BANGKOK - Thai Prime Minister Yingluck Shinawatra suffered a blow on Wednesday when a court knocked back a constitutional amendment that could have strengthened her party's legislative grip, a ruling that could cool tension that was close to boiling over.
Thailand's Constitutional Court said moves to change the composition of the Senate were flawed, but stopped short of dissolving Yingluck's ruling Puea Thai Party for fraud after several lawmakers had proxies cast their electronic votes for them during a Sept. 28 house session.
The decision is the latest setback for Yingluck's government after the Senate last week rejected an amnesty bill that critics say was designed to whitewash the crimes of her influential, self-exiled brother, former premier Thaksin Shinawatra, to clear him to return home.
Nearly half of the members of the Senate are appointed and the proposed changes involved scrapping appointed senators to create a larger, fully elected chamber. But the judges ruled that the proposal would have allowed family members of existing lawmakers to win seats.
Yingluck's party dominates the elected lower house of parliament but has been unable to use its electoral strength to control the Senate fully.
Pro- and anti-government groups had mobilised supporters at opposite ends of Bangkok in anticipation of the verdict, which was closely watched by investors concerned a ruling party dissolution would anger Thaksin's supporters.
Thailand's benchmark index index has fallen almost 5 per cent from a high of 1,484.72 set on Oct. 18 amid worry over political tension, which has seen the baht currency weaken 1.8 per cent this month. Sentiment is expected to improve.
"The Puea Thai Party has learned a hard lesson both in terms of the amnesty bill and the proposed charter changes," said Kampon Adireksombat, an economist at Tisco Securities. "The government is likely to keep a low profile to recover."
The protests have brought Thailand's intractable political divisions back to the surface after two years of relative calm.
Outrage over the proposed amnesty mobilised many urban, middle-class supporters of the royalist "yellow shirt" movement that undermined two governments loyal to the populist former telecoms tycoon Thaksin in the past.