The Thai capital braced on Sunday for more unrest after the government rejected a peace overture from anti-government protesters offering to end increasingly violent protests in return for early polls.
The red-shirted supporters of ousted former premier Thaksin Shinawatra said they feared an imminent crackdown, and their leaders threatened more aggressive measures after rescinding an offer to end the protests if the government called elections in 30 days.
The stalemate rekindled fears of more unrest and a heavier toll on Southeast Asia's second-biggest economy as more retailers shut their doors and tourist numbers dwindle.
Thailand's embattled prime minister acknowledged he initially underestimated the protesters who have occupied central Bangkok for weeks, but he offered no initiatives to end the country's prolonged, sometimes bloody political crisis.
Prime Minister Abhisit Vejjajiva spoke in a nationally televised interview a day after the breakdown of talks with the protesters — who are demanding new elections — dashed hopes that a peaceful way could be found to end the stalemate.
"I admit, I didn't expect to see such a force ready to go this far," he said.
About 300 miles north of Bangkok, hundreds of "Red Shirts" formed a roadblock in northeastern Udon Thani province and stopped a convoy of 150 police from heading to Bangkok to strengthen security operations, a local official told Reuters.
The police retreated but the Red Shirts continued to block the road, the official said, raising questions over whether Prime Minister Abhisit Vejjajiva can exert full control over rebellious parts of Thailand as the deadly protests enter a seventh week.
The army is also having to deal with a rogue military element that supports the protesters and is allied with Thaksin, who was ousted in 2006 coup and sentenced to prison for corruption after fleeing the country.
Abhisit's six-party coalition government is under intense pressure from upper-class and royalist Thais to rebuff demands from the mostly poor Red Shirts. He stuck to an earlier offer to dissolve parliament and call elections in December, a year early.
"There must not be a precedent that allows intimidation to bring about political change," Abhisit said in his weekly television broadcast on Sunday. "Thirty days is out of question. I don't think this problem can be solved within 30 days."
He said the Red Shirts' peace overture looked insincere, designed only to boost their image and could not be considered amid threats. The protests, he added, were taking a worsening toll on Thailand's economy, Southeast Asia's second biggest.
Hotel occupancy in Bangkok has crumbled to 20 percent from about 80 percent in February, squeezing an industry that supports six percent of the economy. Some hotels such as the Holiday Inn near the main protest site have shut their doors entirely.
Taking those losses into account, Abhisit said he would soon scale back the government's projection of 4.5 percent annual economic growth this year.
"We will have to revise the growth rate again, especially after this month and last month, as we can see that the protests have had a big impact on tourism," he said.
Army chief Anupong Paochinda, sitting by Abhisit's side, sought to downplay signs of a split in the armed forces, but he acknowledged for the first time some retired and active officers had joined the protest movement.
"Some of those involved in the deadly attacks are still in the military," he said. "But on the division, any big organisation could have that."
Bangkok, a sprawling city of 15 million people, has been on edge after grenade blasts three days ago killed one person and wounded 88 in a business district, an attack the government blamed on the Red Shirts, who deny they were responsible.
That followed an April 10 clash between protesters and the army that killed 25 people and wounded more than 800 in Thailand's worst political violence in nearly two decades.
The army warned on Saturday it would forcibly disperse thousands of Red Shirts in a fortified encampment stretching 1.9-square miles in Bangkok's main shopping district, but it wants to first separate militants from women and children.
Protest leaders are urging supporters to remove their trademark red shirts to make it harder for troops to find them and they threatened more aggressive measures, including laying siege to Central World, the second-largest shopping complex in Southeast Asia, next to the stage at their main protest site.
"If you want Central World shopping mall back safely, you must withdraw army forces out of the nearby Rajaprasong area immediately," said Jatuporn Prompan, a protest leader.
The shopping centre at the Rajaprasong intersection has been closed since the protesters occupied the area on April 3.
"This hardening of the battle lines between the two sides does not bode well for Bangkok's security situation and a risk of another, and this time maybe even more violent, crackdown is immediate," risk consultancy IHS Global Insight said in a note.
Analysts and diplomats say both sides want to be in power in September during an annual reshuffle of the military, an institution central to protecting and upholding the monarchy.
If Thaksin's camp prevails and is governing at the time, big changes are expected, including the ousting of generals allied with Thailand's royalist elite, a prospect royalists fear could diminish the monarchy's influence.
Royalist generals are likely to resist that at all costs, making these protests radically different from any other period of unrest in Thailand's polarising five-year political crisis.
The government is stepping up accusations the Red Shirts want to overthrow the monarchy, which the protesters deny, raising the stakes in a country whose 82-year-old king is deeply revered but has appeared rarely in public since entering hospital Sept. 19.
The Red Shirts say British-born and Oxford-educated Abhisit came to power illegitimately in December 2008, heading a coalition the military cobbled together after courts dissolved a pro-Thaksin party that led the previous government.
They chafe at what they say is an unelected elite preventing Thaksin's allies from returning to power through a vote.