Thai PM buys time with referendum plan

By Darren Schuettler

BANGKOK (Reuters) - Prime Minister Samak Sundaravej has bought some time with a referendum aimed at defusing street protests, but it will do nothing to resolve Thailand's fundamental political conflict, analysts say.

Leaders of the three-month old campaign to oust the 73-year-old premier vowed to continue their protest, including the 11-day occupation of Samak's official compound in Bangkok.

But with a national referendum looming it becomes much harder to force Samak out through intervention either by the military or the king, who has stepped into disputes in the past.

"I don't see any quick resolution of this situation," Giles Ungphakorn of Bangkok's Chulalongkorn University said, adding Samak had cleverly batted the ball back to the anti-government People's Alliance for Democracy (PAD).

"The PAD's strategy now will be to increase pressure and they will have to discredit the referendum," he said of the motley coalition of royalist businessmen, academics and activists leading the sit-in at Government House.

Samak, who refuses to quit or call an election, announced the referendum on Thursday, two days after imposing emergency rule in Bangkok. He said on Friday he was considering lifting the decree after the army refused to evict the PAD by force.

A new referendum bill passed its first reading in the Senate on Friday, but it could take up to 90 days for final approval.

It's still not clear what question would be put to Thailand's 65 million people. But Samak would likely win on the back of strong support in the countryside, where many Thais blame the protests in Bangkok for hurting the economy.

"Many of these well-off protesters may think they can afford to join the rally, but they don't realize that the demonstration is hurting everybody else in this country," glass blower Prapha Janjaem said in Baan Bangsai, a village north of Bangkok.

The stock market has fallen more than 26 percent since the PAD launched its campaign at the end of May, while the baht has plunged to a 19-month low against the dollar. The crisis has also hit tourism, with airlines and hotels reporting cancellations.

Rubber exporters said some shipments had been disrupted by anti-government industrial action by rail workers.

Thanachart Securities said a referendum would not end the crisis, which has eroded investor confidence in Thailand.

"We feel there are just two ways out -- either the prime minister quits or he calls an election," it said.

PUPPET OR PM?

The PAD, which accuses Samak of being a puppet of former Prime Minister Thaksin Shinawatra, removed in a 2006 coup, launched its street campaign in May, signaling a return to open political warfare in Thailand.

Thaksin, still admired by rural Thais who handed him huge parliamentary majorities in return for his populist programs, is believed to be pulling political strings from exile in London.

He is despised by Bangkok's middle class, the military and the royalist establishment, who all opposed his modernizing agenda. He was also accused of abuse of power and corruption while in office.

"The current drama could take years, if not decades to resolve itself. It is nothing short of a class war with two opposite groups of elites backing their respective sides," Bangkok's Nation newspaper said.

It said Samak was betting that the military "don't have the cheek" to launch a coup before the referendum.

Army chief Anupong Paochinda has said repeatedly that a putsch would not solve the country's political problems.

But more bloodshed on the streets could prompt the military or King Bhumibol Adulyadej to intervene. A move by the latter would be unlikely to favor the government, although it would be nuanced and espouse the need for national harmony and stability.

"The question is whether or not the PAD will have enough patience to wait for this vote or will it continue to provoke the situation," said Kim Eng Securities analyst Vikas Kawatra.

There has been no major violence in Bangkok since emergency rule was imposed on Tuesday, but the situation remains tense.

A gunman on a motorcycle fired at 100 students marching to protest at Samak's home on Thursday night, wounding two of them.