By Pracha Hariraksapitak and Ambika Ahuja
BANGKOK (Reuters) - Thai protesters refused on Tuesday to call off crippling demonstrations and the government said it had done all it could to reach a deal, dashing hopes for a swift end to a crisis that has stifled the economy.
The anti-government "red shirts" have accepted a timetable for a November 14 election proposed by Prime Minister Abhisit Vejjajiva but set a new condition -- that Deputy Prime Minister Suthep Thaugsuban face prosecution over a clash with troops in April that killed 25 people.
"They are trying to force the police to formally charge government officials," said Tanet Charoengmuang, a political scientist at Chiang Mai University.
"Failure to do so means the protest may drag on. Essentially, they refuse to go down alone and take all the blame."
The red shirts, who broadly support ousted former prime minister Thaksin Shinawatra, have been demonstrating since mid-March, at first demanding immediate elections. They say the ruling coalition has no mandate after coming to power in a parliamentary vote 17 months ago orchestrated by the army.
On April 10, troops clashed with protesters in a chaotic gun battle in Bangkok's old quarter. Twenty civilians and five soldiers were killed and more than 800 people wounded.
Suthep went to the Department of Special Investigation (DSI) on Tuesday to hear complaints filed against him as head of the Centre for the Resolution of the Emergency Situation, set up to oversee the response of the government and security forces.
"I think they are just dragging this on, looking for more conditions," he told reporters after meeting DSI officials. "But what we did was not to meet their condition. It was our intention to show our sincerity by entering the judicial process."
His visit failed to satisfy the red shirts, who said the DSI -- Thailand's equivalent of the FBI -- was too close to the government and that Suthep should surrender to police instead.
"We want a criminal charge against Suthep as well as Abhisit and we want a truly independent committee to be set up to investigate recent political violence," said Weng Tojirakarn, one of several leaders of the United Front for Democracy Against Dictatorship (UDD), as the red shirts are known formally.
"We cannot just end the protest without true reconciliation, which means they have to take responsibility for their actions."
The group said Abhisit should also be prosecuted when his immunity ends when the parliamentary session closes on May 21.
Government spokesman Panitan Wattanayagorn said it was the DSI's job to handle all cases tied to the crisis, in which 29 people have been killed and more than 1,000 wounded, but that police and other law enforcement agencies were also involved.
"The government has done its best," said Panitan, when asked if the authorities would do more to satisfy the protesters' demands. "It's not clear to me what they are demanding so we can't respond to something we don't understand."
ECONOMIC DAMAGE
The red shirts' campaign has paralysed an upmarket Bangkok commercial district, where thousands of protesters remained camped behind barricades of bamboo and tyres, and hammered the lucrative leisure and tourist sector.
Abhisit has come under pressure from the Bangkok middle classes and traditional elite to get tough but faces a dilemma about how to dislodge the red shirts, including women and children, from a camp that sprawls across 3 sq km (1.2 sq mile).
Singapore retailer FJ Benjamin, which runs one La Senza and two Celine franchises in Bangkok, said it may shut one or two of the shops because of the turmoil.
"Thailand has been an unfortunate disappointment. We don't see any light at the end of the tunnel," CEO Nash Benjamin said at an earnings briefing in Singapore on Monday evening.
Foreign investors, drawn by relatively cheap valuations, were net buyer of Thai stocks for almost seven weeks from late February. They have been net sellers for the past four sessions, offloading 14.5 billion baht of stocks (302 million pounds).
"It's still not clear that all red shirt leaders will respond positively to the government's reconciliation plan. This kind of uncertainty will fuel more foreign fund outflows," said Warut Siwasariyanon, head of research at Finansia Syrus Securities.
The mostly rural and working-class protesters accepted the election timetable proposed by the government, including plans to dissolve parliament in the second half of September.
But Pavin Chachavalpongpun, a visiting research fellow at the Institute of Southeast Asian Studies in Singapore, said that may be irrelevant given their conditions.
"With the red shirts' requests, I don't think November elections are going to happen. The government has said it will only go forward with November 14 elections if they can bring back some kind of normalcy to Bangkok," he said.
Abhisit does not have to call an election until the end of 2011 but offered the November poll as a way to end the crisis.
(Additional reporting by Ploy Ten Kate and Jason Szep in BANGKOK and Kevin Lim in SINGAPORE; Writing by Alan Raybould and Alex Richardson; Editing by Paul Tait)
