Protesting during another holiday was exactly what the red shirts needed; if they wanted to turn every Thai not already committed to their cause against them. The rallies in April disrupted Song Klong, the Thai New Year, and probably cost them a lot of support. I was a little surprised at Thaksin calling off the rally because in the last six months, his actions were hardly consistent with his apparent desire to return to Thailand and perhaps to power. Rumors were that he was in Cambodia during the April protests, waiting for the masses to congregate and usher him back in. An interview with a London based news organization was viewed by his opponents as against the monarchy. Recently, Thaksin's flirting with Cambodia at a time when Thailand and Cambodia are feuding over borders earned him no love.
Perhaps the former PM has had a change of heart. Today's Bangkok Post had an article which stated that Thaksin wanted to negotiate with the government to end all the red shirt rallies in exchange for him returning to Thailand free from his two year prison sentence. The negotiations would also deal with the 76 billion baht asset seizure case against him that is expected to be decided in January. Theoretically, the agreement would allow Thaksin to return to Thailand with his fortune in tact, and in exchange his political opponents, the Democrats (unrelated to the U.S. party of the same name) would remain in power without the worry of potentially economically crippling protests.
The problem is that Thaksin's bargaining position is considerably weaker than it was back in April. Even back then, he did not have the number of supporters to cause a change in government. Unlike the previous government, the current administration seems to enjoy the support of the military. Whether this is because the generals support the Democrat party or just felt it was finally time to put an end to the disruption of government, I do not know. I have strong suspicions, but I do not know for certain. Let's also not forget that it was the military that deposed him in the first place.
In addition to his lack of success rallying the people and the military, Thaksin and his supporters have not enjoyed much success in the courts. The courts have sentenced him to jail and are considering seizing his assets. Many of his political allies have been banned from politics (for a few more years anyway) and twice the courts have dissolved the government controlled by his supporters.
What incentive does the current government have to make a deal with Thaksin? Further protests, while unlikely to dislodge the government, could disrupt the Thai economy, lead to further deaths, and widen the crack in Thai society. Logical or not, the fugitive billionaire is supported by the impoverished Thais and is seen as their man. If Thaksin returns and stability returns, Thailand benefits, at least theoretically.
Of course, once he's back the itch to rule might return. Even an agreement to a lifetime ban is only worth the power behind the paper its written on. If the reds gain the upper hand in the next election and manage to get the support of the military, who knows. I can see the shirts already now, "He's tan, he's rested." (Its an old Nixon joke for those of you who don't remember).