By Ambika Ahuja and Chalathip Thirasoonthrakul
BANGKOK (Reuters) - Anti-government protesters forced Bangkok's elevated railway system to shut on Tuesday, and the government warned it would adopt tougher methods to quell growing unrest in a seven-week crisis that has killed 26 people.
Red-shirted demonstrators said they planned to go on the offensive on Wednesday with daily mobile rallies across Bangkok, a provocative move in defiance of a state of emergency that could lead to clashes with troops or with rival protest groups.
"We will distribute pamphlets and create understanding among Bangkok people about what are doing," said Kwanchai Praipanna, a red-shirt protest leader. "If the troops stop us, we will break through roadblocks."
Deputy Prime Minister Suthep Thuangsuban vowed action to prevent that. "It is clear the protesters are not gathering peacefully. We will not be lenient with these people anymore."
Hopes for an end to the standoff were dashed at the weekend when Prime Minister Abhisit Vejjajiva rejected a proposal by the protesters for an election in three months, saying an immediate poll could turn violent and refusing to negotiate under threat.
POLITICAL SOLUTION PREFERRED
The red-shirted supporters of ousted former prime minister Thaksin Shinawatra have fortified their encampment in Bangkok's commercial heart that has forced five major shopping plazas to close, preparing for what they believe is an imminent crackdown.
"I'm not scared they will disperse us," said Bangkok electrician Niwet Sawangwong, 38. "I'm getting tired of all the threats and rumours. Maybe if they want to force us out, they should do it and let's see who wins and who are the bad guys."
Vejjajiva said the army had no plan to impose martial law.
"Well from my discussion with the people responsible and the people who have powers, they have no intention of declaring martial law at the moment," he told BBC World News.
"We are aiming to restore order as soon as possible."
The army, which led a failed operation against a red-shirt rally on April 10 that killed 25 people and wounded 800, does not want to be dragged into battle with civilians.
"The army would rather see the government exhaust political means first," a military source said on condition of anonymity.
"We need to prevent trouble from spreading and containing the unrest, but actually ending it altogether would be very difficult without a political solution as well."
Adding to the volatile mix, groups opposed to the red shirts and the loss to business and livelihoods the protests have caused in Bangkok, have held rallies in the capital and want to see the red shirt encampment broken up.
The mostly rural and urban poor red shirts inflicted traffic chaos in Bangkok on Tuesday by stacking tyres on the platform of a railway station by their protest site, worried troops would use the elevated rail system to attack them from above.
Operating company BTS closed the network for nearly four hours during morning rush hour. The trains carry around 450,000 passengers a day in the city of roughly 15 million people.
Overnight, red shirts massed on a main thoroughfare into Bangkok, trying to stop the army and police from sending reinforcements into the capital. Some army trucks got through.
Analysts say the deadlock and a possible deterioration in law and order could continue for weeks, damaging Southeast Asia's second-biggest economy, with consumer confidence flagging and the tourist industry suffering, especially in the capital.
Another three months of protests could shave 0.64 of a percentage point off Thailand's 2010 economic growth forecast of 4.5 percent, the government said on Monday.
The cabinet on Tuesday approved measures to provide relief to businesses affected by protests, a government spokesman said.
The stock market has been volatile, despite a good start to the quarterly results season. Stocks were down around 0.30 percent at the close, in line with other regional markets.
"UNDERMINING MONARCHY"
Thailand's revered but ailing 82-year-old King Bhumibol Adulyadej, regarded as almost divine and the nation's sole unifying figure, spoke publicly late on Monday for the first time since the turmoil erupted in his kingdom.
He did not directly address the political stalemate, telling newly sworn-in judges to perform their duty honestly and set an example to the public. He has stepped into previous political tussles, including one that ended a bloody conflict in 1992.
As the impasse deepens, the government is stepping up accusations that some senior figures in the protest movement want to overthrow the monarchy. The red shirts deny this.
Red shirt leaders frequently pledge allegiance to the institution but accuse the king's senior advisors of meddling in politics and orchestrating a 2006 coup that toppled Thaksin.
Some analysts see the anti-monarchy charges as an attempt to build public support for a harsh crackdown, noting similar accusations preceded tough action against students in the 1970s.
The military has distributed a list of people allegedly involved in a network to undermine the monarchy. It includes Thaksin, several red shirt leaders, academics and others involved in anti-government radio stations and websites.
Tough lese majeste laws restrict discussion of the monarchy.
Thaksin, a former telecoms tycoon revered by the poor and reviled by Bangkok's elite, was convicted in absentia on corruption-related charges and lives abroad to avoid jail.
A CNN broadcast of Thaksin speaking in Montenegro, where he is now a citizen, went abruptly off air on Tuesday. The government has also banned opposition media broadcasts under its emergency decree.
(Additional reporting by Viparat Jantraprap, and Avril Ormsby in London; Writing by Jason Szep; Editing by Bill Tarrant)
