SCENARIOS-Will Thailand's political crisis deepen?

(For an analysis on Thailand's political crisis, click [nBKK227649])

By Martin Petty

BANGKOK, Aug 13 - Plans to submit a petition requesting a royal pardon for Thailand's fugitive former Prime Minister Thaksin Shinawatra have renewed fears of an intensification of the country's four-year political crisis.

The United Front for Democracy against Dictatorship , whose red-shirted ranks are filled largely by the rural poor, says more than 5 million Thais have signed the petition, which has angered royalists and the middle classes who despise Thaksin.

Analysts say chances of reconciliation in politically polarised Thailand are remote, while every instance of street protests or civil unrest further dents the confidence of investors, deters tourists and hampers economic recovery.

The following are scenarios for the coming months.

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ATTEMPT TO SUBMIT PETITION TRIGGERS UNREST

The petition to revered King Bhumibol Adulyadej has sparked anger among anti-Thaksin elements. Both the government and the royalist Peoples Alliance for Democracy could try to block its submission, prompting fears of clashes or even military intervention.

Most commentators, however, believe this is unlikely to provide a flashpoint. They say the motive behind the petition is to highlight Thaksin's mass support and to keep his movement alive. They see only a slim chance a pardon will be granted to the fugitive billionaire, who maintains his graft conviction was politically motivated.

"It does not matter whether a royal pardon will be granted or not. What seems to matter most are the numbers to show how popular Thaksin is," wrote Bangkok Post columnist Veera Prateepchaikul.

Markets would likely remain unruffled.

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ABHISIT CONSOLIDATES RURAL SUPPORT, RETAINS POWER

Prime Minister Abhisit Vejjajiva is implementing a wave of economic stimulus measures aimed at winning over the rural poor, Thaksin's traditional support base, to help him retain power and keep the pro-Thaksin Puea Thai party at bay when new elections take place.

Though he is making progress in reviving the economy, his efforts are unlikely to raise his support significantly among the poor, many of whom remain loyal to Thaksin because of his populist policies while in office.

"Abhisit has grasped how crucial it is to reach out to Thaksin's power base and try to emulate the populist policies," said political scientist Prudhisan Jumbala.

"But that won't be easy and unless the poor see the results of Abhisit's economic pledges, they won't be swayed."

Thailand's financial markets will continue to underperform their Asian peers if the political impasse is not broken.

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ELECTIONS CALLED, PRO-THAKSIN PARTY WINS MOST VOTES

Abhist has refused to call elections until the economy has recovered and constitutional reform is undertaken. Critics say he is buying time to try to shore up support for his Democrat party.

In two recent opinion polls by Assumption University, Abhisit was rated a less competent premier than Thaksin, whose popularity could help the Puea Thai party he backs win the most votes in the next election, if not enough for an outright majority.

Analysts say this scenario could lead to more unrest, due to the refusal by the different fronts of the anti-Thaksin camp to accept a nominee government of a fugitive criminal they see as a challenge to the monarchy.

Under this scenario, financial markets would likely fall.

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STALEMATE CONTINUES, MILITARY SEIZE POWER

Though unlikely at this stage, a military coup can never be completely ruled out in a country that has seen 18 actual or attempted coups in 77 years of on-off democracy.

Rumours of a putsch continue to swirl but analysts say Abhisit still has the backing of Thailand's politicised and power-hungry military, and he continues to toe its line.

"The inside view is Abhisit still enjoys their support and they don't have anyone they can replace him with," said Control Risks analyst Jacob Ramsay.

This could well be the least market-friendly scenario, given how maladroit the military-backed government was following the coup that ousted Thaksin in 2006.

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CONSTITUTIONAL REFORM RESTORES STABILITY?

Abhist says he is determined to achieve national reconciliation, but with no side seemingly willing to compromise, it is unlikely to happen any time soon. A constitutional reform committee has submitted its recommendations but anti-Thaksin elements are unlikely to agree to efforts by his supporters to win an amnesty for scores of disqualified politicians from his two disbanded parties.

"It will have to obtain the support of the military, monarchy and Bangkok elites," Eurasia Group wrote in a note to clients.

"This will be difficult as the anti-Thaksin forces will be concerned that concessions will eventually lead to a pro-Thaksin government, especially given the Democrats' track record of ineptness in consolidating power."

Consensus on constitutional reform, could go a long way toward healing the political rifts -- which financial markets would heartily welcome -- but not if it results in a Thaksin proxy government.