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[sludgehound]

Thai Military Declares Martial Law to Curb Protests, Denies Coup

8:43 pm ET
Asian equity markets were mostly higher on Tuesday, shrugging off Monday's losses, while Thai shares were in focus after the army declared martial law. http://www.cnbc.com/id/101686981

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Bloomberg.net
By Anuchit Nguyen and Tony Jordan May 19, 2014 7:44 PM ET

Thailand’s army imposed martial law nationwide after months of political turmoil that brought down an elected government and tipped the economy into a contraction.

“The military wants to keep order in the country and asks people not to panic and lead normal lives,” according to a ticker running on Channel 5, which is owned by the Thai army. “Martial law is not a coup,” it said.

The latest move is the army’s most direct involvement in the Southeast Asian nation’s politics since 2006, when then-premier Thaksin Shinawatra was removed in a coup. Martial law already is in place in parts of southern Thailand, and then-Prime Minister Abhisit Vejjajiva briefly declared it over Bangkok in 2010 to quell anti-government protests.

Political polarization has escalated in the past decade and a half over the role of Thaksin and his allies in a nation that’s seen 11 coups since the end of direct rule by kings in 1932. Thailand has been without a fully functioning government since December, when then-premier Yingluck Shinawatra, Thaksin’s sister, called snap elections in a bid to ease the unrest.

The February poll was disrupted by anti-government protest leader Suthep Thaugsuban’s followers and the government and election officials were unable to schedule a new one before Yingluck was removed on May 7 after a court ruled she abused her power in office. Anti-government protesters have derailed plans for a July 20 election and the army had said previously it may use force to counter any escalation of violence.

The army acted a day after government data showed gross domestic product shrank 0.6 percent in the first three months of 2014 compared with a year earlier. Thai production and tourism were hurt by unrest that began in November against Yingluck’s government.

“The political divisions run so deep the risks are to the downside” for the economy, Sarah Fowler, an economist at Oxford Economics in Oxford, U.K., wrote in a note yesterday. An end to political disruptions could unleash investment plans that have been on hold amid the turmoil, she wrote. Some $15 billion of domestic and foreign investment plans have been held up, according to Oxford Economics.

To contact the reporters on this story: Anuchit Nguyen in Bangkok at [e-mail]; Tony Jordan in Bangkok at [e-mail]