Thai political future uncertain after Thaksin banned

BANGKOK, May 31 (Reuters) Thailand faced more political turmoil today after exiled Prime Minister Thaksin Shinawatra was banned from politics and his party dismantled, raising fears of unrest ahead of elections in December.

Police and city officials were meeting to discuss the threat of protests in Bangkok, where a rally by activists opposed to last year's bloodless coup against Thaksin was planned for late in the day.

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

Acting Thai Rak Thai leader Chaturon Chaisang said it would try to appeal yesterday's ruling by the Constitutional Tribunal, which found Thaksin's former political juggernaut guilty on two charges of election fraud.

The tribunal also absolved the rival Democrat Party of any wrongdoing in an inconclusive election last year, which was later annulled.

''We will not use violence to protest the verdict, which we feel is unfair. We will go through legal channels to appeal,'' he told Reuters.

Analysts feared more trouble ahead.

''The Thai Rak Thai party is unlikely to go down quietly,'' political analyst Thitinan Pongsudhirak said.

''They have many supporters and they are not happy,'' the Chulalongkorn University lecturer said of the 16 million people who voted it into office in a 2005 landslide.

''This means that anti-coup and anti-government protests will intensify,'' he said, referring to Thaksin's huge support in the countryside and among the urban poor, who gave him the first parliamentary majority in Thai history in 2001.

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 unrest could still come, analysts said, with a referendum on a new constitution due in September ahead of a general election the government installed by the military has promised for December.

''It could be seen as politicised,'' Sukhum Nualskul, a retired professor and political commentator, said of the court rulings.

''I think anti-coup protests will intensify and should make it more difficult to pass the new constitution,'' he said.

Despite the five-year ban from politics on the entire 111-member executive committee, Chaturon said the party would reform under a new name once the coup leaders lift restrictions on political activities.

''The people who seize power dictate right or wrong in society, though that power came from the end of a gun barrel,'' he told supporters.

However, without its senior leadership, including the charismatic Thaksin, it would be hard for Thai Rak Thai to get organised 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.

''I suppose it depends on the extent to which you view Thai politics as personality-driven. Is the TRT bigger than Thaksin, as it were?'' The road ahead looked more rosy for Democrat leader Abhisit Vejjajiva, the Nation newspaper said, suggesting the 43-year-old, British-educated economist was poised to contest the December elections virtually unopposed.

''Our great mission is to guide the country back to the democratic path by advancing towards elections in December under a constitution that is just,'' the newspaper quoted him as saying.

The Bangkok Post, which splashed the headline ''BYE BYE THAI RAK THAI'' across its front page, said it was time for national reconciliation to end ''the worst political divide in modern Thai history''.

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