Q+A: What’s happening in turbulent Thailand?

By Martin Petty

BANGKOK (BestGrowthStock) – Thai anti-government protesters have ignored an ultimatum by the government to pack up and leave their Bangkok encampment, dashing hopes of a swift end to a violent and debilitating standoff.

Prime Minister Abhisit Vejjajiva has withdrawn his offer of a November 14 election and says he will offer no more olive branches to the red-shirted demonstrators after their refusal to budge from their protest site in an upmarket shopping and hotel district.

Abhisit and his army-backed government now have few remaining options for how to settle the latest crisis, which has battered tourism and sent consumer confidence to a nine-month low.

WHY HAS THE DEAL COLLAPSED?

The red shirts agreed to Abhisit’s five-point reconciliation plan and the November 14th poll date, but insist the premier and his deputy, Suthep Thaugsuban, be prosecuted for ordering troops to break up a rally at their previous protest site at the Phan Fah bridge on April 10, a botched effort that left 25 dead and more than 800 wounded.

Suthep reported to law enforcement authorities on Tuesday to hear complaints from the victims of the dead, but the red shirts said that was not enough. They have demanded his arrest, and that of Abhisit when parliament takes a recess on May 21, and he no longer has parliamentary immunity.

Abhisit said the deal was non-negotiable and ordered the red shirts to leave. They have refused and his government says it will scrap the polls — which were due to take place more than a year early — but proceed with the reconciliation plan without the red shirts on board.

WHAT OPTIONS DOES ABHIST HAVE LEFT?

Not many. Since the red shirts are refusing to leave and the government says the peace deal is now off, Abhisit can either wait for the rally to fizzle out — which could take months and inflict huge damage on the economy — or use the army to forcibly evict the demonstrators from the ritzy Rachaprasong intersection.

The latter is an option the military, perhaps Abhisit also, seems unwilling to take. A crackdown at a heavily fortified and well-guarded site could turn out to be another bloodbath, with heavy casualties on both sides.

It would no doubt be a chaotic battle that security forces have no guarantee of winning

Abhisit has repeatedly said the government has the authority to “take necessary action” against the protesters but his threats have so far been hollow. The red shirts know that and are probably calling his bluff.

WILL THIS DAMAGE ABHISIT’S CREDIBILITY?

It looks likely. His reconciliation proposal won him plaudits from almost all parties and saw his opinions ratings soar, with the Oxford-educated economist painted as a peacemaker keen to heal rifts, protect the monarchy and avert a civil war.

But nine days later, he is back on the rocks. Even if Abhisit orders a crackdown, it cannot be guaranteed the police will cooperate and doubts remain as to whether the aloof and soon-to-retire army chief Anupong Paochinda will agree to it given his stand that the standoff can only be settled politically.

Tuesday’s embarrassing U-turn on plans to cut off power and water supplies and cellphone signals around the protest site to force the red shirts out further dented Abhisit’s reputation and he will likely face pressure to either act decisively and follow through with his ultimatums, or step down.

HOW WILL THE LATEST TWIST IMPACT MARKETS AND THE ECONOMY?

Foreign investors have turned negative since violence flared in April and have sold 17.4 billion baht ($539 million) in Thai shares over the past five sessions, cutting their net buying so far this year to 21 billion baht as of Tuesday. Tensions and uncertainty have now increased and selling is likely to continue.

Thailand’s finance minister on Tuesday said the crisis could trim 0.3 percentage point off Thailand’s targeted annual growth rate this year of 4.5 to 5 percent.

Consumer confidence fell in February and March, after hitting a 21-month high in January, due to political turmoil, sinking to its lowest since July 2009, with sentiment eroded by political unrest and the possibility of a crackdown.

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(Editing by Bill Tarrant)

Q+A: What’s happening in turbulent Thailand?