France arrests new suspect in foiled terror plot
PARIS French judicial authorities have arrested and charged a sixth suspect in a foiled militant plot to attack sites in the Paris region, a judicial source said on Saturday.
BANGKOK Predicting the next step in Thailand's political crisis requires some bravery after six weeks of street protests, deadly clashes, a department store blockade and grenade attacks, with few signs of compromise.
Attitudes have hardened on both sides since troops and protesters clashed in Bangkok on April 10, killing 25 people and wounding more than 800 during a chaotic army crackdown that has intensified a five-year political crisis.
Following are scenarios about what could happen next with tens of thousands of the red-shirted supporters of ousted former prime minister Thaksin Shinawatra still on the streets.
RED SHIRT PROTESTERS PROVOKE FURTHER VIOLENT CLASHES
High casualties and the possibility of a failed military operation could be enough to force Prime Minister Abhisit Vejjajiva to step down, setting in motion a snap election -- the ultimate demand of the red shirts.
With that in mind, the protesters may try to provoke the military or spark a clash with rival pro-government protesters, drawing upon shadowy militants led by retired generals whose presence among the red shirts has added a dangerous element to their bid for elections.
Some protesters are believed to be armed with assault rifles and M-79 grenades, both of which were used at an April 10 clash with the army that killed 25 people. The government accuses them of leading Thursday's grenade attacks that killed one person and wounded 88 in Bangkok's business district. Army sources say they believe this group has stockpiled weapons at their protest site.
The army chief has repeatedly ruled out a crackdown on the shopping area given the risk of high civilian casualties, but if provoked, the military may have no choice.
MARKET REACTION: Thai assets have been seen as undervalued, pricing in a relatively high degree of political risk.
Thai stocks, which jumped 15 percent from mid-February to April 9 on a $1.8 billion wave of foreign buying, are likely to remain volatile, with unrest triggering price falls followed by tentative buying by bargain-hunters looking to tap one of Asia's cheapest markets.
The baht currency, which has gained 0.71 percent in the past 30 days and 0.1 percent in the past week, would likely weaken to around 32.50 if the government lost control in the wake of a crackdown and finds it hard to stay in office, dealers say.
Five-year bond yields would likely test the seven-month lows reached on Friday as investors seek the relative safety of government debt.
PRO-GOVERNMENT PROTESTERS CLASH WITH RED SHIRTS
As the protests drag into a seventh week, royalist and pro-government demonstrators take matters into their own hands, frustrated by the army's reluctance to intervene.
This leads to skirmishes between red shirts and rival protest groups such as the royalist yellow shirts. Bottle-throwing is followed by petrol bombs and possibly guns.
The army is drawn in and launches a harsh crackdown on the red shirts, who respond with heavy arms, including M79 grenades.
The army, after failing to disperse the red shirts for weeks, faces intense pressure to finish the job. Large numbers of soldiers are deployed. Fighting continues for hours or even days with many casualties before the red shirts are eventually overpowered by about 50,000 troops deployed in Bangkok.
The red shirts regroup in the northern provinces and other areas of Bangkok, creating a low-level rebellion that causes a new wave of political uncertainty, but they fail to pose a force strong enough to topple the government immediately.
MARKET REACTION: Thai stocks and the baht rise as relatively high dividend yields and low valuations in the stock market tempt investors, who begin to focus less on political risk and more on the region's strong economic outlook. Five-year Thai bond yields rise as debt prices fall on a growing appetite for Thai risk.
ARMY CRACKDOWN ON PROTEST SITE, RED SHIRTS REGROUP
The military moves in unannounced during the early hours of the morning when the number of demonstrators is considerably lower than in the evening and daytime. Clashes ensue, causing many casualties. Militants within the ranks of the protesters wage a fierce fight.
The military surrounds the site in huge numbers. Many protesters agree to leave, others are chased away by troops, who secure the site and establish a perimeter. The government swiftly announces it has taken control.
Protest leaders vow to regroup. After a flurry of phone calls and text messages, and "red shirt" radio issuing a call to mass at another site, thousands begin a new demonstration elsewhere.
MARKET IMPACT: The resilient bourse falls on the violence but there is no mass selling. However, investors are aware this is a quick-fix and not a long term solution and many remain on the sidelines, setting the stage for choppy trading. The baht takes its lead from stocks, easing slightly, while five-year Thai bond yields test seven-month lows on a flight to safety.
COALITION BREAKS APART, ELECTIONS FOLLOW
The pressure to find a political solution to buy time and calm down inflamed passions in the country is growing. Failure to do so means the crisis drags on with hardliners from both camps dominating the agenda.
Under one scenario for a political formula, Abhisit's uneasy coalition partners hold behind-the-scenes meetings, perhaps with Thaksin or his representatives involved. This leads to a deal to end the ruling alliance and focus on a new election.
Abhisit's Democrat Party could try to rule as a minority government, but his former allies echo red shirt calls for an immediate dissolution of parliament. Faced with a vote of no confidence in parliament, Abhisit agrees to dissolve the house.
Or the Democrats could dump Abhisit as leader in favor of another figure, who then produces a timetable for an early election.
These are unlikely scenarios. Any political deal would have to satisfy the army and the palace. Coalition partners may not be happy with Abhisit, but he is still their best bet right now.
MARKET IMPACT: A political deal would be seen as positive for the market. Stocks would rise, with the market's low valuations tempting investors with an appetite for risk. It may not improve Thailand's credit ratings, though, because any political deal would be a bandaid on the problem until new elections -- which may only yield a result that restarts the cycle of protests in the polarized nation.
STALEMATE PERSISTS, GOVERNMENT WEAKENS, ARMY LAUNCHES COUP
Abhisit maintains a tough line, resisting talks and allowing tension to build on the streets in the hope of wearing down the protesters enough so they slowly disperse.
However, with no agreement for talks, frustration grows in Bangkok as the economic toll mounts. Abhisit's position becomes untenable. He defies his military and establishment allies and dissolves parliament.
Aware polls would almost certainly return a government allied with Thaksin -- the de facto red shirt leader despised by the establishment elites -- the military stages a coup saying it is upholding national security and protecting the revered king.
This is not likely either. Abhisit will not call an election without a nod from the military and the palace. The climate may be ripe for a putsch, but the army wants to keep the prime minister in power, as long as he stands firm against the supporters of Thaksin, who was ousted in the last coup in 2006.
MARKET IMPACT: A coup would cause stocks to plunge, and the baht to slide. Concerns about fiscal mismanagement, poor governance, and a public backlash -- even civil war -- would curtail long-term investment. Thailand's credit ratings would be downgraded. There could even be a contagion effect in Southeast Asian emerging markets.
(Additional reporting by Martin Petty. Editing by Bill Tarrant)
ROME Italian President Sergio Mattarella pledged on Saturday to act quickly to solve a government crisis prompted by Matteo Renzi's resignation as prime minister, with all major parties calling for elections as soon as possible.
SEOUL Protesters demanding that South Korean President Park Geun-hye step down marched on Saturday for a seventh straight weekend, a day after parliament voted overwhelmingly to impeach her and put the fate of her presidency in the hands of a nine-judge court.