By Bill Tarrant
BANGKOK (Reuters) - A prolonged and increasingly violent stand-off between government and red shirt protesters in Bangkok is worsening and could deteriorate into "an undeclared civil war," the International Crisis Group said.
"The Thai political system has broken down and seems incapable of pulling the country back from the brink of widespread conflict," the Brussels-based conflict resolution group said in a report released late on Friday.
"The stand-off in the streets of Bangkok between the government and red shirt protesters is worsening and could deteriorate in undeclared civil war."
Thailand should consider help from neutral figures from the international community, drawn perhaps from Nobel peace laureates, to avoid a slide into wider violence, it said.
Clashes between the military and the red shirts, made up of mostly rural and urban poor, have killed 27 people and injured nearly 1,000 in a seven-week-old drive to force early elections.
Dozens of mysterious explosions have hit the capital, including grenade attacks on April 22 in the Silom business district that killed one and wounded more than 80.
Bangkok anxiously awaits an army operation to evict the red shirts from their tent city, fortified at six entry points with ramshackle barriers of tyres doused in gasoline, razor wire and sharpened bamboo poles, which could lead to a bloodbath.
The fault lines are widening between the establishment -- big business, aristocrats the military brass and an educated middle class -- and the protesters, many of whom support former Prime Minister Thaksin Shinawatra, ousted in a 2006 coup.
Civil society groups brought the government and the protesters together but the talks faltered over when to hold elections. The red shirts offered a 90-day timeframe, but the prime minister rejected that last weekend.
The crisis comes as Thailand faces its first prospect of royal succession in more than six decades.
The government has stepped up accusations that the red shirt movement has republican leanings -- a provocative claim in a country where many consider the king almost divine -- and that key figures are part of a network to overthrow the monarchy.
The report recommended the creation of a high-level group of international figures, noting that Nobel Laureate and East Timor President Jose Ramos Horta was in Bangkok this week at his own initiative and could be joined by other figures.
The two sides should be brought together to end the military operation and limit the protests "to a small, more symbolic number of people who do not disrupt life in Bangkok," ICG said.
It could also begin negotiations on an interim government of national unity and preparations for elections, it said.
The government is unlikely to welcome such mediation. The foreign minister this week upbraided Western diplomats for talking with red shirt leaders at the encampment, which lies near embassies in the area that could be affected by violence.
BARRICADE MOVED
The crisis has cast a pall over the economy, decimating the tourist industry, closing businesses and depressing consumer sentiment. Finance Minister Korn Chatikavanij said Thailand's economic growth rate could be cut by 2 percentage points if it continues all year.
Deputy Prime Minister Suthep Thaugsuban ordered police to dismantle barricades near the entrance to Chulalongkorn Hospital, which protesters raided on Thursday night, thinking troops were hiding there.
Protesters agreed to comply with the order and several unarmed police officers arrived as red shirts re-assembled their barricade to create an access road to the hospital. However, the front-line remained just 50 metres from hundreds of armed troops.
Thursday's incident at the hospital caused outrage and leaders apologised for the 200 protesters who entered the hospital, alarming staff and forcing many patients to be relocated.
It also illustrated growing signs of a lack of coordination in the normally disciplined movement. Leaders ordered the barricade be moved back on Friday, only to have a rogue major-general who has overseen their security restore it.
That followed Monday's four-hour blocking of an overhead rail system, which leaders said they had not ordered and immediately told their security staff to remove tyres placed on the tracks.
Another setback followed on Wednesday, when security forces used rubber bullets and live ammunition to stop an attempt to hold "mobile rallies" outside their 3 sq-km (1.2 sq-mile) camp in a luxury shopping and hotel district.
The hospital incursion raised concerns about how much control leaders now have over their followers, particularly over Major-General Khattiya Sawasdipol and the shadowy "black clad" paramilitaries that have appeared among the red shirts as their defenders.
Royalist "yellow shirts," who besieged Bangkok's airports for a week in 2008 in a campaign to topple a pro-Thaksin government, have re-emerged to demand military action to disperse the red shirts, warning they could again take matters in their own hands.
(Additional reporting by Orathai Sriring; Editing by Jeremy Laurence)
