BERLIN, Sept 7 (Reuters) - Chancellor Friedrich Merz ruled out working with the Alternative for Germany on Monday after the far-right party surged into first place in state elections in Saxony-Anhalt, but he conceded the result had shaken his party "to its very foundations".
The AfD is appealing to lawmakers from Merz's conservatives to support its bid to rule the eastern state, in what would be the first time a far-right party takes power at state level in postwar Germany.
The anti-immigrant, pro-Russia AfD won nearly 44% of the vote, an outcome that underlined the deep unpopularity of Merz's ruling coalition and also triggered alarm among Germany's neighbours, France and Poland, and elsewhere.
However, the party — which wants to deport immigrants, halt support for Ukraine and restore ties with Moscow — fell short of an absolute majority in the state legislature, winning 39 of the 83 seats, and hopes to poach individual conservative lawmakers.
The election result could test the longstanding refusal of Germany's mainstream parties, including Merz's Christian Democrats (CDU), to work with the AfD, a policy known as the "firewall". The AfD says this is undemocratic.
"This shakes our party to its very foundations," Merz said, according to the Bild newspaper. "We are all deeply shocked," he added later at a press conference, describing the result as his party's worst election result in decades.
While sounding chastened, and vowing to try harder to connect with voters, Merz batted away suggestions that he might resign, saying he would broadly stick with his government's reform agenda.
Merz, whose own approval ratings have sunk to record lows, faces more state elections in the coming weeks and into next year, though he hopes his mix of reforms and higher spending in some areas will revive growth in Europe's largest economy.
Suggesting that the AfD win was cheered in Moscow, Merz characterised the current political moment as a fight for the survival of Western values. He also defended a decision, taken last year, to borrow hundreds of billions of euros to spend on defence, saying the unity of the NATO alliance was at stake.
"Giving up is not an option for me," he said.
The AfD's national co-leader Tino Chrupalla appealed to CDU lawmakers to make a "centre-right conservative majority" in Saxony-Anhalt possible.
"Partisan games really ought to be a thing of the past," he told German radio, referring to the firewall policy.
BSW PARTY A POTENTIAL PARTNER
The only German party that has signalled readiness to work with the AfD is the populist left-wing BSW.
The BSW shares the AfD's hostility towards mass immigration, which it says undermines local workers' rights, and also advocates for ending Germany's support for Ukraine and restoring ties with Moscow.
Both parties characterise sanctions on Russia as needlessly self-sabotaging, denying German businesses access to Russia's vast cheap energy resources on which Germany's export-driven economy was able to thrive for decades.
"Peace in Europe" was the second biggest factor driving which way people voted in Saxony-Anhalt, according to numbers from the ARD broadcaster. But Merz told reporters that the AfD's success was no reason to change course.
"I will not deviate by even a millimetre from my fundamental conviction that we must defend our freedom, especially now, against Russia," he said.
"If we stop supporting Ukraine, the situation will not improve by tomorrow, it will only get worse. The Russian leadership aims to destabilize the system of values underpinning what we once called 'the West', a system of values that is non-negotiable."
During the campaign, the AfD tapped into growing disillusionment with established parties, which it characterises as tired and out of touch, offering instead a range of hardline policies, a promise of cleaner and safer streets and a revival of national pride.
For some, there is also a nostalgia for life in the former communist-run East Germany.
'VERY, VERY WORRYING SIGNAL'
According to a breakdown of voters, the AfD was particularly popular among men, with 50% voting for the party compared to 39% of women. AfD voters also tended to be less economically secure and less educated.
Saxony-Anhalt is a relatively small state, and one of the poorest in Germany's former communist east, but Alice Weidel, the AfD's other national co-leader, hailed Sunday's result as a milestone and said her party aimed to win at least 40% in the next national election, due in 2029.
The AfD has been classified as right-wing extremist by the local office of Germany's domestic intelligence service, but it dismisses accusations of extremism as scaremongering and an insult to the party's millions of supporters.
While far-right leaders in Europe welcomed the result as a mandate for change, and U.S. billionaire Elon Musk cheered on the AfD from the sidelines, French Finance Minister Roland Lescure told RTL radio it "sends out a very, very worrying signal".
"This shows that we face a major challenge in the face of a populist wave which is spreading around the world today and which we must resist," said Lescure, whose own country holds national elections next year that could see far-right veteran Marine Le Pen become president of France.
(Reporting by Miranda Murray, Andreas Rinke, Benjamin Mejias, Gilles Guillaume, Pawel Florkiewicz, Kirsti Knolle; writing by Miranda Murray and Matthias Williams Editing by Gareth Jones)
