Thai rulings fuel election talk, PM not worried

BANGKOK, July 9 Wed Jul 9, 2008 1:57am EDT

BANGKOK, July 9 (Reuters) - Thai Prime Minister Samak Sundaravej shrugged off doubts about the stability of his five-month-old government on Wednesday, a day after two court rulings fuelled speculation of fresh elections.

Tuesday's rulings piled more pressure on the six-party coalition government, already weakened by a prolonged street campaign which has unsettled investors, but Samak declined to say how he would counter fresh moves by his opponents to oust him.

"I am listening to all the criticism and will tell the people what I think on my Sunday TV show," Samak told reporters, refering to his weekly television programme.

The opposition Democrat Party and several senators said they would file separate petitions to impeach the cabinet after the Constitutional Court said Bangkok's support for Cambodia's bid to list a 900-year-old temple as a World Heritage site was illegal.

Opponents of ousted Thai prime minister Thaksin Shinawatra have whipped up a nationalist frenzy over the Preah Vihear temple, which many Thais believe belongs to Thailand, to try to kick out the pro-Thaksin government elected in December.

Also on Tuesday, a top leader of Samak's People Power Party (PPP) was found guilty of vote buying in the December poll and banned from politics for 5 years, a ruling that could lead to the dissolution of the main party in the coalition government.

The legal defeats will force the government to focus on its political survival at a precarious time for the economy, as it faces soaring inflation and stuttering growth, analysts said.

The main stock index .SETI rose 1.7 percent on Wednesday as bargain hunters jumped into a depressed market.

But analysts said the long-term outlook was poor, with the index down more than 16 percent since a street campaign against Samak's government began on May 25.

"Although many stocks now look cheap, there should be further downside to the market as a whole," Thanachart strategist Pimpaka Nichgaroon said in a research note, predicting "more bad news is on the way".

ELECTION TALK

Leaders of the People's Alliance for Democracy (PAD), whose 2005 street campaign eventually led to the 2006 putsch against Thaksin, cheered the court verdicts and vowed to continue their rallies until the government quit.

Thanachart's Pimpaka said there was a good chance Samak would dissolve parliament "within this quarter" to avoid the possible disbanding of his party.

The conviction of deputy PPP leader Yongyut Tiyapairat for vote buying paved the way for the Election Commission to probe whether the party was involved.

The EC could then pass its findings to the Constitutional Court, which could disband the PPP as happened to Thaksin's former Thai Rak Thai party (Thais Love Thais) after the coup.

Thai newspapers have reported that the PPP, which won the most votes in December on an avowedly pro-Thaksin ticket, would form a new party to cobble together another ruling coalition, or, if necessary, seek a fresh mandate from voters.

Other analysts said a snap election was unlikely, but Samak might shuffle his cabinet to buy time.

With several more court cases coming to a head in July, the struggle between Thaksin's supporters and his opponents in the military and royalist establishment for control of Thailand's future looks set to drag on, analysts say.

"The ongoing political wrangles serve to reinforce our cautious view on Thailand and we continue to believe that a market friendly resolution is unlikely for the foreseeable future," Goldman Sachs said in a note to clients. (Writing by Nopporn Wong-Anan; Editing by Darren Schuettler and Clarence Fernandez)

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