By Amy Sawitta Lefevre
BANGKOK (Reuters) - An escalation of mass street rallies in Bangkok could deepen divisions in polarized Thailand and threaten the stability of a government feeling the backlash of a political gambit that it might now be regretting.
Several thousand protesters gathered in central Bangkok on Tuesday in protest against a government-backed amnesty bill that has galvanized a cross-section of society into action, ending two years of relative calm.
Critics say the bill is an attempt by Prime Minister Yingluck Shinawatra to whitewash the crimes of her brother, former premier Thaksin Shinawatra, and bring him home without facing a two-year jail term handed down in 2008 for graft.
Thaksin, a telecoms tycoon-turned-populist politician, remains a divisive figure, idolized by the urban and rural poor but reviled by royalists, elites and the urban middle class, who chafe at the prospect of his return to office.
A rejection of the bill by the Senate late on Monday appears to have had no impact on protesters who vowed to continue until the draft was killed off, threatening the kind of turmoil that has plagued Thailand since the military ousted Thaksin in a 2006 coup.
The lower house, controlled by Yingluck's Puea Thai party, can re-introduce the bill in another 180 days.
The amnesty was also a policy of the last Thaksin-backed government, led by the People's Power Party. Protests against it were intense and violent and led to a week-long occupation of Bangkok's main airport in late 2008, which ended when the party was dissolved by a court for electoral fraud.
Rushing the amnesty may have been a miscalculation by Yingluck. It has invigorated the opposition and appears to have dented the popularity she has gained, in part through her crafted image as a compromising, non-confrontational leader.
"She has suffered some setbacks. This amnesty gambit has been very costly for her, even more so for her brother, Thaksin. But she could regain her footing," said Thitinan Pongsudhirak, a political analyst at Bangkok's Chulalongkorn University.
"She has bounced back before, after the floods, and she could do so again."
Thailand's recovery after its worst floods in 50 years at the end of 2011 helped bolster confidence in Yingluck's administration and at least partly dispelled accusations she was her brother's puppet.
It remains to be seen whether she can avert a major crisis this time, which comes as Thailand's economy, Southeast Asia's second-biggest, is suffering from weak export growth and consumer spending and rising household debt.
Anti-government protests have been taking place since July but the most significant spell started a week ago and has ratcheted up tension.
Thaksin's "red shirt" supporters paralyzed parts of Bangkok for weeks in early 2010 in an attempt to oust the previous government, before the military used deadly force to break up the 10-week protest. Along with pardoning Thaksin, the bill offers amnesty to those responsible for that crackdown.
Some factions of the United Front for Democracy Against Dictatorship (UDD), as the red shirts are known, want the perpetrators punished and have joined the anti-amnesty protests, but it seems unlikely core members would abandon Thaksin's ruling Puea Thai Party.
"We stand by the government we chose to elect," UDD leader Thida Thawornseth, told Reuters.
Chances of an early end to the impasse appear slim as anti-government protesters called for a three-day nationwide strike starting on Wednesday to try to garner more support on the streets.
"We will force the government to kill this amnesty and will stay until this happens," said Suthep Thaugsuban, a protest leader and a former deputy prime minister.
Adding to Yingluck's woes is Monday's ruling by a U.N. court in favor of Cambodia in a dispute with Thailand over land around an ancient temple on their border. The government is concerned that could upset nationalists, who see Thaksin as soft on disputes with Cambodia, and add impetus to the rallies.
More than 10,000 riot police were stationed around main government buildings near the rallies, which are stoking fears of clashes between rival groups, the kind of violence that has sunk governments in the past.
"Demonstrators are hoping for an over-reaction from the government," added political analyst Thitinan.
(Additional reporting by Aukkarapon Niyomyat; Editing by Martin Petty and Robert Birsel)