Scenarios: How will Thailand’s crisis play out?

By Martin Petty

BANGKOK (BestGrowthStock) – Thailand was braced for a potentially bloody crackdown on anti-government protesters on Monday after a deadline passed for demonstrators to leave their sprawling encampment in downtown Bangkok.

Protesters defied the deadline and only a trickle of an estimated 5,000 people, many of the women and children, at the sprawling encampment in the commercial heart of the city had left, heightening fears that violence will intensify.

Responding to the red shirts’ call for negotiations, the government said on Monday it would consider dialogue if they halted their attacks and dispersed. Neither looked likely as clashes and standoffs continued in several locations.

Following are scenarios for the coming days.


The military has battled protesters for four days but has managed to secure only some parts of central Bangkok after prolonged clashes.

In coming days, military reinforcements arrive and troops move on the site but encounter heavy resistance as they approach the huge, makeshift walls around the camp. Red shirt guards hurl rocks and petrol bombs. Troops respond with deadly force and armed elements within the movement fire back with hundreds of guns and grenades believed to be hidden inside the encampment.

Hundreds of protesters arrive outside the camp and challenge the army from behind. Pitched street battles continue for days at different locations, with troops making no significant gains. Casualties are high on both sides and pressure mounts on Prime Minister Abhisit Vejjajiva to resign.

LIKELIHOOD: The protesters have proved in the last few days they are willing to fight all the way. If the military is perceived as aggressive, they are likely to fight back in bigger numbers.

MARKET IMPACT: Foreign selling of stocks will continue as Thailand’s political situation spirals out of control. The baht falls, having already slipped to a two-month low.


The military overcomes resistance from protesters and moves to the edge of the perimeter around the encampment. The army threatens to use deadly force to evict them.

Defiant red shirt leaders realize the game is over and the government is not bluffing. They appeal for immediate talks to prevent a massacre.

The red shirts no longer have bargaining power. They agree to disperse after the leaders are offered some kind of amnesty or an early election is guaranteed. Peace is restored momentarily.

LIKELIHOOD: This is also a plausible scenario. Both sides are playing a high stakes game and have taken the crisis to the brink. Neither wants a bloodbath and neither wants to admit defeat. Talks would allow both sides to claim victory.

MARKET REACTION: The stock market rebounds and foreigners return as net buyers as the political outlook becomes more positive. However, this will be limited by a perception of more, perhaps deadlier unrest if the peace deal falls through. Thebaht could strengthen, but the Thai currency is basically tracking a weaker euro, in line with other Asian currencies.


Troop reinforcements and armored vehicles arrive. The military makes it clear it will enter the Rachaprasong intersection and many protesters, faced with death, agree to leave. Left behind are hard-core demonstrators willing to fight to the death.

Attempts to disperse the crowd are complicated by armed elements among the protesters. Mysterious but well-trained gunmen allied with the red shirts appear and a full-scale urban gunbattle ensues with many dead and injured on both sides.

Street skirmishes ensue as angry protesters attack troops in response to the bloodshed. Violent demonstrations take place in rural provinces which security forces cannot control.

Abhisit is forced to resign because of the huge loss of life. A new prime minister from his coalition takes over.

LIKELIHOOD: It’s possible. No side wants to engage in a catastrophic battle with unprecedented deaths. This scenario would signal the end of the road for both Abhisit and the red shirt leaders and is therefore unlikely.

MARKET IMPACT: The baht would certainly fall and the stock market would slump with more foreign and local selling. Thailand’s five year credit default swaps, used to hedge against debt default but also to speculate on country risk, may widen further. The five-year Thai CDS jumped the most in 15 months on Friday over the protracted and deepening political crisis. However, this scenario largely priced in, analysts said. The cheap price of stocks and strong earnings, especially for banks, should limit losses, but many foreigners investors would continue a selling spree, in which they have already dumped more than half the stocks they bought this year.


Troops continue to engage in fierce clashes, which escalate to battles with armed militias at several locations next to the walls to the encampment. The hardcore red shirts have a strategic advantage, occupying roofs of tall buildings and an elevated rail system.

The battles go on for several days and both sides suffer big casualties. The presence of civilians complicates the army’s operation. Trained gunmen within the protesters overwhelm the troops. The military retreats and the government is humiliated.

Abhisit is forced by his powerful backers to step down and a new prime minister, a member of his coalition deemed acceptable to the public, takes over in a caretaker role. But the protests continue. Calls for a new election to end the crisis come from multiple sides and a date is set for early polls. The protest rally finally ends.

LIKELIHOOD: Not likely. Abhisit and the army would be totally humiliated if troops retreat after such a show of force. The government would rather finish what it started — regardless of the casualties — than endure the embarrassment of a withdrawal.

MARKET IMPACT: Stocks would climb on perception that this round of crisis could be over. However, this might only be temporary. The potential for violence to resurface before or after a new election would keep many investors on the sidelines.

Stock Report

(Additional reporting by Khettiya Jittapong and Vithoon Amorn; Editing by Bill Tarrant)

Scenarios: How will Thailand’s crisis play out?