BANGKOK (Reuters) - Thailand is heading for a political showdown as protesters plan to shut down Bangkok next week to sabotage an election while the government's supporters have vowed to stage massive counter-rallies in the country's provinces.
Prime Minister Yingluck Shinawatra is facing swelling opposition in Bangkok ahead of the February 2 election in which her supporters in the rural north and northeast are expected to return her to power - if the vote goes ahead.
Thousands of demonstrators marched through Bangkok on Sunday as a prelude to rallies starting on January 13, when they plan to block government offices and occupy key intersections for days in a bid to force Yingluck out and scuttle the poll.
The protesters accuse Yingluck of being a puppet of her self-exiled brother and former premier, Thaksin Shinawatra. They want an appointed "people's council" to oversee a vague reform platform, which includes electoral changes and decentralising power over a 12-month period before any election.
Thai markets are expected to face pressure this week over the growing uncertainty. The baht slid on Friday to its lowest against the dollar since February 2010 and the benchmark stock index has lost 15 percent since early November, when the latest crisis began.
"We will keep walking, we won't stop," protest leader Suthep Thaugsuban, a former top opposition lawmaker, said during Sunday's march.
"We will walk until we win and we won't give up."
Yingluck, 46, is refusing to postpone the poll, which she says would be unconstitutional. Any election delay could heighten the uncertainty and make it harder for her caretaker government to function.
Yingluck enjoyed two smooth years in power until November, when her Puea Thai Party tried to force through an unpopular amnesty bill that would have nullified a 2008 graft conviction against Thaksin and allowed him to return a free man. Protests erupted.
The battle, an outbreak of turmoil stretching back eight years, broadly pits Bangkok's middle classes, southerners and an old-money oligarchy of royalists, conservatives and generals threatened by Thaksin's rise, against his mostly rural supporters and tycoons who prospered under his rule.
Despite her determination to press ahead, Yingluck is looking more isolated the longer the protests drag on, with intervention by the judiciary or the military a possibility to break the deadlock.
Thailand's military has launched or attempted 18 coups in 81 years of fragile democracy, including the overthrow of Thaksin in 2006.
The military isn't rallying behind Yingluck. Its top general, Prayuth Chan-ocha, last month said "the door was neither open nor closed" when asked about intervention to defuse the crisis.
The National Counter Corruption Commission will also decide on Tuesday whether to press charges against 381 former lawmakers for trying to change the constitution to transform the Senate from a semi-appointed to a fully elected chamber, which the Constitutional Court in November ruled was unlawful.
It is unclear what the fallout would be from any subsequent ruling against the former legislators.
The impasse is also a risk for the economy, Southeast Asia's second-biggest, which is struggling with weak exports and consumer spending. Tourism, worth 9 percent of the economy, is suffering from the turmoil and plans for $65 billion in infrastructure spending intended to offset export losses will be delayed until the end of the year.
It has been a tough year-end period for Yingluck, who has avoided Bangkok for much of it, choosing instead to tour her Puea Thai Party's north and northeast strongholds.
Her supporters, known as the "red shirts", plan rallies in dozens of provinces to run simultaneously with the Bangkok blockade by their rivals. The red shirts have threatened pandemonium if the election is derailed or if the military intervenes.
Demonstrations have been mostly peaceful so far, although face-offs between riot police and anti-government protesters turned ugly last month, with scores hospitalised and three people shot dead by mystery gunmen.
Yingluck said on Sunday she was worried about unrest.
"The election may not be a panacea to solve the problems immediately, but the election is the best medicine to help solve conflict under the democratic system," Yingluck said in a post on her Facebook page.
"We should not leave our children to inherit this conflict."
Editing by Dean Yates