Ex-Thai PM urges stunned supporters to accept ban

BANGKOK, May 31 (Reuters) Exiled former Thai prime minister Thaksin Shinawatra urged his stunned supporters today to accept the dissolution of their party and the political banishment of its leaders which threaten more turmoil.

Thaksin, in a statement read by his lawyer in Bangkok, also pressed the generals who ousted him in a bloodless coup last year to speed up elections promised for December. Analysts say the plan could be derailed by unrest.

''As founder who led the party until the coup, I must apologise to party members, the executive committee and every supporter for an unexpected outcome,'' Thaksin said.

''I would urge everyone to stay calm and don't make any moves,'' said the billionaire telecoms tycoon whose Thai Rak Thai (Thais Loves Thais) party was the first in Thai history to win an absolute parliamentary majority.

Hours later, some 600 anti-coup activists with links to Thaksin's old network gathered near Government House to protest the verdicts. About 300 unarmed police watched nearby.

''Democracy Back, Thaksin Come Back,'' read one banner held by a protester wearing a ''CNS Get Out'' headband, referring to the name the coup leaders gave themselves, the Council for National Security.

Thaksin's supporters were outraged by Wednesday's shock ruling by the Constitutional Tribunal, which found Thai Rak Thai guilty on two charges of fraud in last year's inconclusive poll, which was later annulled.

There was no immediate violence, but police set up extra checkpoints across the city of 10 million people.

''Nothing has happened yet, but we are worried that a third party could cause trouble,'' the Bangkok police chief, Lieutenant-General Adisorn Nonsee, told reporters.

The rival Democrat Party, Thailand's oldest party but no match for Thaksin's machine in the vote-rich countryside, was found not guilty of breaking election laws, and should now be in pole position for the promised December election.

''BYE BYE THAI RAK THAI'' The rulings, greeted by the English-language Bangkok Post with a banner headline reading ''BYE BYE THAI RAK THAI'', would ''reshape and realign'' Thailand's electoral landscape, political analyst Thitinan Pongsudhirak said.

''The military will come into an alliance with the surviving politicians and this alliance will be anchored with the Democrat Party,'' he said.

''The military has to protect itself, it has to watch its back, it has to have some cooperation from the politicians after the election because the military will be out of power.'' But the analyst said this new alliance could not ignore the millions of rural and urban poor who lionised Thaksin, in part for populist policies such as cheap health care, village funds and loans.

''If they are alienated, if the military and surviving politicians and the interim government neglect them, don't pay attention to their needs and grievances that Thai Rak Thai addressed, then there will be trouble ahead,'' he said.

INVESTORS SOOTHED The absence of any immediate unrest soothed investors who bid up Thai funds in overnight trade. Thaifund Inc rose 3.1 per cent in New York, while Thai Capital Fund climbed 1.9 per cent.

Thailand's main bourse was closed for a national holiday today, but it hit a 5-month high on Wednesday as the risk of immediate violence diminished.

But there is still considerable potential for trouble.

A referendum on a new constitution is due in September.

Critics call it undemocratic, shifting power from politicians to bureaucrats, and it could turn into a plebiscite on the coup and the banishment of Thai Rak Thai.

''I think anti-coup protests will intensify and should make it more difficult to pass the new constitution,'' said Sukhum Nualskul, a retired professor and political commentator.

However, without its senior leadership, including the charismatic Thaksin, it may be hard for Thai Rak Thai to reform under a new name and get ready in time for the December polls.

''Whether the parties would be sufficiently organised for December polls is debatable,'' said Elizabeth Mills, Asia analyst for London-based Global Insight.

REUTERS RJ KN1903