Thousands of red-shirted anti-government protesters massed on Monday by a military base in Bangkok where the premier has his temporary headquarters, as he resisted their demands for fresh elections.

The supporters of former prime minister Thaksin Shinawatra, who was ousted by the military in 2006, say he must dissolve parliament or face mass street demonstrations led by the United Front for Democracy against Dictatorship (UDD).


The UDD is largely backed by the rural poor, loyal to Thaksin because of his populist policies while in office from 2001-2006. Many red shirts are among the millions who helped the billionaire win two election landslides.

The UDD still backs Thaksin, despite a graft conviction and confiscation of $1.4 billion of his assets deemed by the Supreme Court to be ill-gotten gains from abuse of power. Many red shirts believe the graft case was politically motivated to keep him sidelined.

Not all red shirts back Thaksin unreservedly, but all are angered by the manner of his removal and believe democracy is being systematically undermined by powerful, unelected figures.


The red shirts say their campaign is a fight for democracy and a battle against Thailand's elite -- including royal advisers, influential businessmen, military generals and the judiciary -- who they say have abused their power and conspired to overthrow elected governments by various means.

The UDD says the government is illegitimate because it was not elected but put together by the army in a silent coup in December 2008 after a ruling pro-Thaksin party was dissolved.

It wants new elections, which it is confident the pro-Thaksin Puea Thai Party would win. It is widely believed Thaksin, who lives in exile, is the de facto leader of the UDD and Puea Thai.


Foreigners bullish on Thai stocks believe the government will survive, that prices already carry a substantial risk discount and that the economy is recovering well from the global downturn. Thai stocks have gained around 6.75 percent over the past month and were up 0.3 percent at the midsession break on Monday.

A prolonged unrest, however, could reverse that sentiment.

It could also force the Bank of Thailand to delay an expected interest rate rise because of the need to protect growth.

That might help government bond prices. Foreign investors have bought nearly 16 billion baht ($490 million) in March, partly driven by speculation about the timing of any rate rise. The central bank has said political events will be a factor.

In the medium term, Thailand will remain politically divided. With elections due to be called by the end of next year and the king still being treated in hospital, the risks may be higher than some investors realize.


Most analysts and some security agencies believe the protest will pass without violence, but they do not rule out the possibility of a so-called third hand seeking to stir up trouble to discredit the red shirts or the government.

While the UDD has accepted it will be difficult to oust the government through street protests, it knows it would be greatly discredited if it instigated violence. This has raised fears UDD opponents might provoke violence that could drag red shirts in.


In April 2009, the red shirts blockaded the prime minister's office and shut down key traffic intersections in Bangkok. They also forced the cancellation of an international summit 150 km (95 miles) away.

Hundreds of red shirts then battled for 14 hours with troops in Bangkok, Thailand's worst violence in 17 years. The UDD says thugs hired by the government caused the riots. Numerous rallies, large and small, have taken place since then, all peaceful and typically drawing about 10,000 to 20,000 people.


The red movement has staged numerous rallies in the past two months, targeting institutions and organizations they accuse of using double standards to favor the elites. It has managed to evict one of the king's most senior advisers from a country mansion built on national park land he was illegally occupying.

The UDD operates dozens of community radio stations, websites, a TV channel and merchandise shops, and claims to have scores of organizations running political schools.

Some pro-Thaksin military figures have claimed they have set up a people's army of militias, but the UDD has been quick to deny any paramilitary movement within its ranks.


Many Bangkok residents are tired of the UDD and accuse them of seeking to divide the country and instigate violence to allow Thaksin to regain political power, directly or indirectly. The reds say this attitude stems from alarmist government propaganda and a biased state media.

Businesses complain the UDD is damaging the country's reputation, scaring off investors and tourists, distracting the government and stifling economic recovery.

Many dismiss reds as gullible yokels paid to attend rallies. Others say they have a communist, republican agenda. The UDD denies this and says it supports the constitutional monarchy.

(Editing by Alan Raybould and Sanjeev Miglani)