By: Our Correspondent

The growing lack of security and the Thai opposition’s illegal occupation of Bangkok intersections and key government ministries are having a dire effect on the economy, with one major Japanese auto company, Toyota, warning that investment could be affected.

Last week, the government warned that the protests could take a full 2 percent off the country’s economic performance, an indication that for the first time in seven years of varying levels of political disarray, the protests are cutting into growth. The stalemate is believed to have cost the country as much as 10 percent of its foreign exchange reserves, as the central bank intervenes to defend the baht. The cost of credit protection has doubled since last May, a statement that the market doesn’t think that the central bank can do this indefinitely.

Thailand’s leaders declared a state of emergency Tuesday in response to the anti-government protests that have choked the capital and provoked bloodshed and traffic chaos. Tourism is being negatively affected just ahead of the annual invasion of tourists from Hong Kong, China and Singapore for the upcoming Chinese New Year festivities. Airlines have cut back flights to the country.

At the same time, a leader of Thailand’s pro-government “Red-Shirt” group was shot and wounded outside his home in northern Udon Thani. Kwanchai Praipana is a local radio presenter who played a significant role in the 2010 events in Bangkok, when Red Shirts, then representing the opposition, invaded and occupied downtown Bangkok. He survived, but the incident is a poor harbinger of a return to peace any time soon.

In travels around Bangkok, massive traffic jams create a sense of frustration for ordinary citizens in a city of well over 10 million. The Bangkok-based Nation newspaper Wednesday reported the first drop seen in Greater Bangkok real estate prices since 1997.

The emergency decree issued by caretaker Prime Minister Yingluck Shinawatra is to last 60 days and is the government’s latest attempt to make sure that snap elections set for February 2 go ahead and enable the government to wrest back control of parts of the city occupied by anti-government forces headed by political maverick Suthep Thaugsuban, a former Democrat Party deputy prime minister.

Suthep scoffed at the invocation of the emergency decree, telling his supporters not to be afraid and promising the noisy, stormy rallies would continue.

“We will keep fighting until we win,” Suthep said.

The former lawmaker already faces murder charges related to the earlier 2010 crackdown on the Red Shirts, mainly from Thailand’s northeast Isaan region, who are allies of Yingluck’s legally elected government and more importantly her brother, Thaksin Shinawatra, who was deposed as premier by a coup in 2006.

Suthep resigned his seat in parliament in November to lead the People’s Democratic Reform Committee (PDRC) which is conducting the mass protests to unseat the current government.

Yingluck, 46, is the youngest sister of Thaksin, who went into voluntary exile after being ousted and convicted of corruption. He is believed to exercise a strong influence on the government from his base in Dubai.

Yingluck said she had instructed officials to exercise utmost restraint when handling the protest; nine people have already been killed and dozens injured since it started ten days ago.

Officials said they have no plans to crack down on protesters, but the emergency decree gives the government the power to establish curfews, apply censorship on the news media and disperse gatherings. Ultimately, military force could be used. The decree is issued under the same law that allowed the previous government to violently disperse the Red Shirts in 2006

The current demonstrators blow ear-splitting blasts on whistles and shake plastic hand-clappers during speeches on stages erected at crucial intersections. The numbers rise and fall but the disruptions have been going on in various ways for more than two months, ever since the government’s ill-conceived attempt to pass an amnesty bill that would have allowed Thaksin to return home and evade prison. The rallies are well-funded and usually quite merry, but there are undertones of political threat and recent grenade blasts have injured dozens and killed one.

Many of the protesters are members of the Bangkok elite, who seem to know their way around Paris and London but know little about life in Thai provinces in the north and northeast, where Thaksin’s populist measures created a political base that led to a series of electoral victories for him and his proxies since 2001.

Many of the elite do not seem to believe that voters outside Bangkok, particularly in the rice-growing northeast, have the right background to determine the fate of the country. They accuse Thaksin’s supporters of selling their votes because such measures as subsidized health care and rice prices are deeply popular if often economically unsound.

The protesters and their supporters want to suspend democracy for an ill-defined period of rule by an appointed council of some kind that will supposedly undertake political reforms.

The real reform the opposition wants, of course, is a guarantee that Thaksin and his sister will leave power forever. As the most popular politician in Thailand’s history, Thaksin is seen by his opponents as a threat to the very structure of the society. His political machine represents a challenge to the cozy relationship between the monarchy, the military and the largely bland civilian politicians who have governed the country at various times since the 1932 overthrow of the last king to wield absolute power.

The divide has become so bitter that a solution seems almost impossible to discern. The February 2 election, if it happens, will certainly be won by Yingluck’s Pheu Thai Party since the Democrats have said they are boycotting the polls. That election would do nothing to solve the crisis, however, which is veering toward very dangerous ground for all sides.

With the ailing monarch seemingly too ill to influence an outcome or even appear in public there is no force capable of sorting out the mess. A military coup seems possible but many observers say it is not clear that the military is united on which side to support. The last putsch badly tarnished the image of the armed forces and the country and the uniforms seem determined to avoid taking over if possible.

The class divide is also real. One of the so-called elite recently said that 300,000 “quality people” would be better than 15 million “poor quality people,” such as Thaksin’s scruffy northern voters. “Water buffalos” is one way the snobbish elite in Bangkok describe northern rural folks and it’s not a pretty thing to hear.

It is easy to meet these supposed poor quality people, and ask them about their lives. Most of Bangkok’s thousands of taxi drivers come from the northeast when the rice harvests are over, along with small shop owners, factory workers and others who have migrated to the city in recent years.

“Isaan people” are quite willing to talk, and tell a listener how tough life is for them at the bottom of the pay scale in an increasingly expensive capital.

While they may have sold their votes in the past, they are now politically savvy, and want to use their ballots to better their lives, as most say happened under the billionaire Thaksin, who introduced improvements in health care and education in hundreds of Thai villages while generating undeniable graft at the same time.

Given the severe divisions in society, it is no exaggeration to say that the specter of civil war does indeed hang over Thailand. One Thai human rights researcher said that the current embroglio “is the worst yet,” among Thais, and that includes the troubles in 2010. A foreign business consultant with long experience in the region this week described the situation as “like the US in 1861,” referring to the American civil war. He wasn’t kidding.

Fortunately, Thais in the past have usually pulled back from the brink of disaster. But Thailand’s current divide seems different and Thailand seems to be in the throes of tearing itself apart.

Before the last coup in 2006, the military warned farmers and laborers, Thaksin’s constituency, to “keep out of politics” as if they had been disenfranchised. They have refused to go away.

Though he has no constitutional authority of any kind, Suthep talks as if he thought he should be prime minister. In this combustible situation ‑ he has eight personal bodyguards – Suthep is little more than a rabble rouser backed by the powerful Thai establishment.

Some blame him for partial responsibility in the killing of up to 90 Red Shirts three years ago, when the army was finally sent to clear the streets after months of protest. In almost any country but Thailand the police would move in, as in the current situation, to clear the streets of crowds that are blocking traffic at crucial points, but so far the protesters have been given a clear field.

It’s part of the charm – and frustration – of Thailand that things are that way. The police are believed to be supporters of the present government, because Thaksin was himself a policeman before using those connections to go into the telecommunications business.

The army is presumed, broadly but certainly not totally, to support the middle and upper classes, though they are staying out of politics for the moment.

Serious bloodshed seems sadly possible if no way forward is found. Another coup would make Thailand look bad just as neighboring Myanmar has dramatically improved its human right record over the past two years, though not all political prisoners have been released yet.

Thailand, despite its reputation as one of the world’s great fun spots, marches to the beat of its own drum, summed up in the universal expression, mai pen rai, or “never mind.” It is also, despite everything, a country that has a real charm of its own, which is why foreign tourists still show up even when bullets are at risk of flying.

One hopes that all sides will find a way to let charm and reason prevail before it is too late.