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German Chancellor Angela Merkel’s coalition was defeated in its southwestern heartland and failed to win control of a second state as the anti-nuclear Greens vote surged to a record, forcing her to reassess energy policy.

The Greens are poised to enter the regional governments in Baden-Wuerttemberg and Rhineland-Palatinate after yesterday’s state elections conducted in the shadow of the nuclear disaster in Japan. In Baden-Wuerttemberg, the Greens are set to lead their first state administration, ejecting Merkel’s Christian Democrats from power in Stuttgart after 58 years.

The shift would grant the Greens sway over policy affecting a state whose economy is bigger than Belgium and Luxembourg combined, driven by companies such as Porsche AG, SAP AG and Daimler AG. It would also hand them control of Germany’s third- biggest utility, EnBW Energie Baden-Wuerttemberg AG, and its four nuclear plants just as the Japan crisis fans public fears over reactor safety.

“Merkel’s coalition in Berlin must take a huge slice of the blame” after voters’ “complete rejection of her nuclear policy and her leadership,” Hans-Juergen Hoffmann, head of the Psephos polling company, said by phone. “That a booming economy in the land of Daimler and Porsche played a backseat role in the region’s election is a turning point in the fortunes of the federal coalition.” […]

The Greens took a record 24.2 percent, while the Social Democrats, the main opposition party nationally, won 23.1 percent. The SPD, which also opposes nuclear power, said it is prepared to rule in coalition with the Greens.

“There won’t just be a changing of the guard in Baden- Wuerttemberg, there will be a change of politics,” Greens national co-leader Claudia Roth said in Berlin. It will be “a historic watershed in 31 years of Green history when we vote in a Green premier” in the state. “Let the future begin.” […]

With the CDU poised to lose Baden-Wuerttemberg, “Merkel may become a lame duck, nuclear power in Germany may become a memory,” Kit Juckes, head of foreign-exchange research in London Societe Generale SA, said yesterday in a note. “Sorting out Europe doesn’t get easier.”

Nationally, support for the Greens has surged since Merkel, reacting to the disaster in Japan, closed Germany’s seven oldest reactors for three months and suspended an extension of plant lifespans she pushed through last year pending safety checks.

“At the end of those three months, we will have to present a new energy policy,” said Peter Altmaier, the CDU’s deputy floor leader in the national parliament. Foreign Minister Guido Westerwelle, the FDP leader, said his party “understood” the message voters sent on nuclear policy. The issue is “something we really have to discuss” now, he said in Berlin.

About 250,000 people took part in demonstrations across Germany on March 26 calling for an end to atomic power, in what organizers said were some of the biggest anti-nuclear protests the country has ever seen.

A Greens-SPD win raises the chance of “an accelerated schedule for the permanent shutdown” of “some or all of Germany’s 17 nuclear reactors,” Mark Lewis, a Deutsche Bank AG analyst in Paris, said before the votes. “I don’t think the market has really grasped how deep the potential implications of these elections go.”

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