Addressing her first party conference since she became chancellor last November, Merkel ticked all the boxes of her conservative supporters, saying the CDU had "rescued" Germany from the previous government of the left-leaning Social Democrats and Greens.

She aimed a dig at her predecessor as chancellor, Gerhard Schröder, who is currently plugging his political memoirs after he was forced to call early elections last year which he lost.

"We ended the red-green government before it was due to end. We chased Schröder out of public life, and prematurely. Let him travel through the country with his memoirs and have a good trip. Meanwhile, we are working for our country," Merkel said.

She admitted the CDU should have won the knife-edge election instead of being forced to accept an uncomfortable political marriage of convenience with the Social Democrats.

Nevertheless, the so-called grand coalition "has achieved more in its first year than many previous governments did in years," she said. And that, Merkel said, was thanks to the CDU. "Without us there would have been no steps in the right direction. But with us, with the Union, Germany is progressing."

Global challenges

The chancellor said the party's burning priority now must be to reform the social market economy -- without forgetting that profits must not be made at the expense of people's well-being.

Other comments that went down well with supporters were Merkel's assertion that multiculturalism in Germany had failed because integration had not been demanded of immigrants. And she reiterated the party's position that Turkey should be offered a "privileged partnership" with the European Union rather than full EU membership.

The speech appeared to strike a chord with party members and was rewarded with a six-minute standing ovation.

As Germany prepares to take over the leadership of both the Group of Eight most industrialized nations and the European Union in one month's time, Merkel urged the party to think globally. Where the challenges were once German, they now leaped beyond national borders, she stressed, recalling that Chinese President Hu Jintao said on a visit to India last week that the 21st century could belong to Asia.

"Globalization is not a natural catastrophe," Merkel said. "It can be shaped."

Appeasing frustrated party members

While Merkel was expected to easily secure re-election from the party later in the day, her speech was a clear attempt to quell the rumblings of discontent from grassroots members.

Rank-and-file supporters appear frustrated with the constraints placed on the CDU in the straitjacket of the coalition government.

Many members have also not forgiven Merkel for squandering a clear advantage in the polls leading up to last year's election. The party has lost 23,000 members in the past two years and surveys show that less than a third of the country currently backs the CDU -- their lowest score since 2000.

The pre-conference talk was dominated by a proposal from the leader of the industrial powerhouse state of North Rhine-Westphalia, Jürgen Rüttgers, to reform unemployment laws. Rüttgers has proposed that older workers who have paid into the unemployment insurance system for decades should be paid higher benefits than younger people without jobs.

The proposal -- significant in a country struggling with about four million unemployed -- has gained support from Merkel and looks set to be approved, although the chancellor has underlined that there is no guarantee it will be implemented by the government because the Social Democrats will oppose it.