Thousands of protesters besieging Thailand's seat of government rejected talks with the military Wednesday, insisting they would only negotiate after Prime Minister Samak Sundaravej steps down.
There appeared little sign of an imminent end to the crisis as a state of emergency in Bangkok entered a second day following the worst unrest seen on the capital's streets in 16 years.
But a strike by unions representing 200,000 employees at state enterprises, who had threatened to cripple government agencies by cutting water and power supplies, won few followers with services running as usual.
Some workers who began disrupting train services last week returned to the job Wednesday, the State Railway of Thailand said, adding that operations had had actually improved, with trains suspended only in southern provinces.
Flag carrier Thai Airways reported no disruptions and transport authorities in Bangkok said public buses were running as usual.
Thousands of activists stormed Samak official compound 10 days ago but the tensions turned deadly Monday night when street fights erupted with supporters of the premier, leaving one dead and 44 injured.
The violence prompted Samak to invoke a state of emergency early Tuesday, essentially giving control of the capital to the military.
Political gatherings are banned and the army is empowered to suspend civil liberties.
But while the protesters have defied the ban on assembling, the army chief General Anupong Paojinda, said he would use talks rather than violence to end the siege.
The military has made no move to evict activists squatting in the Government House compound, and one of the key protest leaders said they would only open negotiations if Samak resigns.
"Our stand is always firm -- that Mr Samak has to go. If Mr Samak doesn't go we will not talk to anybody," said media mogul Sondhi Limthongkul, who has spearheaded the movement.
"Samak was very upset and he has tried every possible way to make us yield," he added.
"There are no guns among us. There might be golf clubs and sticks which we use to defend ourselves but absolutely no guns."
No soldiers were seen around the protest site early Wednesday, where 5,000 activists had again slept on the Government House lawn, now little more than a smelly mass of mud, after days of occupation with little sanitation.
Samak told CNN that he believed the army would find a way to break up the protesters, although he refused to rule out the possibility that the generals could use the turmoil as a pretext to stage a coup -- as they did after the same protesters rallied against then-premier Thaksin Shinawatra in 2006.
"I must have confidence" in the army, he said. "The coup or not a coup, I don't guarantee."
The turmoil has already battered Thailand's stock market, which has fallen 24 percent since protests first broke out in May.
The protesters, who call themselves the People's Alliance for Democracy (PAD), accuse Samak of acting as a puppet for Thaksin.
Thaksin has fled to Britain to escape corruption charges, while Samak also faces a barrage of legal cases that could see his party dissolved.
But more broadly the PAD wants to weaken the voting power of the rural poor, who form the base of support for both Samak and Thaksin, by appointing rather than electing 70 percent of parliamentarians.
Such a change would undo most of Thailand's democratic development over the last three decades. The kingdom has only ever had a shaky hold on democracy, with 18 military coups since absolute monarchy ended in 1932.
"All these calls for Samak to resign now constitute a litmus test for Thailand's democratic system," said political analyst Thitinan Pongsudhirak of Chulalongkorn University.
"If the PAD remains intransigent and gets its way, that would mean Samak is ousted and PAD is unlikely to stop there. Ultimately they're going far to the right, taking Thailand back to the dark ages."