Protests take toll on Thai PM

Two weeks of street protests have taken a toll on Thai Prime Minister Abhisit Vejjajiva.

He works and lives in a military base. He barely sees his family. His home and office have been splashed with sacrificial blood.

Whether his 15-month-old, military-backed government survives depends on whether he can continue to resist protesters' demands for early elections, which the opposition aligned with ousted premier Thaksin Shinawatra would almost certainly win.

Public opinion in politically powerful Bangkok still favours him. But the longer protests drag on, the bigger the risk of the tide turning against him for failing to resolve the impasse, and the harder it will become to reject those demands, analysts say. All this is an unprecedented test for Abhisit, 45, a British-born, Oxford-educated economist lauded by investors for steering Southeast Asia's second-biggest economy out of recession with fellow Oxford alumnus Finance Minister Korn Chatikavanij.

"Abhisit's government has been phenomenal. They are very credible technocrats. Korn is a very savvy ex-investment banker who knows how to sell Thailand to the outside world," said Joseph Tan, chief Asia economist at Credit Suisse. "But this is not about capability. This is about rural Thailand."

That raises red flags for investors with a medium to longer-term horizon and puts pressure on the government with its royalist and establishment backers to find a quick way to quell the discontent at the heart of the mostly rural protest movement.

Analysts say that is especially so if the red-shirted protesters with their calls of class warfare and social injustice win more of the cheers they received unexpectedly in a 65,000-strong watershed procession on March 20 through a usually hostile Bangkok.

The 'red shirts' plan more rallies, and say they may stay for weeks after massing more than 150,000 on the streets on March 14 and making headlines emptying bottles of their blood outside Abhisit's home.

The displays of opposition political muscle bode ill for Abhisit's chances in elections that must be called by the end of next year and raise doubts the government can make inroads into the vote-rich north and northeast, a Thaksin stronghold home to just over half of Thailand's 67 million people.

Last April, the opposition was considered politically dead and reviled in Bangkok, home to Thailand's powerbrokers, after 'red shirt' protests sparked the country's worst street violence in 17 years, killing two people during April holidays.

"That's the main political risk facing Abhisit."

It is also the main risk facing Thailand's resurgent markets.

If Thaksin's allies prevail in polls that must be called by December 22, 2011, more political turbulence awaits. Royalist elites and military leaders would almost certainly seek to overturn that result, possibly with another coup.

Abhisit has repeatedly said his Democrat Party can win the next election, citing the effects on voters from two years of aggressive government spending in rural communities - from free health care to new roads, schools and low-income housing.

His policies echo those pursued by Thaksin, a 60-year-old former telecommunications tycoon beloved in the north and northeast for becoming the first civilian Thai leader to reach out to the poor through populist policies such as cheap loans.

Speaking to Reuters last month, Abhisit said his party could win 240 seats in an election, half the total and a substantial increase from his party's 165 seats in the last election in 2007, when a pro-Thaksin party won 233 seats.

That is doubtful, say analysts, who estimate the best he could do is 200 seats, leaving the Thaksin-allied Puea Thai Party with a strong chance of forming either a single-party government or comfortably leading a coalition.