* Army says declares martial law to restore stability
* Says not interfering with caretaker government
* To avoid clashes, orders protesters on both sides not to
* TV stations run by rival political groups ordered to shut
* U.S. says monitoring situation closely
(Adds comment from army chief, adds detail)
By Amy Sawitta Lefevre
BANGKOK, May 20 Thailand's army declared martial
law nationwide on Tuesday to restore order after six months of
street protests that have left the country without a proper
functioning government, but insisted the surprise intervention
was not a military coup.
While troops patrolled parts of Bangkok and army spokesmen
took to the airwaves, the caretaker government led by supporters
of self-exiled former premier Thaksin Shinawatra said it was
still running the country.
Army chief General Prayuth Chan-ocha said the military had
stepped in to restore order and build investor confidence, and
warned that troops would take action against anyone who used
weapons and harmed civilians.
"We ask all sides to come and talk to find a way out for the
country," Prayuth told reporters after meeting directors of
government agencies and other high-ranking officials.
Military officials said they were not interfering with the
caretaker government, but ministers were not informed of the
army's plan before an announcement on television at 3 a.m. (2000
GMT on Monday) and Prayuth said martial law would be maintained
until peace and order had been restored.
Twenty-eight people have been killed and 700 injured since
the anti-government protests began in November last year.
The crisis is the latest instalment of a near-decade-long
power struggle between former telecoms tycoon Thaksin and the
royalist establishment that has brought the country to the brink
of recession and even raised fears of civil war.
Both pro- and anti-government protesters are camped out at
different places in the capital and, to prevent clashes, the
army told them they had to stay put and could not march.
The army also called on media not to broadcast material that
would affect national security and ordered 10 satellite TV
channels, including both pro- and anti-government stations, to
The caretaker government, wary of the army given its past
interventions on the side of the establishment, said it welcomed
the move to restore order and that it remained in office.
"The army's actions must be under the framework of the
constitution," caretaker Prime Minister Niwatthamrong
Boonsongphaisan said in a statement.
Thailand has been stuck in political limbo since Prime
Minister Yingluck Shinawatra, Thaksin's younger sister, and nine
of her ministers were dismissed on May 7 after a court found
them guilty of abuse of power.
The military, which put down a pro-Thaksin protest movement
in 2010, has staged numerous coups since Thailand became a
constitutional monarchy in 1932. The last one was in 2006 to
oust Thaksin, who has lived abroad since 2008 but wields
political influence and commands huge support among the poor.
Anti-government protesters want a "neutral" prime minister
appointed to oversee electoral reforms aimed at ending Thaksin's
influence. The government views an early general election it
would likely win as the best way forward.
Thaksin said anyone following political developments could
have expected martial law.
"I hope that no side will violate human rights and damage
the democratic process more than it has already been," he said
in a rare message posted on his Twitter account (@ThaksinLive).
The army tried to mediate in the crisis late last year,
bringing together then premier Yingluck and anti-government
protest leader Suthep Thaugsuban. It has played down fears of a
coup, stressing that politicians must resolve the dispute.
But Human Rights Watch called Tuesday's army action a "de
facto coup" while a political analyst said it was a "phantom
"There was no consultation with the government and I think
the military will slowly expand its powers and test the waters,"
said Kan Yuenyong at the Siam Intelligence Unit think-tank.
"For this to be a success the army needs to act like a
neutral force and not be seen to side with the anti-government
protesters. It needs to offer an election date and start a
political reform process at the same time."
Martial law gives the military broad powers over civilian
authorities, but a full coup would likely incur costs in terms
of greater damage to investor confidence and U.S. sanctions.
The United States, which cut aid to its military ally after
the 2006 coup, said it was monitoring the situation closely.
"We expect the army to honour its commitment to make this a
temporary action to prevent violence, and to not undermine
democratic institutions," U.S. State Department spokeswoman Jen
Psaki said in a statement.
Prayuth had warned last week, after three people were killed
in an attack on anti-government protesters, that troops might
have to be used if violence continued.
"The army chief was moving towards imposition of martial law
ever since his announcement last week," said a senior army
official, who spoke on condition of anonymity. "He now feels
that the police cannot handle security and is alarmed by grenade
attacks and other incidents and the fact neither side looks like
it will back down."
Troops initially stopped some traffic from entering Bangkok,
took up positions at some intersections and secured television
stations but life went on as normal in most of the city.
"NO COUP YET"
The baht fell against the dollar in early trade but steadied
later and dealers suspected that was due to intervention by the
central bank. At 0900 GMT the baht was quoted at 32.53 per
dollar after earlier trading at a low of around 32.64.
The stock market was down 1.1 percent in late trade.
Six months of turmoil has dragged down Southeast Asia's
second-biggest economy, which shrank 2.1 percent in the first
quarter of the year.
Andrew Colquhoun, Head of Asia-Pacific Sovereigns at ratings
agency Fitch, said martial law was not necessarily negative for
Thailand's government debt, and might help break the deadlock.
"The key factors for the ratings are whether Thailand can
avert more serious and bloody political disorder, and whether we
see a return to a fully functioning government that is able to
make policy and pass a budget for the next fiscal year starting
in October," he said.
Opposition supporters disrupted a Feb. 2 election which was
later declared void by the Constitutional Court. The protesters
reject any vote before electoral reforms and the Election
Commission has said it does not think a poll tentatively
scheduled for July 20 can go ahead.
The leader of Thaksin's pro-government "red shirt"
loyalists, who are rallying in Bangkok's western outskirts,
appealed for calm but warned of trouble if the government was
"Our stance is the same. (We) will not accept a neutral
prime minister. If soldiers appoint a prime minister then we
will escalate our rally," Jatuporn Prompan told a news
conference. "Stay calm, there has been no coup yet."
Anti-government protesters said they too had not changed
their demands for the caretaker government to go.
(Reporting by Bangkok Bureau; Writing by Robert Birsel; Editing
by Alan Raybould and Alex Richardson)