BANGKOK, May 16 (Reuters) - The sister of exiled former premier Thaksin Shinawatra was named the prime ministerial candidate for Thailand's biggest opposition party on Monday, a move seen as a high-stakes gamble ahead of a crucial July general election.
Members of the Puea Thai Party opted for Yingluck Shinawatra, the 43-year-old president of SC Assets corporation , to spearhead and reenergize its campaign and return power to allies of Thaksin, who won two election landslides before his overthrow in a 2006 military coup.
The election is expected to be a close race between Puea Thai and Prime Minister Abhisit Vejjajiva's ruling Democrat Party. Analysts and commentators are split on whether the decision to run with the politically inexperienced Yingluck will benefit Puea Thai, or backfire.
Yingluck could alienate the party from swing voters fearful that the return of a government controlled by Thaksin -- a fugitive tycoon convicted of graft and charged with terrorism -- would be deeply opposed by his powerful enemies, leading to more protests or even another coup.
However, she could prove to be instrumental in uniting a party in disarray and boosting its support by winning over the rural poor who were wooed by Thaksin's populist policies.
"It's a bold move, but given the power of the Shinawatra brand in Thai politics, it's a pretty good move," said Andrew Walker, an expert on Thai politics at the Australia National University.
"It's a risk, but Puea Thai see that it's outweighed by Thaksin's galvanising appeal and the affection that exists among the electorate for him and his policies. What the Democrats and their allies most fear is an electoral runoff with Thaksin."
Yingluck, who was educated in the United States and keeps a low profile, has had no official role in Thai politics. She will be regarded as a proxy for Thaksin if she is voted into office and would become Thailand's first female prime minister.
"NO REVENGE"
Echoing Thaksin's most recent comments, Yingluck said she would pursue reconciliation in the deeply divided country and would not seek payback for the 2006 coup, which sent Thailand into a spiral of instability.
"All the parties have to turn to each other and know that Puea Thai is not here for revenge but to solve (Thailand's) problems," she said in a speech on Monday to Puea Thai members, who voted overwhelmingly in her favour.
"People still think of my brother and his policies of the past and many still have had mercy for our family until today," she said, adding that seeking Thaksin's return from exile a free man was "not the priority".
Oxford-educated Abhisit sees the election as a chance to finally win an unambiguous mandate having come to power in 2008 following the dissolution of the pro-Thaksin People's Power Party, which led to a series of defections and a new coalition government critics say was cobbled together by the military.
Thailand has suffered five years of political turbulence and sporadic street violence in a protracted crisis that pits the establishment elite and its military allies against pro-Thaksin "red shirt" protesters drawn mostly from the rural poor and urban working class.
The election, analysts say, could either ease or exacerbate Thailand's long-running crisis and if the result is contested, it could lead to potentially violent street protests or judicial or military intervention.
Neither Puea Thai nor the Democrats are likely to win a majority, meaning an alliance with smaller parties would most likely be required, creating scope for behind-the-scenes interference and a backlash by supporters of each party.
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