A Violent New Year's Eve in Bangkok

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A Thai bomb squad unit inspects the damage at a bus stop struck by one of several bombs that exploded in the capital on New Year's eve, killing three people and injuring 38

New Year's Eve got off to an unexpected bang in the Thai capital, Bangkok, when a series of bombs detonated across town, killing at least three people and injuring dozens, including several foreign tourists. The explosions—no one so far has claimed responsibility—capped off a turbulent year for the Southeast Asian nation. In September, the country's democratically elected Prime Minister Thaksin Shinawatra was ousted by a military junta. Then, on Dec. 19, Thailand's stock exchange suffered its worst-ever one-day drop after the nation's monetary czars instituted controversial capital controls. Meanwhile, an insurgent movement in the country's largely Muslim south has ratcheted up its bloody campaign, setting off near daily bombings in Thailand's three southernmost provinces. "[2006] was the year of the greatest social and political divisions in a generation," says Bangkok-based economist Chris Baker.

The New Year's Eve bombings in Bangkok erupted in two waves. The first series of blasts exploded around 6:30 in the evening, just as revelers were beginning to crowd the streets of this party-loving town. The six targets included a shopping mall, a supermarket and a bus stop at Victory Monument, one of Bangkok's busiest gathering places. "At first, I thought the noise was a flat tire," says waiter Thanapon Prukthara, whose outdoor restaurant is located less than 20 yards from the Victory Monument detonation site. "But then I heard all this screaming and saw people lying on the ground, so I rushed to help the wounded."

Three hours later, forensic police sifted through the Victory Monument bus-stop wreckage for possible bomb components, collecting and photographing a handful of nails, a metal wristwatch band and twisted chunks of metal. After watching the police comb for evidence, German tourist Irina Martin said she was heading back to her hotel instead of going to Bangkok's famous New Year's countdown at the Central World shopping mall complex, as she had originally planned. "I heard rumors from other people that there might be more explosions at midnight," said the kindergarten teacher from Hamburg. "It's not worth going, just for a party."

The Thai authorities must have agreed. They quickly canceled the Central World festivities and urged the thousands of people already gathered for the countdown to go home. Many dispersed, but plenty of celebrants were still milling around when a second wave of bombs detonated around midnight. Two explosions erupted near Central World, one at a flyover and another at a seafood restaurant frequented by tourists. Several foreigners were injured in the midnight attacks. Firework blasts added to the general chaos, with initial reports of further bombs proving instead to be New Year's Eve festivities.

On New Year's Day, Bangkok was swirling with rumors about the possible masterminds behind the crude but deadly attacks. Initial suspicion centered on Muslim insurgents, who have terrorized Thailand's south with unrelenting small explosions that have claimed nearly 2,000 lives over the past three years. But the insurgents, some of whom are fighting for a separatist homeland for the country's minority Muslims, have never brought their bombing campaign out of Thailand's south. At a press conference on Monday afternoon, interim Prime Minister Surayud Chulanont specifically discounted speculation that the terror attacks were planned by Muslim extremists, instead linking the bombs to "people who lost power."

Surayud did not identify any particular group—nor was any evidence given—but the implication appeared to rest on forces tied to ousted Prime Minister Thaksin. Although less popular among the urban and middle-class electorate, Thaksin swept into office with a record-high vote, largely thanks to support from the country's rural north. Since the September coup, more than a dozen public schools in Thailand's northeast have been torched; the military junta has used such acts of violence, which they link to Thaksin supporters, as justification for keeping parts of the nation under martial law. Thaksin is currently in exile in China, as the interim government investigates whether corruption charges can be brought against the billionaire ex-premier. On Monday, through his lawyer, Thaksin denied any connection to the New Year's Eve attacks.

Regardless of who planted the bombs, the violence has shaken a country that had been trying to mend its international reputation following the military coup. Thailand remains a regional manufacturing hub, but competition from China, India and even upstart Vietnam is threatening profits. Complicating matters are efforts by the military-installed government to reform the finance sector in ways that may penalize the very foreign companies needed to keep investment flowing into Thailand. Proposed amendments to the Foreign Business Act, for example, could force thousands of foreign firms to sell shares to Thai locals if they wish to continue operating in Thailand. "There is a lot of confusion about what exactly is happening in Thailand," says Sukit Udomsirikul, assistant managing director of Siam City Securities in Bangkok. "Such uncertainty negatively impacts business sentiment." A mysterious bombing campaign is sure to rattle confidence further. After such a tense and tumultuous 2006, Thais can only hope that the new year restores some measure of stability.

—With reporting by Robert Horn/Bangkok