It was last Monday that the incendiary whispers first began.

Over the following four days, politicians, foreign embassy officials, journalists and political observers gradually caught wind that a candidate for prime minister would be put forward to run in the elections in March who would turn the political landscape on its head.

By Friday morning, to the shock of almost everyone, the rumour was confirmed, setting the ball rolling on one of the most extraordinary weeks in Thai politics in years.

Princess Ubolratana, the eldest sister of King Vajiralongkorn, was announced as the sole prime ministerial candidate for Thai Raksa Chart, a newly formed political party linked to, and controlled by, the former prime minister Thaksin Shinawatra, who has lived in exile since he lost power in 2006 and was charged with corruption.

In Thailand, the royal family is a highly revered institution, protected by some of the strictest laws in the world preventing criticism. According to the constitution, members of the monarchy are not allowed to be involved in the parliamentary process. However, Ubolratana gave up her royal titles in 1972 when she married an American, and despite having moved back to Thailand after her divorce, technically had no more privileges than an ordinary citizen.

A mighty blow to the military

The surprise announcement left Thailand reeling. For more than a decade politics has been fiercely divided between pro-Thaksin “red shirts” and pro-monarchy “yellow shirts”. It was a mighty blow to the military junta, who took power in a bloodless coup in 2014 and hoped to win the election with a political party that presented itself as the representative of royal interests and the party closest to the king.

Yellow shirts and royalists, who have long loathed Thaksin for his perceived disrespect of the institutions of the monarchy, also despaired at the new political alliance, fearing it signalled the imminent return of Thaksin.

Some in the red-shirt camp considered it to be a great betrayal of democratic principles by Thaksin, who has been a champion of the poor. There were also fears that the princess would be impossible to hold to account. Even though Ubolratana is not officially protected by the lèse-majesté laws, she was still considered part of the royal family and therefore above criticism.

But not everyone was against the alliance. Some red shirts praised the move as genius political checkmate by Thaksin: here, finally, was a way to secure votes on both sides of the colour divide, with Ubolratana as the one candidate who could be a match for the military candidate Prayut Chan-ocha and make way for a united and stable pro-Thaksin civilian government.

The plan unravels

But over the course of 14 hours, the tide turned. By Friday evening, word emerged that the king was to issue a royal decree. The statement was unprecedented, saying in the strongest words possible that Ubolratana’s candidacy was “improper and highly inappropriate”. It ended her prime ministerial dream on the spot. This was the first time the king had publicly stepped into the political realm to exert his authority.

“Friday exposed how the Thai monarchy continues to play a huge role in the future of Thai politics,” said Pavin Chachavalpongpun, a professor at Kyoto University’s centre for south-east Asian studies.

The question now polarising Thai political pundits was: who was playing whom in this saga? Was the miscalculation Thaksin’s or Ubolratana’s? And was the green light from the palace ever given?

The line from those in Thai Raksa who spoke to the Guardian is that the princess had directly approached the party’s executive committee and expressed her interest in being a candidate in late November, just after the party was formed. “The assumption was that if she was coming to us offering to run, she had approval from the king. And it certainly was not possible to go directly to the palace to ‘make sure’, that would not have been appropriate,” said a Thai Raksa party member.

Umesh Pandey, the former editor of the Bangkok Post who is running as a candidate for Thai Raksa, was one of the only party members willing to speak on the record. He said there had been “complete shock” in the party on Friday evening when the royal decree was published.

“Of course, we were confident she would be approved as a candidate otherwise we would not have gone ahead with it,” said Umesh, who did not know about Ubolratana’s candidacy Friday until morning. “As the princess herself has said, it was her own decision to run, she came to us. And she has renounced all her royal titles, so legally she should be entitled to be a candidate.”

It appears that the idea was cooked up between Ubolratana and Thaksin in 2018. The pair’s unlikely friendship has long been public knowledge. “Thaksin and Ubolratana have been very close for a long time,” said Pavin, who is in frequent contact with Thaksin. “They meet up quite regularly, their friendship is real.”

Former Thai prime minister Thaksin Shinawatra. The princess hoped to run for the party he controls. Photograph: Phil Noble/Reuters

One source said that in July 2018 Thaksin had openly described the princess as “politically powerless” but said he hoped she could act as a “bridge” to help connect, and eventually reconcile, him with the palace.

Thaksin’s presence still looms large over Thai politics, much to the chagrin of the military, who overthrew him in a coup 13 years ago. After his downfall, he was sentenced to multiple criminal charges, forcing him to flee Thailand.

But even from exile he still commands huge loyalty across the country for his social security policies that brought millions of people out of poverty and pro-Thaksin parties have won every election this century. He is known to control Pheu Thai, the political party he founded, and masterminded the creation of Thai Raksa in November as a way to increase the chance of pro-Thaksin parties winning the election in a system which is purposely skewed to favour the military.

“Clearly this is a sign of desperation by Thaksin, another one of his bold moves to attempt to come home,” said Thailand specialist Eugénie Mérieau.”

Fears for return to democracy

Andrew MacGregor Marshall, a journalist and author of A Kingdom in Crisis: Thailand’s Struggle for Democracy, said he had concluded that no concrete permission was ever given by the king. “Thaksin is famous for his audacious moves and he is also a gambler, but this is clearly one gamble he hadn’t thought through,” said MacGregor Marshall. “Thaksin really wants to have a royal pardon and come home, and I do think that affects his judgment.”

Others, such as veteran Thai political columnist Pravit Rojanaphruk, suggested that in the 14 hours between That Raksa’s announcement and the damning royal decree, the strength of the response to Ubolratana’s candidacy – particularly from the old guard of ultra-monarchists – had prompted a u-turn from the palace.

The incident shook the country so severely that by Sunday it was enough to spark coup rumours on social media, which the army chief was forced to deny. .

But the greatest damage has been to pro-Thaksin parties, who have long been the strongest champions of democracy in Thai politics. The constitutional court is expected to dissolve Thai Raksa Chart, which leaves about 75 constituencies without a pro-Thaksin party candidate, and there are concerns that the election commission will also use the incident as an excuse to dissolve Pheu Thai on the grounds that it “colluded” in Ubolratana’s nomination.

As a result, the return of a military-led government, led by the Prayut, the current junta leader and prime minister, after 24 March looks more likely than ever. Without a civilian government to push for democratic progress in Thailand, the country will remain under the control of the military, whose regime over the past five years has been defined by the suppression of freedom of speech, the imprisonment of critics and a complete lack of accountability and transparency.

“This event has been very bad for the general state of Thai democracy,” said Mérieau.