The military's announcement came just before the country's Election Commission said the ruling Democrat Party should be dissolved for receiving an illegal donation of $8 million, a report in The Bangkok Post newspaper said.

The commission also said the Democrat Party, Thailand's oldest, allegedly misused an $895,000 political development fund provided by the European Commission.

The development was a double blow for Prime Minister Abhisit Vejjajiva who before the protests began last month had strong backing from the military.

The generals ousted former Prime Minister Thaksin Shinawatra in a coup in 2006 amid allegations of corruption. Many of the Red Shirts support the self-exiled Thaksin whose socialist policies favored the rural poor.

It appears that Abhisit's popularity with the military is on the wane after live television offered the country images of anti-government protesters and security forces fighting in the streets of the old town of the capital Bangkok on the weekend.

The military and Abhisit had said several times over the past month said that force isn't the way to resolve the problem.

But in an effort to unblock city roads tensions exploded with police in full riot gear charging down streets through clouds of tear gas. More than 20 people died in the in clashes as protesters beat back police who abandoned several damaged personnel carriers as they fled.

Red Shirt protesters marched through the streets this week carrying symbolic coffins -- one for each of the 15 dead protesters -- draped in the national flag. A BBC report said that at least two of the coffins contained remains.

The head of the army, Gen. Anupong Paojinda, told journalists that he was reluctant to use force to end the standoff. "The problem will be resolved with the House dissolution but when to dissolve depends on the outcome of negotiations," he is quoted as saying in a BBC report.

Anupong's statement could signal another round of talks between Abhisit and Red Shirt leaders after the last round fell apart over when Abhisit should resign. The prime minister offered to step down around October and call elections for January 2011.

But the Red Shirts insisted he formally step down within 15 days and call elections for early summer at the latest.

Thailand's political landscape could change drastically in the coming months if the Election Commission gets its way. Its decision to recommend the disbanding of the Democrat Party will be sent to the Constitution Court for a final decision, The Bangkok Post said. However, the process could take more than a month.

Democrat Party executives, including Abhisit, could be banned from politics for five years if the Constitution Court upholds the Election Commission's finding.

The alleged illegal donations to the Democrat Party were from cement firm TPI Polene for use in the 2005 general election and not declaring it. The current and previous constitutions limit individual donations to $308,000 a year.

Polene allegedly made the donations through a third party, an advertising called Messiah Business and Creation.

The military itself is set for change after Sept. 30 when Anupong retires. His second in command and in line for his job is Gen. Prayuth Chan-ocha, a noted hard-liner.

A Thai military analyst, Wassana Nanuam, writing in The Bangkok Post, said the military were unprepared for the strength and use of weapons by the Red Shirts last weekend.

There could be doubts over any agreed peaceful transition resulting from further talks between Abhisit and Red Shirts if the military under new management later on aren't happy with the details.

A tougher military may yet have a showdown with the Red Shirts if emboldened protesters attempt to bring back Thaksin for any new elections.

earlier related report
Bangkok protesters release soldiers
Bangkok (UPI) Apr 12, 2010 - Anti-government protesters are set to fan out across Bangkok again after releasing four soldiers captured during fatal clashes with security forces Saturday.

More than 20 people died and around 800 were injured when the military tried unsuccessfully to retake the old town area of Bangkok. The violent clashes were the first major incident during the monthlong protest by the Red Shirts.

Among the dead are six soldiers and a Japanese cameraman, Hiroyuki Muramoto, who was working for the Reuters news agency. The Japanese government has demanded that the Thai authorities investigate Muramoto's death.

The soldiers who had been captured said they had been well-treated.

The protesters had routed the soldiers in the end, leaving several damaged tracked personnel carriers in the streets, a BBC video report of the aftermath indicated. The vehicles were a focus of attention for passersby. Major shops in the area remain closed and public transport disrupted in the city center.

The night before Bangkok television showed police and military hosing protesters with water cannon as well as appearing to fire tear gas and what the head of the army acknowledged was live ammunition.

Fighting was intense at times as military in riot gear marched into street-wide barricades behind which protesters were gathered. Soldiers behind the lines pointed into the crowds while other soldiers fired in the same direction and also into the air.

A government spokesman said in a televised news conference Sunday afternoon that security forces used live ammunition but fired only into the air. They didn't fire live rounds at the protesters, he said. The military also said that protesters had used guns and tear gas.

The Red Shirts, who want the military-backed government of Prime Minister Abhisit Vejjajiva to resign and set up new elections within weeks, have vowed to continue their protests, said one of their leaders, Natthawut Saikua.

The Red Shirts and their United Front for Democracy against Dictatorship support the controversial and self-exiled former Prime Minister Thaksin Shinawatra who was ousted by the military in 2006 over corruption allegations. He won record election victories in 2001 and 2005 and is often credited with improving the financial situation of the poor, many of whom have traveled into Bangkok to swell the ranks of the Red Shirts.

After the weekend's violent clash, Abhisit went on television to express regret for the deaths but said protesters had been carrying weapons, including tear gas grenades which meant they wanted a violent protest. But he also said neither side should blame the other for the events.

Earlier this month Abhisit met with Red Shirt leaders to discuss ending the protests, which had been peaceful up to that time and appeared to be more street party than political rally. He agreed to stand down by the end of the year and hold elections in January.

But the meeting broke up with the Red Shirts demanding he stand down within two weeks and call elections for June.

Late last week the Red Shirts clashed briefly with security forces when they stormed a television station's headquarters and demanded that it restart broadcasting. There were no major injuries although police used tear gas.

Afterward, Red Shirts and the military agreed that the station, often broadcasting pro Red Shirt messages, restart broadcasting and the protesters left. However, the government closed the station again just before the weekend's fatal confrontation.

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