BANGKOK, April 10 (Reuters) - Political unrest has returned to Thailand with supporters of ousted premier Thaksin Shinawatra bringing the capital to a grinding halt and forcing the government to declare a public holiday on Friday. [ID:SP45804] The "red shirt" Thaksin supporters are demanding the current government step down so new elections can be held and have taken their protests to the southern beach town which is holding an Asia summit this weekend. [ID:nSP1300]
WHO'S FIGHTING WHO?
It's Prime Minister Abhisit Vejjajiva versus Thaksin, who was removed by the army in a bloodless coup in September 2006 and now lives in self-imposed exile.
The protests are funded and guided from a distance by Thaksin, a former police officer who built up a telecoms empire before turning to politics and becoming prime minister in 2001.
Thaksin funnelled government funds to the poor in the countryside and cities, winning their devotion. But he was also widely seen as authoritarian and critics accused him of corruption. Above all, he was accused of republican leanings in a country that reveres King Bhumibol Adulyadej.
All this set him up for a fight with the royalist elite, the military and the 'old money' business community, and he was ousted in a military coup in September 2006.
Abhisit -- educated at Eton and Oxford and a smooth performer on the international stage -- is much closer to that elite.
He became prime minister in December, taking over from a pro-Thaksin premier, voted in by parliament thanks to defectors from Thaksin's ranks. Some say the army engineered the transition.
WHAT'S THE CHANCE OF THE PROTESTS SPREADING?
Apart from an effort to disrupt a high-profile Asian summit in the seaside town of Pattaya [IDn:nPEK468621], there has been little echo of the protests outside Bangkok, as Thaksin's allies concentrated their resources on busing supporters to the capital. Anti-Thaksin protesters staged a dramatic assault on Bangkok's two airports last December, closing them down for a week. Officials at the main international airport say that won't happen again, with stepped-up security on approach roads.
COULD THE PROTESTS TURN VIOLENT?
Abhisit is adamant the government will not crack down, but security forces will take action if the protests turn violent.
Economics Professor Lae Dilokvidhyarat from Chulalongkorn University says Abhisit has learnt a lesson from history.
"History since the 1970s has showed that every civil strife or coup in this country was triggered or stemmed from the government, police or soldiers starting a crackdown," he said.
"As long as this government can restrain itself in the face of provocations, and can control police and soldiers, I think we won't see riots or widespread street fighting."
IS THERE ANY CHANCE OF TALKS BETWEEN THAKSIN AND ABHISIT?
The government has offered talks but it is unclear how sincere it was, since Thaksin's main demand -- general elections, which pro-Thaksin parties would be well placed to win -- was ruled out in advance.
The offer may have been for international consumption, to show the government was being conciliatory. One offer of talks came while Abhisit was in the spotlight in London, representing southeast Asian countries at the Group of 20 summit.
Thaksin has been found guilty on conflict of interest charges and is a fugitive from justice. He would want an amnesty for himself and for allies who have been banned from politics for electoral fraud and other offences. It would be difficult to get that through the courts.
WHO IS PREM?
The demonstrators have also targeted Prem Tinsulanonda, marching to his house and demanding that he resign, like Abhisit.
Prem, 88, is a former general and prime minister. More importantly, as head of the privy council he is the chief political adviser to the king.
Thaksin has named him in recent days as a behind-the-scenes instigator of the 2006 coup, breaking a taboo.
"The Privy Council is an institution traditionally looked up to as representing the king, and before this protest there was hardly anyone attacking it directly," said Professor Lae.
"I think the majority of Thais still have this same feeling and this strategy will backfire in the end."
WILL ALL THIS HURT THE ECONOMY?
The economy is already on the ropes, likely to shrink as much as 4 percent this year, according to the International Monetary Fund, because of a slump in exports and the effects of last year's unrest, which hit tourism badly.
A visiting IMF official suggested this month that Thailand had "built a tolerance" to changes of government, so the unrest might not make too much difference to its forecast.[ID:nBKK5323]
But violence would deal another blow to tourism, and to consumer confidence [ID:nBKT000963], which could undermine the stimulus measures brought in by Abhisit to support the economy.
AND FINANCIAL MARKETS?
The Thai market has fallen 1.4 percent this year
, failing to join in the tentative rally enjoyed by many other Asian markets. Foreigners have returned of late but could easily pull out again if the trouble gets worse again.
Government bonds have benefited from the aversion to stocks, especially with interest rates still falling <0#THBMK=>.
has been remarkably steady, supported by a current account surplus. (Reporting by Alan Raybould and Vithoon Amorn; Editing by Bill Tarrant)
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