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By Martin Petty
PHNOM PENH (Reuters) - Cambodia refused a request from Thailand on Wednesday to extradite fugitive former Thai premier Thaksin Shinawatra, in a widening diplomatic row that threatens to worsen Thailand's political crisis.
Cambodia's Foreign Ministry handed over a statement refusing to extradite the billionaire -- ousted in a 2006 coup and later sentenced to two years in prison for graft -- just seconds after officials from the Thai embassy in Phnom Penh submitted the request.
"Cambodia considers the prosecution and legal process against His Excellency Mr. Thaksin Shinawatra as a politically motivated proceeding," the ministry said in a statement.
It said it would not recognise the charges because Thaksin was toppled by the military after being "overwhelmingly and democratically elected by the Thai people."
"Taking into consideration (these) absolute realities ... Cambodia is not in a position to make the provisional arrest for the purpose of extradition," the statement said.
The rejection is likely to anger Thai authorities, already fuming after the former telecommunications tycoon arrived in Cambodia on Tuesday to take up a job as economic adviser to its government.
The diplomatic spat could undermine any attempt by Southeast Asian leaders to project a united front in talks with U.S. President Barack Obama on Sunday in Singapore, the first-ever meeting between a U.S. leader and all 10 members of the Association of South East Asian Nations (ASEAN).
Thaksin, twice elected in landslides, has been living in self-imposed exile, largely in Dubai. He is staying in Phnom Penh as Cambodian Prime Minister Hun Sen's guest.
His presence in the neighbouring country, where he intends to give a speech on Thursday, has fired up passions on both sides of Thailand's political divide while drawing attention to a border where Thai and Cambodian troops have clashed in the past year.
The row may embarrass the Thais in front of Obama. Thailand chairs ASEAN this year, and the regional group's meeting with Obama will be led by Thai Prime Minister Abhisit Vejjajiva, whose coalition government is on shaky ground.
Thailand has said any refusal to extradite Thaksin would be tantamount to meddling in its domestic affairs.
Some analysts say the Cambodian move was cooked up by Thaksin and Hun Sen to stir trouble in polarised Thailand and undermine the government, boosting Thaksin's chances of wresting back power.
"Thaksin wants to cause chaos at home and remind his supporters he's still alive," said Puangthong Pawakapan, a Thai-Cambodian relations specialist at Chulalongkorn University in Bangkok.
Thaksin is still immensely popular among Thailand's rural poor and his red-shirted supporters have staged frequent street rallies in Bangkok, calling for his pardon and return.
Abhisit's allies, the urban elite centred in Bangkok who wear the king's traditional colour of yellow at protests, plan a demonstration of their own on Sunday in Bangkok to denounce Thaksin and the Cambodian government.
"Abhisit is under heavy pressure by groups in Thailand to act," added Puangthong.
Extremists within the yellow-shirt movement want him to take bolder retaliation against Cambodia, from closing all border trade to stepping up Thailand's military presence on the border.
Thai Deputy Prime Minister Suthep Thaugsuban said on Wednesday the government had no plans to close the border. Analysts say closing it could hurt Thailand as much as Cambodia, especially if Cambodia turned to Vietnam for more of its imports.
(Writing by Jason Szep; Additional reporting by Chantha Lach, Ek Madra and Pracha Hariraksapitak in Bangkok; Editing by Alan Raybould and Jerry Norton)

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