REFILE-Q+A-What’s happening in turbulent Thailand?

(Corrects spelling of turbulent in headline)

By Martin Petty

BANGKOK, May 13 (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Prime Minister Abhisit Vejjajiva has withdrawn his offer of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 Nov. 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 Nov. 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.

Stocks
(Editing by Bill Tarrant)

REFILE-Q+A-What’s happening in turbulent Thailand?