday, leading party moderates will present a new book that defends the SPD's shift to the political centre under Schroeder -- a transformation party traditionalists blame for their 2005 defeat at the hands of Angela Merkel's conservatives.

The 340-page tome, entitled ''In Tune with the Times'', is a warning shot to party leftists who would prefer to disown Schroeder's policies at a high-profile SPD congress next month and return the party to its labour-friendly roots.

The debate is likely to heat up in the coming months as SPD leaders strive to reclaim political ground lost to both Merkel and the surging new Left party of SPD-defector Oskar Lafontaine ahead of key state elections next year.

''The polls show the SPD is not seen as the party of the small man anymore,'' said Gerd Langguth, a political scientist at Bonn University.

''They are split over whether to defend Schroeder's reform policies or move to the left. It is an extremely tough dilemma.'' The party's problems, which closely mirror the woes of France's struggling Socialists, begin with Merkel and the success she has had in overshadowing her junior partners in Berlin's awkward ''grand coalition'' of conservatives and SPD.

Merkel's clever stewardship of Germany's dual presidencies of the European Union and Group of Eight (G8) in the first half of the year won her admirers.

But her ability to co-opt traditional leftist issues like childcare reform, climate change and foreign takeover protections is what has thrown the SPD on the defensive.

LEADERSHIP VOID A Forsa survey last week showed that even traditional SPD voters preferred Merkel to her presumed SPD challenger in a hypothetical vote, with 45 per cent supporting the chancellor and only 28 per cent SPD Chairman Kurt Beck.

That poll highlights one of the party's other big problems -- its lack of strong leadership. This in a party that has in past decades boasted such powerful figures as Willy Brandt and Helmut Schmidt.

Much as President Bill Clinton's exit in 2000 left Democrats in the United States in disarray, so has Schroeder's departure exposed a glaring hole in the SPD.

Both were charismatic leaders who moved their parties to the centre and won elections on the force of their personalities.

But they also left in a cloud -- Clinton over the Lewinsky scandal and his controversial pardons, Schroeder because he joined Russian energy giant Gazprom weeks after leaving office -- and left rudderless parties to pick up the pieces.

On Monday, Foreign Minister Frank-Walter Steinmeier, Finance Minister Peer Steinbrueck and former SPD Chairman Matthias Platzeck will press the party to own up to Schroeder's policies.

They will point to the former chancellor's labour market reforms, now hailed as a key factor behind Germany's robust two-year old economic recovery, and his modernisation of the country from a cultural, social and foreign policy perspective.

''The Schroeder government's forceful modernisation drive was a good start,'' the three write in the book's introduction. ''It brought us Social Democrats back in touch with reality.'' Weakened SPD Chairman Kurt Beck will be conspicuously absent from the presentation in what is perhaps a sign of the leadership struggle to come.

REUTERS PDT KN1742