BERLIN (Reuters) - The reform communist Left party took power in a German state on Friday for the first time since reunification, ending a quarter century of conservative rule in Thuringia and raising the chance of a left-wing threat to Angela Merkel in the next federal vote.

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The Left, which traces its roots to the Socialist Unity Party (SED) that once ruled East Germany and built the Berlin Wall, will run the state southwest of Berlin with the centre-left Social Democrats (SPD) and Greens in a three-way coalition.

Thuringia voted in September in state elections which produced a close result, leading to protracted negotiations involving four parties. Eventually the three left-leaning parties agreed on a coalition and on Friday the state assembly elected the Left party’s Bodo Ramelow, a 58-year-old trade unionist from West Germany, as premier of Thuringia.

It is the first time these three parties have ruled together in one of Germany’s 16 states. If they succeed in Thuringia, they could decide to band together in the next national election in 2017 in an attempt to knock the chancellor’s conservatives from power.

The centre-left SPD, which rules with Merkel in a right-left federal “grand coalition”, has long refused to cooperate with the Left at the national level, largely because of the party’s foreign policy views, which include opposition to NATO.

Merkel, who had warned against a Left-led government in Thuringia, declined to comment on the result when asked at a news conference in Berlin, saying only that her party would respect it.

Vice Chancellor Sigmar Gabriel, the national leader of the SPD leader and a likely candidate for chancellor in 2017, denounced a rising national “hysteria” over Thuringia. “It’s nonsense” to think Ramelow wants to restore East German communism, he said.

Ramelow, who is often seen with his pet terrier Attila, was confirmed in a second round vote in the assembly in the state capital of Erfurt, after falling just shy of a majority in the drama-filled first round.

“We need reconciliation instead of division,” he said in an emotional speech to the 91-seat assembly. Ramelow is an unabashed backer of socialism and campaigned for September’s election with a bright red bust of Karl Marx at his side.

But he told the deputies of his long struggle to convince a friend who was a political prisoner in East Germany that the Left party was not the SED. Of the SED’s 2.3 million party members there are only about 16,000 in the Left.

The shadow of the Cold War has hung over the vote 25 years after communism in East Germany collapsed. Merkel’s conservatives had said a victory of the pro-Russia, anti-NATO Left party was an insult to the victims of communism.

Merkel, raised in East Germany, warned the SPD against letting itself be used “to carry Karl Marx into the state government”. An SPD and Left alliance represents the biggest threat to her winning a fourth term in 2017, if she runs again.