Thai government seeks talks with Thaksin to end siege

Soldiers walk behind a wire barricade at Government House during an anti-government protest by the supporters of former Prime Minister Thaksin Shinawatra in Bangkok March 31, 2009.

BANGKOK (Reuters) - Thailand's government said on Wednesday it was open to talks with ousted Prime Minister Thaksin Shinawatra to end a fresh surge in political unrest that threatens to undo efforts to revive a slumping economy.

Thousands of Thaksin protesters have surrounded the seat of government in Bangkok for the past week in a bid to force out Prime Minister Abhisit Vejjajiva, the latest escalation in Thailand's three-year-old political crisis.

Police have taken no action against the United Front for Democracy against Dictatorship (UDD), an extra-parliamentary group loyal to Thaksin, despite a court order on Tuesday that protesters allow ministers to enter Government House.

Deputy Prime Minister Suthep Thaugsuban said the government wanted to avoid violence and he offered to negotiate directly with the exiled Thaksin, who has used video-link speeches this week to exhort his supporters to "bring back democracy."

"If talks can bring peace to the country, I am ready to meet him anywhere, because Thaksin is the only person that can end the siege," Suthep told reporters after chairing a special meeting of ministers while Abhisit attends the G20 Summit in London.

Suthep tempered his conciliatory remarks, however, by saying he could not agree to certain key demands made by Thaksin, such as his call for a snap election.

In an interview with Reuters on Monday, Suthep accused the UDD of seeking to provoke a violent incident and said he had tried to negotiate with Thaksin before but was rebuffed.

Thaksin, a former telecoms billionaire who was ousted in a bloodless 2006 coup, lives in exile after being convicted on conflict of interest charges last year.

His absence has not ended the political impasse between Bangkok's royalist and business elite, who accused Thaksin and his allies of corruption and abuse of power, and the rural and urban poor who loved his populist policies.

ECONOMY IN TROUBLE

Economists are worried the latest unrest will hurt efforts to revive an economy hit by falling exports due to the global economic downturn. Despite a government stimulus package, the economy is expected to shrink in 2009..

Some government ministers worry that the political unrest will further erode consumer confidence and tourism, another key sector of the economy.

"While the government's economic stimulus measures have been enacted, we're afraid that the ongoing demonstrations will undo the government's effort," Korbsak Sabhavasu, a deputy prime minister overseeing economic policy, told the Bangkok Post.

UDD leaders have vowed to stay until Abhisit steps down, but have promised not to invade Government House or other facilities.

Last year, the anti-Thaksin People's Alliance for Democracy (PAD) occupied the government compound for three months and seized Bangkok's main airports for more than a week in a campaign that helped force a pro-Thaksin government from power.

The UDD planned to appeal against Tuesday's court order, which required them to lift blockades of Government House entrances. The group has called on supporters from across the country to converge on Bangkok on April 8.

"We will stay here and get ready for our biggest rally ever next Wednesday," Weng Tojirakarn, a UDD leader, told Reuters.

(Reporting by Chalathip Thirasoonthrakul; Writing by Kittipong Soonprasert; Editing by Alan Raybould)