Last December, the German Social Democratic party (SPD) gathered in Berlin for its biannual party congress. It was a vital gathering of the party faithful ahead of the next federal elections in 2013. The party leadership, in turn, was faced with a key strategic choice: would it use the congress mainly to celebrate its new-found unity and recent rise in the polls, or would it seek to seriously challenge its own troops and raise uncomfortable questions about the party's programmatic renewal?

The good health of the SPD and the confusion around the ideological direction of Angela Merkel's ruling centre-right government seemed to invite, if not demand, the latter. The SPD leadership, however, shied away from any serious controversy and decided to opt for the former.

Since the historic defeat in the 2009 elections, where the SPD only scored a shocking 23%, its powerful and rhetorically brilliant chairman Sigmar Gabriel – a former environment minister and premier of Lower-Saxony – has injected new confidence and self-esteem into a party that was in a demoralised and rudderless state when he took over. The SPD, now hovering around the 30% mark, performed well overall in last year's regional elections, and with a strong Green party (at around 15%), a centre-left majority is currently looming in 2013. Confidence has grown to such an extent that the SPD has already publicly ruled out any formal co-operation at federal level with the populist leftwing party Die Linke.

Two largely tactical moves explain the SPD's recovery: first, Gabriel has so far resisted any major lurch to the left and has presented his party as a moderate change-maker and a self-correcting force. No fully fledged attack on wealth; no anti-business rhetoric; no wavering on fiscal prudence; no excessive social promises. Instead, he has steadied the ship with a few modest proposals – including a higher top income tax rate and measures that soften the rise in the pension age – aimed at holding together a diverse social democratic family. That's no easy task given the deep splits that exist between socio-economic conservatives and liberals, between cultural cosmopolitans and communitarians, and between political traditionalists and modernisers.

Second, Gabriel has successfully masked his own unpopularity with the German electorate by siding with two reputable figures: former finance minister Peer Steinbrück and former foreign minister Frank-Walter Steinmeier – both are liked by the public and seen as centrist reformers and common-sense politicians operating above party politics. Together, they now form a so-called "troika", which is supposed to give the SPD an aura of reliability and competence in times of economic uncertainty.

All three are considered to "have what it takes" to be the SPD chancellor candidate, while offering complementary qualities and expertise. No wonder many in the party want to wait as long as possible for the official coronation, now set for early 2013. The choice of candidate may well depend on the political issue of the day.

Yet will it be sufficient to oust Merkel, who, after the total collapse of her coalition partner (the liberal FDP), has invested all her political capital and energy in battling the eurozone crisis? Poll after poll shows that the German public approves of her handling of and approach to the crisis – latest figures show her popularity reaching a two-year high. The reasons for such a strong showing may above all be instinctive rather than rational: many Germans remain fearful of inflation and suspicious of financial markets. They value a rules-based system based on fiscal responsibility, and have bought her line that profligacy and complacency in Europe's southern countries are partly, if not fully, to blame for the euro's woes. Much of the EU's response follows from this.

The SPD, only too aware of these sentiments, has therefore taken a rather cautious line, criticising her more on process than substance – unlike France's leading contender François Hollande, who dared to openly attack the European consensus on the "fiscal compact" and promised renegotiation. To be sure, the SPD positions itself as a resolutely pro-European party, arguing for economic convergence, partial social and tax harmonisation, or debt mutualisation, for example in the form of eurobonds. But the difference in tone and determination between the SPD and Hollande's Parti Socialiste is striking.

What both parties share, however, is a lack of a credible blueprint for a new social democracy within the constraints of European integration and 21st century globalisation. If traditional nation-state social democracy has passed its heyday, what is the centre-left's distinctive political offer? As the search goes on, projecting an aura of competence and reliability seems the best bet. But while in France this could prove enough for a socialist candidate facing a highly unpopular president, for German Social Democrats the prospects are far less clear. The missed opportunity of the Berlin congress could well come back to haunt them.

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