By Jan Schwartz
HAMBURG (Reuters) - Chancellor Angela Merkel's Christian Democrats suffered a crushing defeat in a regional election in the northern German city-state of Hamburg on Sunday that will make it harder for her coalition to pass laws.
The rout will cost the CDU three seats in the upper house, or Bundesrat. The unexpectedly large scope of the loss may cause Merkel and her conservatives further trouble at the national level with six further regional elections coming this year.
The CDU fell to 21.2 percent from 42.6 percent in the last election in 2008, according to an ARD TV exit poll. The drop of 21.4 points was the steepest decline ever between elections for the CDU and about five points worse than pollsters had forecast.
"It's an hour of helplessness for us," said the defeated CDU candidate for mayor in Hamburg, Christoph Ahlhaus.
The CDU was crushed because Ahlhaus was deeply unpopular and ran a poor campaign while the Social Democratic (SPD) candidate, highly regarded ex-Labour Minister Olaf Scholz, won back traditional SPD voters and moderates by making economic issues the focus of his campaign.
"The CDU has suffered a heavy defeat," said CDU general secretary Hermann Groehe, Merkel's deputy party leader.
The opposition SPD won 49.6 percent of the vote, up from 34.1 percent in 2008, ARD public television said. The SPD was projected to win 63 seats in the Hamburg state assembly, two more than needed for an absolute majority.
"It's an historic result not only for us but also for the others," said SPD chairman Sigmar Gabriel, referring to the CDU's record-breaking plunge. "It's an impressive result."
Hamburg is the first of seven state elections this year. The loss of three seats in the Bundesrat, which represents Germany's states, will make it harder for Merkel's CDU-Free Democrats coalition to pass federal legislation.
The Bundesrat has to approve about half of the legislation that passes through the Bundestag (lower house).
ANALYSTS SEE SHORT-TERM SPD GAIN
The drubbing in Hamburg, where Merkel was born, will also send a signal to voters before the other state votes, especially in the important southwestern region of Baden-Wuerttemberg where her CDU is also in danger of losing power in March.
Analysts believe the SPD nationally might get a short-term boost with a second consecutive state election victory following their May win in North Rhine-Westphalia. They said Merkel will now be forced to make more compromises with the SPD in Berlin.
"Merkel lost three Bundesrat seats but her position isn't in danger," said Gerd Langguth, a Bonn University political scientist. "It's the first election and the optical effect for the CDU is not good. They've got their work cut out for them."
Nils Diederich, political scientist at Berlin's Free University, agreed the upper house loss would hurt Merkel.
"The government will have an even tougher time getting laws through," he said. "Hamburg should be seen mainly as a regional result. They managed to win back an SPD stronghold."
Karl-Rudolf Korte, a political analyst at Duisburg University, told ZDF television the SPD would count on Hamburg's result having a knock-on effect elsewhere.
"The winners will be hoping this result will help mobilise their supporters in other states," he said.
The lopsided defeat comes at a difficult time for Merkel. Popular Defence Minister Karl-Theodor zu Guttenberg has been embroiled in a plagiarism scandal, allegations he has dismissed.
Bundesbank chief Axel Weber, seen as a key contender to lead the European Central Bank, said he would quit the German central bank, a decision that media interpreted as a blow to Merkel.
Hamburg, long a left-wing bastion, was ruled by the SPD for 44 years before it lost power to Merkel's CDU 10 years ago. Scholz, 52, purged the party of corrupt officials who cost it control in 2001.
The CDU plunged in Hamburg polls after its leader Ahlhaus, a colourless lawyer, took over from once-popular CDU mayor Ole von Beust, who abruptly quit in July. A CDU coalition with the Greens failed in November, prompting the elections.
(Writing by Erik Kirschbaum and Annika Breidthardt; editing by Mark Heinrich)
