* Merkel is stepping down as CDU leader
* She wants to remain chancellor until 2021
* Kramp-Karrenbauer, Merz fight CDU leadership battle
* She is a pragmatist, he pledges reforms
By Paul Carrel
DUESSELDORF, Germany, Nov 30 (Reuters) - The race to succeed Angela Merkel as leader of Germany's ruling conservatives, and take pole position to succeed her as chancellor, is going down to the wire.
Two frontrunners have emerged with opposing visions for the Christian Democratic Union (CDU) since Merkel said last month she would step down as party chief following a regional election setback.
One is Annegret Kramp-Karrenbauer, a Merkel protege seen as the candidate of continuity. The other is Friedrich Merz, a long-time Merkel rival who promises more radical change.
The outcome of the vote for a new leader at a party congress on Dec. 7-8 is crucial not only for the CDU, which governs in a three-party coalition, but also for the future of the European Union's dominant country and biggest economy. Merkel remains chancellor but whoever takes over the CDU is likely to be its candidate in the next federal election, due by October 2021.
Kramp-Karrenbauer, who was leader of the state of Saarland for nearly seven years, leads in polls of party supporters. But Merz, who is returning to politics after a decade in business, is a close second and is backed by CDU members who want an end to Merkel's consensual politics and love of compromise.
In the sixth of eight debates before the CDU congress in Hamburg, it was Merz who captured the 4,000-strong audience this week in the western city of Duesseldorf, capital of his home state, North Rhine-Westphalia.
Lamenting a slide in opinion polls for the CDU, he wooed the crowd by pledging: "We must resist this trend, we must stop it and we must reverse it."
In a dig at Merkel's style of politics, he said: "We haven't taken clear positions."
Kramp-Karrenbauer, 56, was at a disadvantage on Merz's home turf and received only polite applause. But she has been scoring points by presenting herself as more in touch with the public than her rich opponent, derided by media for describing himself as "upper middle class" rather than upper class.
"I'm not sure that becoming a millionaire is really the purpose of life," she said last week.
She also said she used to play rock group AC/DC's raucous song Highway to Hell "nice and loud" while on her way to parliamentary debates and alone in her car.
Merkel, 64, said when she stepped down as party leader that she wanted "to open a new chapter" and that her current, fourth term as chancellor would be her last.
Merkel has come to dominate European politics since she first became chancellor in 2005, but her authority was dented by recent regional election setbacks and a close ally losing his role as leader of her conservatives' parliamentary group.
She has also lost popularity over her decision in 2015 to open Germany’s doors to migrants fleeing war in the Middle East and Africa in 2015.
Merz and Kramp-Karrenbauer lead a field that also includes Health Minister Jens Spahn, though he trails a distant third in polls. Their fate will be decided by 1,001 CDU delegates.
Merz led the centre-right's parliamentary group from 2000 to 2002 but lost out to Merkel in a power struggle in 2002 and has not held a seat in the Bundestag since 2009.
Merz says he respects Merkel and would work well with her if he won the vote. A self-declared "free-trade man" who heads the German arm of the U.S. investment fund BlackRock, Merz said earlier this month Germany should "contribute more" to the EU as it benefits from a euro that is "too weak for our economy".
Last week, he raised an outcry by questioning Germany's constitutional guarantee of asylum to all "politically persecuted", which was enshrined in the 'Basic Law' to atone for World War Two Nazi crimes.
He also criticised the CDU for watching with just a "shrug of the shoulders" as the anti-immigration Alternative for Germany (AfD) entered state assemblies and the Bundestag.
The euro comments strayed from the mainstream political consensus in Berlin, but the comments on asylum and the AfD played into Kramp-Karrenbauer's hands.
Describing his comments on the AfD as "a slap in the face" to all those in the CDU who worked hard to combat the far-right party, she said: "It is naive to pretend you can just say or decide something and then the fight against the AfD is won."
Her approach to politics, she added at the weekend, was: "A policy of an iron fist in a velvet glove."
Sometimes referred to as AKK or "mini Merkel", she has a track record of winning state elections and forming coalitions in Germany's fractured political arena. But on what lies ahead for the CDU, she says: "I have no particular recipe."
Kramp-Karrenbauer's trump card is her record as former state premier in Saarland, where she led a broad coalition with the Greens and pro-business Free Democrats - a potential plus as three-way alliances could become more common in Germany if no single party can dominate.
Most of the CDU delegates who will vote on the new leader are career politicians - lawmakers, mayors or councillors - who are usually pragmatic. This could work in her favour as someone who has risen through the CDU's ranks to the role of general-secretary of he federal party, based in Berlin.
But Merz will also benefit from the fact that 296 of the delegates at the congress -- almost 30 percent -- will be from his home state.
"I'm for Merz because he address problems clearly," one CDU member, 58-year-old Bernd Hohaus, said after listening to the leadership candidates in Duesseldorf on Wednesday evening. "We don't have to please everyone."
Ute Gremmel-Geuchen, an organist from nearby Kempen, also sees Merz as "very convincing."
"Mrs Kramp-Karrenbauer has experience -- but in the Merkel government. In my view, it's time for something new. We need a change," she said.
Jan Techau, a political analyst at the German Marshall Fund of the United States, a think tank, sees a close race.
"If I had to bet, I would put my money on her (Kramp-Karrenbauer)," said Techau. "But I wouldn't bet the house on it." (Editing by Timothy Heritage)