(Adds coalition plans, quote from Thaksin)
* Military accepts Thai election result
* Size of win cuts chance opponents can stop party taking
* It also makes military meddling less likely, analysts say
By Jason Szep and Vithoon Amorn
BANGKOK, July 4 Thailand's powerful military
accepted on Monday a stunning election victory by the party of
fugitive former Prime Minister Thaksin Shinawatra, adding to a
new sense of stability in a country plagued by unrest since his
ouster in a 2006 coup.
A day after the decisive win by Puea Thai Party headed by
Thaksin's youngest sister, Yingluck Shinawatra, the military
agreed not to intervene or stop her from forming a government,
according to the outgoing defence minister.
"I can assure that the military has no desire to stray out
of its assigned role," said General Prawit Wongsuwan, a former
army chief close to military leaders involved in the 2006 coup
that removed Thaksin.
"The army accepts the election results," he told Reuters.
Puea Thai's absolute majority of 264 seats in the 500-seat
parliament makes it hard for Thaksin's rivals to stop the
44-year-old businesswoman becoming Thailand's prime minister,
which would have ignited protests by her red-shirted supporters
who clashed with the army last year in Bangkok.
"Winning by a big margin eases the problem of the military
intervening and makes it easier for them to form a government
and implement all their policies," said Kongkiat Opaswongkarn,
chief executive of Asia Plus Securities.
Yingluck, who will be Thailand's first woman prime minister,
said she would form a five-party coalition controlling 299
seats, or about 60 percent of parliament, giving her a strong
hand to fulfil her election promises.
Under the Thai constitution, the first sitting of the lower
House of Representatives to choose the next sucessor as prime
minister must be convened 30 days after the election.
Yingluck plans to roll out a long list of Thaksin-style
populist programmes that could fuel spending and inflation in
Southeast Asia's second-largest economy - from subway extensions
to big wage increases and various giveaways aimed at boosting
spending power, especially in rural areas.
Thai stocks jumped more than 4 percent as the scale
of her victory persuaded some investors that Thailand could be
more stable after the six-year crisis marked by a blockade of
Bangkok's two airports, the occupation of Government House by
protesters, an assassination attempt and bloody street rallies.
Thailand's baht currency rose 1 percent to a one-week
high against the dollar on hopes foreign investors would return
following $1.4 billion of outflows of global capital since the
election season revved up in May.
Full Thai election coverage:
Graphic timeline of crisis: link.reuters.com/bac99r
Election preview graphic: link.reuters.com/xak89r
Thailand special report PDF: r.reuters.com/cad99r
REBUKE OF ELITE
The vote is an unexpectedly strong rebuke to the traditional
establishment of generals, old-money families and royal advisers
who backed Prime Minister Abhisit Vejjajiva. It suggests broad
support for policies championed by Thaksin, a divisive figure
elected prime minister twice, in 2001 and 2005.
Supporters say Thaksin revolutionised Thai politics with
pro-business reforms and populist policies aimed at eradicating
poverty. Critics accuse him of authoritarianism, crony
capitalism and of undermining Thailand's revered monarchy.
"Puea Thai's big victory eases tensions for now but Thailand
is still vulnerable," said Kan Yuanyong, director of the Siam
Intelligence Unit, a consultancy. "They will wait for Puea Thai
and Thaksin to slip up, then we'll see them strike back."
Kan predicted anti-Thaksin yellow-shirt protesters would
once again flood the streets if Yingluck seeks an amnesty
clearing her brother of corruption charges and bringing him back
to Thailand from self-imposed exile in Dubai.
The yellow-shirted People's Alliance for Democracy, a motley
collection of businessmen, academics and royalists, emerged in
2005 to help topple Thaksin and two pro-Thaksin governments.
Thaksin told reporters he no longer desired to be prime
minister and wasn't trying to reclaim $1.4 billion of assets
seized when a Thai court convicted him of tailoring government
policies to benefit his family business interests.
"Don't worry about it. I'm not starving," he said of his
frozen assets when asked by journalists at his villa in Dubai,
where he lives to avoid a two-year jail term for graft charges
he says was politically motivated.
"I want to retire," he added. He has said he will "wait for
the right moment" to come home. "Going back is not necessarily
going to be going back into politics. I may turn pro in golf,"
he said with a laugh.
Thaksin brushed aside concerns of an inflationary backlash
from his younger sister's campaign promises, including a roughly
40 percent rise in the minimum wage due to take effect in
January. Higher inflation would be offset by growth, he said.
Yingluck dismissed criticisms over the cost of her policies
such as free tablet PCs for nearly a million children.
"We know what to do. We'll reduce costs for people and we
know how to generate the income that we'll give back to them,"
she told Reuters.
Economists said the policies may force the Bank of Thailand
to raise interest rates for a longer period than had been
expected to control any increase in inflation.
But they said billions of extra dollars pumped into
Thailand's rural economy will stimulate consumption. Under
Thaksin, money funnelled into villages through a debt moratorium
for farmers and cheap loans had a knock-on effect on the whole
economy, fuelling a boom in household spending.
A burst of spending could weaken Thailand's fiscal position
depending on how it is implemented, Takahira Ogawa, analyst at
credit-ratings agency Standard & Poor's Corp, told Reuters.
Under Thaksin, Thailand's economy grew on average by 5.7
percent a year between 2002 and 2006, compared with growth of
2.2 percent in 2001 and the economic turmoil of the late 1990s.
But his policies also drove up household debt and did little to
fundamentally alter income gaps between rich and poor.
The stridently anti-Thaksin Nation newspaper accepted the
result but pulled no punches on the challenge ahead.
"The election is over but the hatred remains," it headlined
its leader column. "It's time for ordinary Thais to take
reconciliation into their own hands."
Yingluck's red-shirted supporters accuse the rich, the
establishment and army top brass of breaking laws with impunity
-- grievances that have simmered since the 2006 coup -- and have
clamoured for the return of Thaksin.
Her critics say she is a simple proxy for Thaksin, who they
accused of abusing his electoral mandate to dismantle
constitutional checks and balances while cementing his own
authoritarian rule while in power from 2001 to 2006.
Abhisit announced on Monday his resignation as party leader.
His legacy is unclear. Backed by the army, he put down a
protest movement by the red shirts sin Bangkok last year and 91
people lost their lives. Nearly 2,000 were injured. But he was
also lauded by economists for steering Thailand out of the
(Additional reporting by Panarat Thepgumpanat and Martin Petty
in Bangkok and; Praveen Menon in Dubai; Editing by Michael