Thailand's Prime Minister Refuses to Resign

Embattled Prime Minister Samak Sundaravej called the political crisis in Thailand a shameful embarrassment for the country but vowed not to resign or dissolve Parliament, saying Thursday it was his job to protect democracy.

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CNBC.com

Samak vowed in a live radio broadcast that he would not bow to demands of anti-government protesters, a stance likely to inflame a national crisis that started Aug. 26 when thousands of activists occupied the grounds of his office compound.

"I am not resigning. I have to protect the democracy of this country," said Samak, who has not been able to enter his office since the protesters set up camp on the grounds of Government House.

"I am outside, and I can't work properly," he said, noting several times that the world was watching Thailand. "Is it shameful? Yes. "But he added, to "resign won't mean anything, even if I dissolve the Parliament."

News of the planned radio broadcast leaked Wednesday night, fueling speculation that Samak's resignation was imminent. The front-page of the English-language Nation newspaper ran with the banner headline Thursday: "Samak on the Brink of Exit."

The announcement came after Samak imposed a state of emergency in Bangkok on Tuesday after bloody rioting between his supporters and opponents left one person dead.

The anti-government protesters have publicly humiliated Samak by defying the emergency decree and remaining at his office compound, after the army declined to use force to remove them.

Foreign Minister Tej Bunnag resigned Wednesday, a move widely viewed as a sign that Samak was losing support from his own government.

Samak said Tej, a respected diplomat who was appointed to his post July 27 to help ease political tensions, had been "pressured by many sides" and that his wife was not well.

The protests have been organized by the People's Alliance for Democracy, which has already forced one prime minister from power -- staging protests in 2006 that paved the way for the bloodless coup that removed Thaksin Shinawatra.

(Watch Sondhi Limthongkul, the leader of the People's Alliance for Democracy discuss why he believes the upheaval will eventually make it easier for investors to do business in Thailand)

Thaksin, a telecommunications tycoon, recently fled to Britain to escape corruption charges. The protesters say Samak is Thaksin's stooge and is running the government for him by proxy.

The army chief, Gen. Anupong Paochinda, has insisted the military will not stage a new coup.

Anupong also has made it clear that if troops are ordered into Bangkok's streets, they will be armed only with riot shields and batons, and will not use force -- roughly the same position taken by Samak since the crisis began.

Even if peace can be maintained, the government's failure to resolve the deadlock -- and take back its own offices -- makes the business community skittish.

Since the beginning of the year, the Stock Exchange of Thailand index has fallen 24 percent. The index is at it lowest level in more than six months. In the second quarter, the country's economy slowed for the first time in more than a year. The central bank expects growth to ease further in the second half amid political crisis.

The Credit Suisse Group advised investors in a report to avoid stocks in Thailand as political turmoil intensifies.

Even if Thailand can avoid serious street violence, "the country is at risk of becoming ungovernable," said the financial group.

But Kongkiat Opatwongkan, head of Asia Plus Securities, saw some hope in the latest developments.

"The state of emergency actually allayed some fear of another clash between the two sides," he said. "Investors are waiting to see what form of negotiation or compromise both sides might engage in but if this drags on, it would have a very negative impact on investment and the economy.