Thailand's prime minister vows to stay in office, despite thousands of protesters around the country demanding his resignation. As Ron Corben reports, the Cabinet plans to hold a national referendum on the political crisis.

Thai Prime Minister Samak Sundaravej reacts during the no-confidence vote at the Parliament House in Bangkok, 27 Jun 2008

Prime Minister Samak Sundaravej, in a nationally broadcast address Thursday morning, dismissed reports he was preparing to stand to end weeks of anti-government protests.

In a defiant speech, Mr. Samak said the whole world was watching the unfolding events and he would not "abandon ship."

He says he will not resign and he will not dissolve parliament as he must stay to protect democracy.

Mr. Samak was elected last December, in the first elections held after a coup in 2006 ousted Prime Minister Thaksin Shinawatra.

Just hours earlier, a leading English language daily newspaper declared in a banner headline "Samak on the brink of exit" because of the foreign minister's resignation on Wednesday.

Sompop Manarangsan, an economist at Chulalongkorn University, says Mr. Samak's decision will worsen the situation.            

"The tensions in the society are going to be much more critical from now on because a lot more people - even the businessmen, academics, lecturers around the country - even senior high school students are coming out for the government to resign or to dissolve the parliament," said Sompop.

Sompop warned of the protests spreading and as they do, becoming more difficult to control.

The People's Alliance for Democracy has led the protests for nearly four months. The PAD says Mr. Samak acts as a nominee for former Prime Minister Thaksin Shinawatra, who recently fled to Britain to avoid trial on corruption charges. Mr. Thaksin says he is innocent.

Last week, PAD supporters escalated the protests by occupying the compound of the main government office building. They remain there, despite court orders to leave and the imposition of a state of emergency, which bans large gatherings.

In a move seen as trying to de-fuse the situation, the Cabinet Thursday announced it would hold a national referendum asking voters to decide whether the government should resign or dissolve parliament. Mr. Samak says he hopes the Senate will approve the referendum quickly, so the vote could be held early next month.

Kraisak Choonhavan, a member of parliament from the opposition Democrat Party, says the protests are spreading and now are in 15 cities, while 45 labor unions pledge to support the PAD. The crisis, he says, undermines the administration of the country.
           
"The government is completely paralyzed and yet the stubbornness and unrighteousness and the arrogance of the prime minister remains unabated. And the only solution is the resignation of the prime minister," he said.

Despite the protests, the country is calm and operating normally. The army chief says that troops called in to enforce the state of emergency want to keep it that way. He rules out using force against demonstrators.

The crisis is the most severe since 2006, when after months of massive protests, the military ousted Prime Minister Thaksin, and imposed a military-led government.