Military shakeup could derail Thai peace moves

By Martin Petty and Ambika Ahuja

BANGKOK (Reuters) - Thailand's prime minister has proposed a reshuffling of top military leaders that strengthens the influence of royalists and risks intensifying a violent power struggle in one of Asia's best-performing emerging markets.

According to a draft list pending royal endorsement, the top brass will be dominated by pro-establishment royalist generals opposed to the twice-elected former premier Thaksin Shinawatra and his powerful anti-government "red shirt" movement.

The military and Thailand's monarchy are the country's two most powerful institutions. The reshuffle looks set to strengthen the alliance, raising questions over whether the military and its royalist backers will play an even greater political role.

The top army chief post is expected to go to Prayuth Chan-ocha, who was central in the 2006 coup that ousted Thaksin and convulsed Thailand into four years of political turmoil marked by deadly street riots, mass protests and army crackdowns.

Although he said this week the army should play no political role, he is well known for his opposition to Thaksin, placing him in the same camp as a "yellow shirt" political movement who laid siege to Bangkok airport in 2008 in a protest that precipitated the removal of the last Thaksin-friendly government.

Political analysts say his appointment dims chances of reconciliation between the government and the red shirts following violence over April and May when at least 91 people were killed and nearly 2,000 wounded in clashes between red shirt protesters and troops in central Bangkok.

"Any chance of reconciliation now seems as elusive as ever," said Jacob Ramsay, a Singapore-based analyst at Control Risks, a strategic consulting firm based in Britain.

It could also embolden Prime Minister Abhisit Vejjajiva, sending a strident message of zero-tolerance of the red shirts.