BANGKOK- Thai anti-government protesters in Bangkok surrendered on Tuesday, giving the harried prime minister some breathing space to try to fix the worsening economy.
We have to stop because we need to look after the lives of our supporters, said Jatuporn Prompan, one of the leaders of the red-shirted protesters loyal to former premier Thaksin Shinawatra who still commands widespread loyalty among the rural poor.
The government extended the New Year's holiday for the rest of the week for public safety in case the red shirts regroup in Thaksin strongholds and come back to the capital, government spokesman Panitan Wattanayagorn told Reuters.
Overall, I don't think this is the end of the story, said Danny Richards, senior economist at the Economist Intelligence Unit in London. This crisis still has a long way to go. But in terms of this protest in itself, Abhisit has managed to remain in control, and I think you'd have to say he has avoided a major crisis of confidence in his government.
Thailand's intractable political divide broadly pits royalists, the military and the urban middle-class against the rural poor loyal to Thaksin.
Standard & Poor's downgraded its local currency sovereign rating for Thailand on Tuesday and said political tension would remain high, whichever side was in power.
We believe that investor confidence has been damaged significantly as a result of the latest developments while, in the near term, inbound tourism will also be affected negatively, said S&P credit analyst Kim Eng Tan.
The tourist sector was barely picking up after a one-week shutdown of Bangkok's airports by protesters opposed to Thaksin late last year when a government allied to him was in power.
Abhisit was made to look foolish after the red shirts forced the cancellation of an Asian summit in the resort of Pattaya on Saturday, an event the prime minister had trumpeted as proof Thailand was returning to normal.
Protesters had besieged his office at Government House since March 26, demanding he resign and new elections be held.
But Abhisit restored some of his lost credibility after the military quelled violent protests on Monday between red shirts and troops at a major junction in the capital without too much bloodshed.
Two people died, both of them in skirmishes between residents and someone riding on a motorbike, while 123 people were injured in the clashes between soldiers and protesters, mostly from tear gas, authorities said.
Abhisit said on Tuesday the emergency in greater Bangkok that he imposed on Sunday would remain for the time being to restore order in parts of the capital where protests were still taking place but without their red shirts on.
Thousands of red shirt protesters were put on buses back to their home provinces after their leaders surrendered to the military at Government House.
The violence has damaged Thailand's crucial tourist industry at a busy holiday time. Several countries have issued advisories on travel to Thailand.
However, a festive spirt returned on Tuesday, as people came out onto the streets to soak each other with water, a tradition of Songkran, the Thai New Year.
The government announced the three-day holiday would be extended for the rest of the week, although financial markets will open as normal on Thursday.
Arrest warrants have been issued for Thaksin and 13 other pro-Thaksin United Front for Democracy against Dictatorship (UDD) leaders for violating the state of emergency, which forbids gatherings of more than five people for political reasons.
DO OR DIE
Army spokesman Sansern Kaewkamnerd said red-shirted protesters had tried to stop transmission of a state television channel in two places on Monday, and Thaksin supporters were thwarted from setting up a blockade in his northern Chiang Mai stronghold, police there said.
This is not the end, one protest leader, Nattawut Saikuar, told Reuters. We'll be back. Our leaders will meet after Songkran to discuss our next move.
Abhisit told Reuters in the early hours of Tuesday it was a do-or-die moment for the rule of law and he would not negotiate with Thaksin.
He said dissolving parliament in order to hold elections could lead to electoral violence, but he would listen to the grievances of protesters.
The end to the protests is a blow to Thaksin, ousted in a 2006 coup and living in exile to avoid jail on a corruption conviction. He had been calling for a people's revolution that for now has fizzled.