Paetongtarn Shinawatra, Thailand's prime minister, under siege

By Panu Wongcha-um and Panarat Thepgumpanat

BANGKOK (Reuters) -After less than a year in office, Thailand's Prime Minister Paetongtarn Shinawatra has her back to the wall - and little room left to manoeuvre.

For months, the 38-year-old - the second woman and the youngest Thai to hold the position - has grappled with a faltering economy that has stalled her Pheu Thai party's flagship economic scheme while coping with an unwieldy ruling coalition.

But the leaked audio of a phone call with Cambodia's former leader Hun Sen, after weeks of bickering between the two Southeast Asian neighbours over a disputed border, could be the final blow to her 10-month term.

"Paetongtarn is untenable now," said Thitinan Pongsudhirak, a political scientist at Bangkok's Chulalongkorn University.

"The leaked conversation is deeply compromising to her position as prime minister and deeply damaging for Thailand. I think there's no way she's going to last."

In her June 15 call with Hun Sen, who she referred to as "uncle", Paetongtarn not only appeared to kowtow before the veteran Cambodian politician but also denigrated a senior Thai military commander - seen as red lines by her critics and allies alike.

Facing an unprecedented backlash, Paetongtarn - a political novice who held no government position before becoming premier - delivered a public apology on Thursday, insisting that she did not know the call with Hun Sen would be recorded.

"This was a private call from my personal phone," she told reporters.  

But it came after the conservative Bhumjaithai party - the third largest in parliament's lower house - pulled out of the ruling coalition late on Wednesday, citing the audio of the call, which was released in full by Hun Sen after the initial leak of a clip.

The Pheu Thai party now only holds a narrow majority in Thailand's 495-member parliament, and the exit of some other coalition partners, some of which are due to hold individual meetings to decide their respective positions, could swiftly bring down the government.

Thailand's main opposition, the People's Party,  underlined the lack of public trust in Paetongtarn on Thursday and called on the government to dissolve parliament, which would trigger fresh elections.

"Paetongtarn needs to take responsibility for what has happened," said Pavin Chachavalpongpun, a Thai academic at Japan's Kyoto University, referring to the audio in which she described a prominent Thai army commander as being part of "the opposite side".

"She may not trust the army. But she should not be telling this to foreign leaders."

BRAND SHINAWATRA

Paetongtarn, educated at Chulalongkorn University and Britain's University of Surrey, was primarily involved in the Shinawatra family businesses before becoming prime minister but has spent much of her life exposed to the tumult of Thai politics. 

She was 8 when her father, Thaksin Shinawatra, entered politics in 1994 and began a meteoric rise to become prime minister by a landslide in 2001 - only to be ousted in a coup five years later.

In 2011, her aunt and Thaksin's sister, Yingluck, also found her way to the premiership but was ejected by a court ruling, followed by a military coup.

On the campaign trail in 2023, seeking to resuscitate her family's political fortune, Paetongtarn harked back to the track record of previous Shinawatra administrations and promised robust government policies to kick-start Southeast Asia's second largest economy.

Paetongtarn, who is married with two children, also made no bones about her closeness to her father, Thailand's most influential but divisive politician who returned to the country in 2023 after over a decade-and-a-half in self-exile to avoid a prison term. 

Since she became prime minister last August, following the abrupt removal of her predecessor by a court order, Paetongtarn has struggled to deliver on her party's promises, even as she operated under the long shadow of her father, who is himself facing court cases that could see him return to prison.

In particular, a decision last month to freeze a $14 billion cash handout programme, a key plank in the 2023 election, in the face of potential U.S. tariffs has hit Pheu Thai's popularity. 

But this crisis will likely damage the party's standing further, making it even more challenging to head into fresh polls, according to analysts.

A snap election, however, may not be amenable to some current and former members of the ruling coalition, including Bhumjaithai, and instead favour the People's Party, said Olarn Thinbangtieo, a political science lecturer at Burapha University.

"This is more about pressuring the prime minister to resign than dissolving parliament," said Olarn, outlining the possibility of parliament picking Bhumjaithai's leader Anutin Charnvirakul to replace Paetongtarn.

Move Forward, a forerunner of the People's Party, won most seats in the 2023 election but was blocked from taking power by an unelected senate, paving the way for second-place Pheu Thai to cobble together a coalition and form a government.

Still, there is a possibility that Pheu Thai can engineer a survival strategy to retain power, but Paetongtarn's actions may also determine the future of Thailand's most prominent political dynasty.

"This could be the end of the Shinawatra brand," said Chulalongkorn University's Thitinan. "She has really damaged it."

(Writing by Devjyot Ghoshal; Editing by Raju Gopalakrishnan)