Thai troops fired at protesters on Saturday in a third day of fighting on Bangkok’s streets that has killed 16 people and injured scores as troops try to isolate an encampment of demonstrators seeking to topple the government.

The crisis has paralysed Bangkok, squeezed Southeast Asia’s second-biggest economy, scared off tourists and choked off investment in one of Asia’s most promising emerging markets.

The fighting is the latest eruption in a polarising five-year crisis between the rural and urban poor, known as the red shirts by the clothing they wear, who accuse an “establishment elite” — comprising royalists, big business and military brass — of colluding to bring down two elected governments.

Those governments were led or backed by exiled former premier Thaksin Shinawatra, a graft-convicted populist billionaire ousted in a 2006 coup who is a figurehead of the protest movement.

The red shirts say the politically powerful military influenced a 2008 parliamentary vote, which took place after a pro-Thaksin party was dissolved, to ensure the British-born, Oxford-educated Abhisit rose to power.

The revered but ailing King Bhumibol Adulaydej, 82, who has intervened in past crises during his 63-year reign, has been hospitalised for months and has not commented on the political turmoil in his kingdom.

Here are some questions and answers on the crisis.

WHAT IS THE MILITARY’S STRATEGY FOR ENDING THE PROTESTS?

The army spokesman said the plan is to basically to starve thousands of protesters out of their fortified encampment, occupying a 3-sq-km (1.2 sq-mile) area of central Bangkok along roads lined with embassies, hotels, malls and office towers.

The military is attempting to throw a security cordon around the encampment to keep people and supplies from coming in. They have made some progress, but skirmishes have continued on roads around the encampment and the cordon is incomplete.

Analysts say if the military regains control of the streets in the next few days, it stands a good chance of ending the six week-occupation that has closed businesses, and thrown tens of thousands out of work in the area.

The military has repeatedly said it is unwilling to wade into the encampment ringed with walls of tyres, bamboo stakes and concrete to break up the protest site, which 10,000-20,000 people, including women and children, have occupied at various times. A crackdown could be a bloodbath that security forces have no guarantee of winning, especially given the trouble they have had so far in establishing a perimeter around the encampment.

The military has offered to let any rank-and-file protesters safely leave the camp, but red shirt leaders all face arrest warrants on various charges. The military hopes peaceful red shirts come out, leaving only a small hardcore to be rounded up.

Mobile generators provide power to the encampment, and its residents are tapping into fire hydrants for water, but food supplies are dwindling, with trucks prevented from coming in.

“What we are getting is less than what we are consuming daily,” said one protest leader, Kwanchai Praipanna. “So we are figuring out a way to bring supplies in. We’re urging people to come in with a few boxes and bottles each.”

WHAT DO THE RED SHIRTS WANT?

They say if the military pulls out of the streets, they will call their supporters back to the encampment and restore peace to the city. But they won’t end their sit-in until the deputy prime minister is charged in connection with the violence that has killed at least 46 people and injured at least 1,500 since April.

They want the prime minister to step down over the violence, dissolve parliament, and call elections.

The protesters say Prime Minister Abhisit Vejjajiva came to power illegitimately in a parliamentary vote engineered by the military. Parties allied to Thaksin have won the past three general elections by landslides and would be heavily favoured to win the next one as well.

The red shirt protesters have a 22-member leadership council and don’t always speak in one voice. They are split between moderates who favour ending the protest, and hardliners who want to press on. Some of the leaders face terrorism charges punishable up to death, and so perhaps feel little incentive to peacefully end the protests.

WHAT ARE THE PROSPECTS OF A POLITICAL DEAL NOW?

The latest bout of violence has hardened positions on both sides, making any political deal extremely difficult. Abhisit withdrew his offer of a Nov. 14 election, under a five-point reconciliation plan, and says he will offer no more olive branches after the red shirts refused to end their protest.

The red shirts had agreed to Abhisit’s plan, but then insisted that Deputy Prime minister Suthep Thaugsuban, who is in charge of security, be prosecuted.

Abhisit said the deal was non-negotiable and ordered the red shirts to leave. They have refused and his government says it will scrap the polls — which were due to take place more than a year early — but proceed with the reconciliation plan without the red shirts on board. Officially, talks between the government and the protesters have ended. But government and red shirt sources say back channel talks continue with moderate protest leaders.

HOW WILL THE CRISIS IMPACT MARKETS AND THE ECONOMY?

The crisis has scared off investors, decimated the tourism industry and has begun to hit the wider economy.

The occupation of Bangkok’s ritziest shopping area by protesters has forced hotels, malls and offices to close doors and cut jobs. The tourism sector makes up 6 percent of the economy, but employs 15 percent of the national workforce. So loss of tourism has a knock-on effect on economic activity.

The cost of insuring Thai debt (five-year credit default swaps) jumped the most in 15 months and Thai bond yields fell to a nine-month low on Friday as the violence propelled investors to the safety of government debt.

Foreign investors have turned negative since violence flared in April and have sold $584 million in Thai shares this month. Thai stocks are now among the cheapest in Asia with shares trading at 10.5 times 2010 earnings.

Finance Minister Korn Chatikavanij said on Wednesday the protests could cut 0.3 percentage point off his 4.5-5.0 percent growth forecast. Kasikorn Research Centre said growth could be cut by as much as 2 points if there were more clashes.

Consumer confidence fell in February and March, after hitting a 21-month high in January, due to political turmoil, sinking to its lowest since July 2009, with sentiment eroded by political unrest and the possibility of a crackdown.

(Editing by Jason Szep)