REFILE-Q+A-What is going on in Thailand?

(Refiles, fixing GMT time in third paragraph)

By Ambika Ahuja and Nick Macfie

BANGKOK, April 16 (BestGrowthStock) – Thai anti-government protest
leaders staged a dramatic escape from police on Friday after
the authorities vowed to crack down on “terrorists” ahead of a
planned televised address by the prime minister.

One protest leader slid down a rope from a balcony, while
others were rescued from riot police by hundreds of “red
shirts”, who heavily outnumbered security forces at a Bangkok
hotel owned by the family of former Prime Minister Thaksin

Prime Minister Abhisit Vejjajiva had been due to hold his
first news conference in four days at 1 p.m. (0600 GMT) but it
was delayed. No reason was given.

So what happens now?


It is unlikely in the short term. The failed attempt to
eject protesters from one of their encampments last Saturday,
which turned into violent clashes, embarrassed the military. It
is now on a public relations offensive to explain that security
forces were targeted by “terrorists”. The army is unlikely to
come out in full force again, risking its reputation to protect
Abhisit, whose political capital appears to be dwindling.

The protesters have consolidated at the Rachaprasong
intersection shopping district. The geography of the area and
the presence of families, tourists and expatriates in luxury
hotels and apartments make it very unlikely the troops will
move in.

A state of emergency is in effect, banning public
gatherings of more than five people, yet thousands remain on
the streets. Army chief Anupong Paochinda said “political
problems require a political solution”, another indication the
army is unwilling at this point to crack down on behalf of the
embattled government.


Abhisit may well have to dissolve parliament soon or
resign. Pressure will mount on him if the protests continue to
paralyse the capital’s commercial heart. The government has
said it does not want to give in to mob rule, but Abhisit has
offered few clues as to how he will resolve the crisis.

Complicating his future, Thailand’s poll watchdog has set
in motion a procedure that could lead to the disbanding of his
Democrat Party over suspected funding irregularities. A similar
ruling ended a Thaksin-supported coalition government in 2008.

Some in the establishment, however, are believed to be
manoeuvring for Abhisit to quit, paving the way for a temporary
“national unity government” that would bring all parties,
including the Thaksin-allied opposition, into the fold. That
could take the red shirts off the streets and buy time before
fresh polls are called. But Finance Minister Korn Chatikavanij
said on Thursday that Abhisit had no intention of standing


The short answer is yes. Credit rating agencies and
economists say the escalation of violence will hit tourism
revenue, foreign direct investment and economic growth.

But Thailand has had 18 coups since 1932 and protests by
yellow shirts, red shirts and others are a way of life, even if
Bangkok has not seen such violence since 1992. Until the
declaration of a state of emergency last week, Thailand along
with the rest of Southeast Asia had seen a surge in foreign
investment inflows, with $1.8 billion coming into Southeast
Asia’s second largest economy from Feb. 22 to March 7.

Stocks dived 2.7 percent on Friday, extending a 3.6 percent
fall before the three-day New Year holiday. Airports of
Thailand (AOT.BK: ) fell 5.6 percent and national carrier Thai
Airways (THAI.BK: ) 4.9 percent. Tourism has taken a hit, with
occupancy rates at hotels about a third of expectations.

In January, the central bank predicted economic growth of
3.3-5.3 percent this year. Private economists expect 4-5
percent. They say that despite the problems, the export-driven
economy should perform well due to the global recovery.


It’s not totally out of the question if the government
teeters and the influential men in green who traditionally play
a pivotal role in politics risk losing behind-the-scenes clout.

The army is well aware that another coup will not sit well
with the international community and could provoke a violent
response in the bitterly divided country. Some within the army
may prefer the use of “soft power” to push Abhisit out and
install a new leader to buy time before the next poll is held.

Analysts say large numbers of soldiers in the lower ranks
and some senior officers sympathise with the red shirts. Many
of the military’s top brass are at the other end of the
political spectrum, allied with royalists, business elites and
the urban middle classes who wear yellow or pink at
counter-protests and broadly back the 16-month-old government.

Adding to the mix is the question of the eventual
succession to 82-year-old King Bhumibol Adulyadej, who has been
in hospital since Sept. 19, and whether this might lead to a
change in the balance of power in the military, traditionally
closely aligned with the palace.


They are mostly supporters of Thaksin, drawing from the
rural poor and increasingly from the urban working class.

Their formal name is the United Front for Democracy against
Dictatorship (UDD). They wear red shirts to distinguish
themselves from the pro-establishment yellow shirts.

They back Thaksin because of his welfare and rural
development policies while in office from 2001-2006. Many of
them believe his conviction for corruption after he was ousted
in a 2006 military coup was an attempt to keep him out of
politics after the coup. Not all red shirts back Thaksin
unreservedly, but all are angered by the manner of his removal
and believe democracy is being undermined by powerful,
unelected figures.

The red shirts say Abhisit’s coalition government is
illegitimate because it was not elected but pieced together
with the backing of the army in a “silent coup” in December
2008 after a ruling pro-Thaksin party was dissolved. It wants
new elections, which it is confident the pro-Thaksin Puea Thai
Party would win.

Stock Market Investing

(Additional reporting by Nopporn Wong-Anan in Bangkok; Editing
by Alan Raybould and Alex Richardson)

REFILE-Q+A-What is going on in Thailand?