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By Ek Madra
PHNOM PENH (Reuters) - Former Thai Prime Minister Thaksin Shinawatra, wanted at home for a graft conviction, arrived in Cambodia on Tuesday to take up a government job offer that has set off a diplomatic row with Bangkok.
"Thaksin is now in Cambodia. He flew in on a special flight and just landed at the military airport," Khieu Kanharith, Cambodia's information minister, told Reuters.
The former telecoms tycoon lives in self-imposed exile after being toppled in a 2006 coup and later found guilty on a conflict of interest charge. He spends much of his time in Dubai.
Cambodian Prime Minister Hun Sen has made Thaksin an economic adviser to his government and offered him a home in Cambodia. Thaksin has said he does not intend to live there.
Witnesses reported heavy security for his arrival, with black-uniformed troops carrying rifles deployed on the road into the capital from the airport.
It was not clear how long he would stay. Officials said he would meet Hun Sen on Tuesday. He is scheduled to give a lecture on Thursday to 300 economists at the Finance Ministry.
Thailand's government is outraged at the Cambodian move, not only because it sees Thaksin as a fugitive from justice but because he now has a base across the border from which to organise his campaign to force new elections and return home.
Analysts say the move could give momentum to the pro-Thaksin camp, heightening investor concerns about protracted instability.
The Thai cabinet agreed on Tuesday to scrap a memorandum of understanding covering plans by Thailand and Cambodia to exploit energy reserves in the Gulf of Thailand. Talks on finalising the agreement have been running for years.
Thaksin comments in an interview posted on the website of the Times newspaper have opened up a new controversy. He was quoted as saying people in "circles" around Thailand's revered monarchy were meddling in politics.
However, he said the monarchy was good for the country and King Bhumibol Adulyadej, regarded as semi-divine by his people, and Queen Sirikit, were not involved. He pointed the finger at the Privy Council, an influential royal advisory committee.
Comments deemed insulting to the monarchy are punishable by 15 years in prison. However, the Privy Council is not protected by the country's strict lese-majeste laws.
Thai Foreign Minister Kasit Piromya said the comments were "inappropriate and offensive" and that the interview was poorly timed because the 81-year-old king was still recovering in hospital after suffering from fatigue and lung inflammation.
The royalist, extra-parliamentary "yellow shirt" movement, which helped bring down two elected pro-Thaksin governments, has called for a big rally in Bangkok on Sunday to protest Thaksin's remarks.
Thailand's chief prosecutor was preparing to send an arrest warrant for Thaksin to the Cambodian authorities, who have said they will not extradite Thaksin because his conviction was "politically motivated."
The two countries have recalled their respective ambassadors because of the row.
Relations were already strained following a nationalist dispute over an 11th century temple awarded Cambodia by an international court but which many Thais still consider rightfully a part of their country. The issue has led to deadly border clashes.
Thai businesses said the stand-off would have minimal impact because bilateral trade was limited. In the first nine months of this year, Thai exports to Cambodia were worth $1.4 billion (840 million pound), 1.04 percent of all exports, while imports were just 0.05 percent of its total.
Energy firm PTT, which supplies oil to Cambodian power plants and runs three oil storage facilities there, said the row would have no impact unless the border were shut.
"If the border is closed, we will definitely be affected because we wouldn't be able to export oil products," Kampong Kittitornkul, vice president for PTT's International Marketing Oil Business, told Reuters.
(Reporting by Ek Madra; Additional reporting by Khettiya Jittapong; Writing by Alan Raybould and Martin Petty; Editing by Jerry Norton)