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Anti-government demonstrators are arrested by Thai soldiers in downtown Bangkok on Friday.Vincent Yu/The Associated Press

In the anxious wake of another deadly day of clashes on the streets of Bangkok, Thailand's leaders find themselves facing a stark choice: allow the country to drift further into chaos and lawlessness, or order a crackdown that is sure to bring more bloodshed and which some believe could drive this country into civil war.

Bangkok received a bitter taste of both options Friday as thousands of Thai soldiers moved in to surround the site of the two-month-old "Red Shirt" anti-government protests, provoking a furious response that plunged the city centre into anarchy.

Gangs of Red Shirts, spurred by rumours that the government was preparing to launch a crackdown, hurled stones and Molotov cocktails at the advancing troops, blocking roads and setting at least one police bus on fire. At least 16 people were killed and some 125 others were injured as the army responded with a mixture of rubber bullets and live rounds. Loud explosions and gunfire were heard throughout the day.

Thirty-nine people have now died since the Red Shirts, many of whom are supporters of fugitive former prime minister Thaksin Shinawatra, began their protest on March 12. The protesters, who view Prime Minister Abhisit Vejjajiva's government as illegitimate, are calling for the dissolution of parliament and fresh elections.

The violence subsided as night fell, but there was mounting pressure on Mr. Abhisit's government to take firm action to end the rolling protests that have paralyzed parts of Bangkok for weeks, costing the tourist-reliant economy hundreds of millions of dollars and forcing the closing of major shopping malls and hotels.

Friday, many foreign embassies - including those of Canada, the United States and Britain - also announced they would close indefinitely because of the violence. The U.S. urged all those involved in the crisis to show restraint and work toward a peaceful resolution.

Mr. Abhisit's options, however, appear limited. Peace talks that once appeared promising fell apart last week and the crisis has been spinning more rapidly out of control ever since an unknown gunman shot Red Shirt military leader General Khattiya Sawasdipol in the head on Thursday, sparking the latest round of violence. Gen. Khattiya remained in a coma Friday and doctors at Bangkok's Vajira Hospital said he was suffering from swelling of the brain and is unlikely to survive.

Mr. Abhisit's supporters have been urging him for weeks to use the military to clear the streets, arguing that the protest must be brought to an end by Monday, when a new school semester begins. However, the last attempt at a crackdown, on April 10, failed, leaving 25 people dead without dispersing the demonstration.

Meanwhile, the Red Shirts, the bulk of them poor villagers from the north of the country, on Friday were repeating their demands that Mr. Abhisit dissolve parliament and call a snap election. Thousands of Red Shirt protesters remained camped in Bangkok's main commercial district Friday night, their makeshift city surrounded by a wall of tires and sharpened bamboo poles.

As tensions rose on both sides of the barricades, a senior Red Shirt leader warned Mr. Abhisit that a catastrophe loomed unless he ordered the army to back away from the protest site.

"If the Prime Minister does not order ceasefire, tonight will likely see a big tragedy. It is likely that Thai people will forever feel pain in their heart because of what will happen tonight," protest leader Natthawut Saikua told supporters from a stage erected at an intersection in the middle of the protest camp. He said Red Shirt protesters would not instigate violence, but warned confusion and chaos could come after dark.

As he spoke, thousands of troops armed with assault rifles and riot shields were taking up positions less than 100 metres from the bamboo-and-tire barricades. In preparation for more conflict, Red Shirt youths, many wearing bandanas to cover their faces, were stockpiling more stones, Molotov cocktails and homemade rockets.

Army spokesman Colonel Sansern Kaewkamnerd said the order had not yet been given for a full-scale crackdown, although the army had accomplished one goal of clearing a key intersection just beyond the main protest site that had been occupied by Red Shirts. He said the objective of the current operation was to put pressure on the demonstrators and encourage them to leave on their own by cutting off supplies of food, water and fuel.

"We hope to return the situation to normal in the next few days," government spokesman Panitan Wattanayagorn said.

Col. Sansern said soldiers were authorized to use live ammunition "to protect their own officers [and]protect the general public." He estimated that there were 500 armed "terrorists" among the larger group of Red Shirts, which also includes families who have brought their young children to join the open-ended sit-in.

Fears are rising that the chaos will now spread beyond Bangkok as Red Shirt leaders called for supporters in the countryside to join the main demonstration. The army has vowed to stop anyone else from entering the protest site and a state of emergency has now been expanded beyond the capital to 17 of Thailand's 75 provinces.

There are also concerns about the unity of the Thai security forces, many of whom are suspected of harbouring loyalties to the Red Shirts. A witness told the Reuters news agency that they saw a policeman firing at soldiers during Friday's clashes.

Three journalists, including Nelson Rand, a Canadian working for the France 24 television network, were among those injured in the battle. "Canada is deeply concerned by the recent violence and loss of life in Bangkok. We urge all parties to observe restraint and to address political differences through peaceful, transparent and democratic means," Foreign Minister Lawrence Cannon said in a statement Friday. He said Canadians should avoid all non-essential travel to the Thai capital.

Even if the Thai military were able to clear the protest site in short order, it's unlikely that it would mark the end of the political unrest, which dates back to the 2006 ouster of Mr. Thaksin's government by military coup. Since that time, the Red Shirts, who can claim to have won the last three elections in the country, have complained that democracy has been subverted by a powerful elite made up of the military, monarchy and businesses that helped bring Mr. Abhisit to power.

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