By Apornrath Phoonphongphiphat
BANGKOK (Reuters) - Thai government officials huddled on Saturday to consider a peace overture from tens of thousands of demonstrators demanding snap elections that could end weeks of protests and deadly clashes in Bangkok.
The red-shirted supporters of ousted former premier Thaksin Shinawatra said on Friday they would end a three-week occupation of Bangkok's ritzy shopping district if the government dissolved parliament and announced elections in 30 days, softening a previous demand for an immediate dissolution.
It was unclear whether the military-backed government of embattled Prime Minister Abhisit Vejjajiva would agree to that timetable. Analysts say he is running out of options after weeks of unrest by protesters who have gained a clear upper hand.
"The government might have to agree to a three-month timeframe, but this doesn't mean this will ease the tensions," said Pitch Pongsawat, a political scientist at Chulalongkorn University. "There doesn't seem to be any real control about what's been happening on the streets."
With the new offer, the government would then have another 60 days to hold the election.
Abhisit and other senior government officials were meeting at a military base to consider the red shirts' offer after talks. No response was expected on Saturday, but Abhisit was scheduled to appear on television on Sunday.
The violence and deepening political divide has spurred talk of civil war in Southeast Asia's second-biggest economy.
The United Nations and foreign governments have urged both sides of the political divide to show restraint after two incidents of street violence killed 26 and injured hundreds.
The central bank said this week the crisis was hitting confidence, tourism, private consumption and investment. The Fitch Ratings agency has downgraded its outlook on Thailand's local currency because of the political strife.
The red shirts say British-born and Oxford-educated Abhisit came to power illegitimately in December 2008, heading a coalition the military cobbled together after courts dissolved a pro-Thaksin party that led the previous government.
Abhisit was non-committal about the offer of compromise in comments to reporters late on Friday. "I'm here to solve the problem. If I can't solve the problem I should not stay (as prime minister)."
GOING AFTER 'TERRORISTS'
But government spokesman Panitan Watanayagorn said the talks should not take place "under pressure or any kind of threat."
A series of grenade blasts killed one person and wounded 88 on Thursday in Bangkok's business district, an attack the government blamed on the red shirts, who denied responsibility.
The risk of further violence remains high.
Tens of thousands of red shirts remain in a fortified encampment at a district of high-end department stores in central Bangkok, vowing to stay until parliament is dissolved and defying a state of emergency that bans large gatherings of protesters.
The military says the crowd includes "terrorists" willing to use violence to bring down the government and overturn the monarchy and wants to go after them, not peaceful protesters.
"We're ready to wipe out terrorists and we'll do it at an appropriate time," army spokesman Sansern Kaewkamnerd said.
"We need to make sure very few innocent people are there before doing anything."
Red-shirt protesters bolstered their barricades after those tough remarks.
The red shirts also want Abhisit to begin an independent probe into a clash that killed 25 people and wounded hundreds in a failed attempt to disperse the protesters on April 10, and for troops to withdraw from their protest site.
Some red shirt supporters were lukewarm about the softened demands. "I can accept their decision," said one, named Kamol. "But if (Abhisit) remains, we will not be able to accept it."
The compromise offer came shortly after army chief Anupong Paochinda offered his own overture, telling his commanders there would be no crackdown because it would do more harm than good.
A powerful backlash against the mostly rural and working-class red shirts is growing among Bangkok's royalist establishment. A pro-government group calling themselves "multi-coloured shirts" have begun daily rallies in the capital demanding the red-shirts go home.
"This hardening of the battle lines between the two sides does not bode well for Bangkok's security situation and a risk of another, and this time maybe even more violent, crackdown is immediate," risk consultancy IHS Global Insight said in a report.
Diplomats and analysts say the army's middle ranks look dangerously split with one faction backing the protesters led by retired generals allied with Thaksin, who was ousted in a 2006 coup and later sentenced in absentia for corruption.
(Writing by Jason Szep; Additional reporting by Panarat Thepgumpanat; Editing by Bill Tarrant and Paul Tait)
