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A key leader of Angela Merkel's conservative political bloc demanded on Tuesday that she change course, blaming the chancellor's liberal refugee policy for her party's humiliating result in a weekend state election that hints at future defeats.

Sunday's "disastrous" outcome in the eastern German state of Mecklenburg-Vorpommern was a result of Merkel's open-border refugee policy, Horst Seehofer, the premier of the southern state of Bavaria, told the daily Sueddeutsche Zeitung.

His comments underlined the deep divisions in the chancellor's coalition caused by the arrival of about 1 million refugees to Germany during the last year.

Seehofer is also chief of the arch-conservative Christian Social Union (CSU), the Bavarian-based allies of Merkel's Christian Democrats (CDU) in the national legislature.

"The situation is highly threatening for the (CDU-CSU)," Seehofer said, insisting that people don't want "this Berlin policy."

However, pollsters say that the confrontation between Merkel and Seehofer about refugees has been a major factor in the slump in support for the CDU-CSU bloc.

In spearheading criticism of Merkel's handling of the refugees, Seehofer at one point also threatened legal action if Merkel failed to introduce a tougher asylum policy.

The CDU was beaten back into a humiliating third place in the Mecklenburg-Vorpommern election following a surge in support for the new right-wing populist Alternative for Germany (AfD).

Merkel's CDU is likely to suffer another setback in weekend regional elections in the central state of Lower Saxony and in Berlin later this month, when the anti-foreigner AfD is likely to make further gains.

CDU General Secretary Peter Tauber hit back at Seehofer saying CDU-CSU supporters "expect one thing above all: unity."

In his interview, Seehofer said that his "multiple prompts for a course correction" had fallen on deaf ears in Berlin, with the CSU demanding again that Merkel step up controls on refugees entering Germany.

"We need an upper limit (for refugees)," said Bavarian Finance Minister Marcus Soeder and a possible successor to Seehofer. "We need effective controls, we need to finally know who is in the country," he said.

Seehofer told Sueddeutsche Zeitung that the refugee policy was part of a much deeper problem and demanded that the chancellor clarify her government's stance on taxation, security and pensions by October.

The Mecklenburg-Vorpommern election comes 12 months after Merkel's controversial decision to open her nation's borders to allow refugees stranded in Hungary to travel to Germany.

Since then, Bavaria has emerged at the frontline of Germany's refugee crisis, with a large number of migrants crossing the state's borders into the nation.

More recently, however, the number of refugees arriving in Germany has dropped sharply, a result of an EU deal with Turkey - from where many of the migrants made their final push into Europe - on top of this year's closure of the Balkan route, which was used by many refugees travelling to northern Europe.

"So far, Merkel has had a pragmatic and humanitarian approach on the issue," the head of UN Refugee Agency UNHCR, Filippo Grandi told the daily La Repubblica.

"I think that being a leader requires acknowledging citizens' immediate fears and being able to manage them, while sticking to a much wider plan and vision, which should always include the challenge of solidarity," Grandi said.

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