By Sarah Marsh and Thomas Escritt
BERLIN (Reuters) -The euphoria of German Chancellor Olaf Scholz's Social Democrats at their regional election win over the far-right faded on Monday as the party faced the sobering realisation that it would need the help of a pro-Russian populist party to govern.
The SPD came first in its traditional stronghold of Brandenburg, winning 31% thanks to tactical voting against the far-right.
But its win did not mask the continued surge in support for populist parties on both sides of the political spectrum which is threatening political stability in Europe's largest economy.
The far-right, with which other parties refuse to form a coalition, hit a record high of 29%, driven by the youth vote, while three mainstream parties that the SPD would traditionally consider governing with performed dismally.
That makes a kingmaker of the leftist Sahra Wagenknecht Alliance (BSW), which took third place just nine months after launching - an awkward reality for the SPD given the BSW's demand that any partner should back urgent Ukraine peace talks and oppose installing U.S. long-range weapons in Germany.
The AfD and BSW, which are both anti-NATO, Russia-friendly, and anti-migration, are both stoking and capitalising on worries about a cost-of living crisis, irregular immigration and a belief that Germany's sending of weapons to Kyiv is prolonging the war that Russia started.
Most of these topics, but especially the question of support for Ukraine, are federal matters far removed from regional governments' remits.
"Political stability will not be easy to achieve," said incumbent SPD Premier Dietmar Woidke.
The Greens and liberal FDP both fell at the 5% hurdle needed to get into parliament, while the conservatives sagged to fourth place on just 11.4%. An SPD-conservative coalition would end up one seat short of a majority in the regional legislature.
"This confirms the trend in two earlier elections this month where the political centre, at least in Germany’s east, can no longer form a government without the help of radical forces on the left and right," political risk consultancy Eurasia Group said in a note, adding that this would give both extremes more "agenda-setting power".
The BSW is also destined for a key role in two other eastern states where mainstream parties are all but certain to need their votes to govern if they stick to their determination not to work with the surging AfD.
REPRIEVE FOR SCHOLZ
The result will likely give Scholz only a brief respite from a debate within the SPD over whether he is the right person to lead the party into next year's federal election. Critics say his leadership is hesitant and his communication awkward.
Three-quarters of the SPD's voters in Brandenburg were not motivated by conviction but wanted to fend off the AfD, according to broadcaster ARD's exit poll. Turnout stood at a record 72.9%.
Woidke kept his distance from Scholz, Germany's least popular chancellor ever, during the campaign and criticized the federal coalition's policies and constant bickering.
The SPD is polling just 15% at national level, down from 25.7% in the 2021 federal election. That is behind the AfD on around 20% and the opposition conservatives on 32%.
Last week, the mayor of Munich, Germany's third largest city, was the latest SPD party politician to suggest it should consider fielding the popular Defence Minister Boris Pistorius, 64, as its candidate for the 2025 elections.
Party insiders however say Scholz, 66, who already announced his intention to run for a second term, is unlikely to step aside.
Party co-leader Lars Klingbeil said on Monday it stood firmly behind Scholz for a second term.
Yet governing is not likely to get any easier for Scholz with the dismal results for his junior coalition partners, the Greens and the pro-business Free Democrats, potentially further stoking tensions in Berlin.