Thailand has reached a critical juncture in its modern history, and if warring parties do not take a step back at this moment, the entire country may end up going down a bloody path with wounds that would take generations to heal. Thailand, it seems, is walking on thin ice that has yet to crack. The country has found itself in what is popularly referred to as a "Mexican stand-off" - an impasse in which neither side will strike first for fear that it could endanger their own existence.

But that equation is quickly giving way as the red shirts are preparing for an all-out battle with the yellow shirts. Needless to say, the outcome will be bloody.

At the ground level, pockets of violence are already emerging in Bangkok and Chiang Mai, the government's temporary seat, and innocent people are being dragged into a conflict that is bringing the entire country down.

Immediately after a state of emergency was declared, the anti-government People's Alliance for Democracy guards braced themselves for an assault by putting up three-kilometre-long barbed wire fences around the airport, blocking access as they prepared themselves for a bloody confrontation.

At the political level, Prime Minister Somchai Wongsawat upped the ante by declaring a state of emergency and vowing to take back the airport from the PAD demonstrators.

However, his goal is being made virtually impossible by the military and the police's unwillingness to use force to clear the demonstrators from the airport. This is not the first time that the prime minister and the army chief have been at loggerheads. The last time Somchai declared a state of emergency, General Anupong Paochinda handed him unarmed soldiers.

Moreover, as of last night, national police chief General Patcharawat Wongsuwan, who is seen as being too close to the military, was removed from his post. No explanations were given, but it was understood that this was done as a stern warning to Anupong. If that was the reason, then one wonders what kind of effect, if any, this will have on the military.

For the time being, the entire country is waiting to see the outcome of the negotiations between the police and the PAD. Some sort of progress report should be announced today, so let's pray something good comes out of it.

Apart from the airport, all eyes are on embattled Somchai to see if he will remove Anupong, who has twice called on the government to dissolve Parliament and hand back the mandate to the people.

In a normal situation, an effective premier would have already dismissed any military general for making such a demand. But this is not a normal situation and this elected PM is not his own man but a proxy of a convicted tycoon guilty of greediness.

Ousted Thaksin Shinawatra may talk about democracy, but one wonders if his interest in any of this is to protect his own coffers.

Threats from the red shirts have sent chills down the spines of so many people. Not only will the outcome become a bloody one, but the incident could place a psychological divide in the country - splitting one region against another.

Already, Somchai has made the northern city of Chiang Mai his de facto capital from where he hands out his commands and instructions. The bulk of the red-shirt foot soldiers come from the North and Northeast, while the moral support of the Southerners towards any anti-government initiative remains unwavering.

While things may not be at the scale of Lebanon in the 1980s, the psychological scars would be unthinkable. Regardless of which warring faction came out victorious, it would be a lose-lose situation for the country as a whole - no matter how one looks at it. Any healing would take generations. However, it's not too late for warring factions to defuse the tension. If they place the interest and well-being of the country before their political interests, they will take a tactical steps to defuse the tension.

This is because in the end, it is not just the blood of the red or the yellow shirts that would be spilled. Innocent bystanders would be damned as well.