On Sunday, Thailand will hold its first parliamentary elections since the September 2006 coup that ousted Prime Minister Thaksin Shinawatra, ushering in a new period of managed democracy and potentially triggering more instability.

“You can already see evidence that the election will be another episode in the ongoing struggle between the two major versions of Thailand: The old version of the establishment and Thaksin’s new, emerging, globalized version,” said Thitinan Pongsudhirak, head of the Institute of Security and International Studies at Bangkok’s Chulalongkorn University. “We need to bridge that gap but that has not taken place because the coup group refused to implement any of Thaksin’s policies.”

Thailand remains very divided as people prepare to vote on December 23. Although the military junta has spent 15 months demonizing Thaksin, the exiled premier has maintained a high profile overseas and still remains popular in the country’s poor northeast region, where loyalists in the People Power Party (PPP)—a hybrid version of his banned Thai Rak Thai party—look set to win big.

Thaksin remains a major force in other ways. All the parties have adopted many of his populist measures in some form, revealing just how much TRT changed the political landscape in its five years in power. While some political parties think the election will bring stability, others warn that more discord is likely if the royalist coup group seeks to undermine a strong PPP showing.

“It’s shaping up that a new form of volatility is coming,” Thitinan said.

To the disdain of election officials, the PPP has invoked Thaksin throughout the campaign. Samak Sundaravej, the brash right-winger recruited by Thaksin to lead the party, has said PPP plans to dissolve the military-led investigation into the former premier’s financial dealings and lift the five-year political ban on him and 110 other TRT executives.

The Election Commission has fought back, issuing a serious of “guidelines” in November that said banned TRT members could not make campaign speeches or have their photographs used in campaign material — a decision that even main opposition Democrat leader Abhisit Vejjajiva called a violation of their constitutional rights. Still, the commission plans to bring legal action against at least one PPP member for using Thaksin’s photo on the campaign trail. It also made a controversial decision to drop PPP’s case against junta leaders after documents surfaced revealing a military plan to undermine the party at the polls.

“The argument the commission offered for the ruling on the documents how should I put this was a little bit unclear,” said Gotham Arya, a former election commissioner. “They were sympathizers of the coup. From those documents we can assume the military still has a plan to influence the election,” he said.

Although the PPP appears to set to win the most votes, it remains to be seen if they can form a government. The party hopes to secure 240 seats, enough to guarantee that it can lead the government, said Noppadol Pattama, the party’s deputy secretary-general and Thaksin’s lawyer. Although that is unlikely, he vowed that a PPP-led government would not take revenge on the coup group.

“The military has to play by the rules and must respect and abide by the will of the people,” he said. “Some of the generals might be unhappy about a PPP victory, but we will not do anything to retaliate or take revenge on the junta. We will go ahead working for the people and solving economic problems and getting the country back on track.”

The Democrats, the main opposition party and the only one that has ruled out forming a government with the PPP, say Thaksin is pumping large amounts of money into the campaign and the Election Commission has failed to clamp down on vote buying.

“Every man and his dog knows money is being used in enormous amounts, but yet there has been no action taken by commission on this issue,” said Korn Chatikavanij, deputy secretary-general of the Democrats.

Although traditionally known as a party that opposes military rule, the Democrats this year have come under fire for appearing to accommodate the coup group. Korn rejected those assertions, and said the fact that the military leaders knew they must hold an election within a set timeframe or face protests is a “positive reflection” on the state of Thai democracy.

“Everyone had faith that nobody would have the power to renege on the public promises made by military at the time,” he said. “Too many people, journalists and commentators, demanded that the Thai people and the Democrat party be more forceful against the military, but we’ve shown the world that the Thai way of solving problems, avoiding confrontation, often yields the best results.”

Polls suggest the Democrats will finish second, but that won’t stop the party from attempting to form a coalition government with smaller parties. As a show of faith in its alliance with Banharn Silpa-Archa, the slippery survivor who leads the regional Chat Thai party and who many suspect will try to worm his way into the premiership, the Democrats decided not to field candidates in constituencies contested by Chat Thai.

Korn also said that the tradition in which the party that wins the most votes gets first shot to form the government is irrelevant.

“At the end of the day, the parliamentary system gives the legitimate right to the majority of MPs to form a government and select a prime minister,” he said. “It doesn’t matter from how many parties the MPs come from. If all the other parties find it unpalatable to be in bed with the PPP, then it is a decision for them to make.”

With so much at stake for both Thaksin and the coupmakers, the horse-trading after the election will be intense. Although the Democrats will fight to form the government, PPP is confident that it can convince other parties to come aboard if it wins the most votes.

“When everyone learns the results of the election, parties will urgently contact the leading party as they don’t want to be left behind and miss the train,” Noppadol said. “This is the nature of Thai politics, and I don’t see why it would change this time.”

Since no party is likely to win an outright majority, the middle parties hold the key to victory. Chat Thai has vowed to stick with the Democrats but most analysts believe the malleable Banharn can be easily persuaded to switch sides with the right offer.

The other intriguing party is Pua Paendin, a new party formed by ex-Thaksin ally Surakiart Sathirathai. The party has reportedly received an influx of funds from the military and behind-the-scenes support from Prem Tinsulanonda, the highly influential former prime minister who heads the king’s Privy Council. The party has steadily risen in pre-election polls, but may be fragmented, giving Thaksin a possible opening to woo some Pua Paendin MPs to vote for the candidate the exiled premier wants in power.

“The Surakiart faction cannot work with Thaksin at all, but another faction in Pua Paendin has no loyalty to Prem and just wants to win,” said a former Thaksin aide, speaking on condition of anonymity. “Thaksin himself is unlikely to come back for another two or three years, so he can sit back from the outside with the remote control and choose either Banharn or [Pua Paendin leader] Suvit [Khunkitti] to act as a nominee. MPs don’t have to vote along party lines, so that gives Thaksin more options. It’s easier for Thaksin to buy MPs than it was to buy votes.”

PPP rejects allegations that it buys votes or MPs. Thaksin, who will monitor the election from Hong Kong because he is going there for business, “will return to Thailand with dignity sometime after the election and after considering his safety,” Noppadol said.

As the focus shifts to the election, many analysts are watching to see if the military-appointed legislature will try to pass a draconian Internal Security Act just before the election. The National Legislative Assembly has continued to pass laws during the campaign season despite protests from many civil society groups who claim its mandate has expired.

“Even in a diluted form, the Internal Security Act would give the military immense power,” Thitinan said. “The army wouldn’t need another coup. They may see it as an insurance policy against a PPP victory.”

No matter what, PPP’s resurgence has thwarted the military’s plan for a smooth transition to a political system it can easily manipulate.