August 31, 2008 / 4:53 AM / 11 years ago

UPDATE 3-Thai crisis on hold as parliament debates protests

(For a look at what may happen next, double click on [ID:nBKK8925]) (Recasts with Phuket airport open, analyst’s quote)

By Vithoon Amorn

BANGKOK, Aug 31 (Reuters) - More than 1,000 government supporters rallied outside Thailand’s parliament on Sunday as lawmakers debated a street campaign threatening to topple Prime Minister Samak Sundaravej.

Shouting “Samak, fight on; Samak, fight on”, the group stayed clear of areas where anti-government protesters massed for a sixth day, including inside Samak’s official compound in Bangkok.

Two days after the unrest peaked when police fired teargas and rubber bullets to repel 2,000 protesters and demonstrations spread from the capital, Thailand’s political crisis appeared to be settling into a stalemate.

Samak, speaking on his weekly radio address, vowed never to bow to the demands of the protesters barricaded at Government House, who insist they will stay until the seven-month-old government falls.

“I am not afraid, but I am concerned about chaos in the nation,” he said, adding he hoped the parliamentary debate would find a way out of the prolonged crisis that is expected to further depress Thai shares on Monday.

Air and rail services were hit as protests and strikes spread last week [ID:nBKK183828], but flights to the resort island of Phuket resumed on Sunday after its airport, Thailand’s second-busiest after Bangkok, reopened after a two-day blockade.

Thousands of tourists were stranded and some countries issued travel warnings, threatening the image of one of Asia’s top tourist destinations. Samak vowed to review airport security.

“They have been trained to handle terrorists but what happens? How have they allowed these people to encroach on the runway?” he said.

POLITICAL DEADLOCK

Nobody knows how the deadlock will be broken, but possible scenarios include a military coup, a police crackdown, a snap election, or even intervention by the king, who has stepped into several political disputes during his 60-year rule.

Samak gave no details of his meeting on Saturday with King Bhumibol Adulyadej, but he berated the Thai media for speculating that he would resign after the royal audience, which Samak said he had requested to explain the political situation.

Analysts said Samak could hold on until Wednesday, when parliament will debate and probably pass a new national budget that would replenish government coffers for a snap election.

Samak’s People Power Party would be almost certain to win the vote on the back of massive support in the countryside, but it is unlikely the PAD would end its campaign.

“Whoever wins the vote this time, if they do not listen to the people’s voice, like us, what we are telling them is if you continue the policies of Samak, we will come on the street again and again,” PAD leader Sondhi Limthongkul said.

The PAD, a motley group of businessmen, academics and activists whose campaign against former Prime Minister Thaksin Shinawatra led to his overthrow in a 2006 coup, accuses Samak of being an illegitimate proxy of Thaksin. [ID:nBKK96523]

It also proclaims itself to be a defender of the king against a supposed plan to turn Thailand into a republic, a charge denied by Thaksin, who now lives in exile in London.

Thailand's stock market .SETI, one of the worst performers in Asia recently, has fallen 23 percent since the protests began in May amid fears of major unrest and policy paralysis at a time of slowing growth and the highest inflation in a decade.

“The lingering political uncertainty will continue to undermine market sentiment if there are no signs of a solution from the joint session of parliament,” Standard Chartered economist Usara Wilaipich said. (For full coverage of the crisis, double click on [nBKK69595]) (Additional reporting by Pracha Hariraksapitak; Writing by Darren Schuettler; Editing by Alan Raybould)

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