ANALYSIS - Thaksin launches new offensive to win back power

By Martin Petty

BANGKOK (Reuters) - His opponents may dismiss him as a fugitive criminal and a spent political force, but ousted former prime minister Thaksin Shinawatra is redoubling his efforts to return to power in Thailand, and the government is stumbling.

His red-shirted supporters have been pushing for a royal pardon of his corruption conviction, which would allow the exiled billionaire to come home. Now Thaksin has raised the stakes with a series of moves likely to add fuel to an intractable crisis in Southeast Asia's second-biggest economy.

His acceptance of an offer to become an adviser to the government of neighbouring Cambodia has caused an ugly diplomatic row, with the prospect of his running a political campaign from across the border angering the powerful opponents who have fought hard to keep him at bay.

"The government is being seen as incompetent and we're slowly moving towards becoming a failed state," political scientist Pitch Pongsawat said. "Thaksin wants to steal the show ... and we're headed for a whole different battle."

The offer of a home for Thaksin in Cambodia has triggered a backlash in Thailand that has led to the withdrawal of envoys from each other's countries.

He's not arrived yet, but Cambodia says it will turn down any demand to extradite him, calling his graft conviction politically motivated.

It remains to be seen whether all of Thaksin's supporters will back his latest move, which critics see as an unpatriotic alliance with an old foe that will stoke nationalist fervour.

"He can be forgiven for trying to embarrass his opponents who are holding the rein of power. But everything has its boundary -- and Thaksin has crossed it," the anti-Thaksin Nation newspaper said in a front page commentary on Friday.