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By Panu Wongcha-um and Chayut Setboonsarng
BANGKOK (Reuters) -&nbsp;Thailand's&nbsp;election-winning Move Forward party on Friday made&nbsp;way&nbsp;for runner-up and alliance partner Pheu Thai to try to form the next government,&nbsp;after&nbsp;its leader's&nbsp;bid&nbsp;was twice thwarted this month by a military-backed Senate.
The progressive Move Forward and populist Pheu Thai have the lion's share of the 500 lower house seats&nbsp;after&nbsp;trouncing conservative, army backed rivals in a May 14&nbsp;election, in what was a clear rejection of nine years of military-backed rule.
But a big obstacle for their alliance is the 249-member Senate, which was appointed by the royalist army&nbsp;after&nbsp;a 2014 coup and has a record of voting as a bloc to protect its interests, including stopping governments from being formed.
The eight-party alliance backed Move Forward's leader Pita Limjaroenrat for prime minister before conservative opponents and Senators blocked him in a July 13 parliamentary vote and stifled his re-nomination six days later.
The resistance underlines the threat posed by Move Forward's anti-establishment agenda, which includes ending business monopolies, reforming the military and most controversial, amending article 112 of the criminal code, a tough law that insulates the monarchy from public criticism.
Pheu Thai,&nbsp;Thailand's most dominant political party in the past two decades, said it would start lobbying lawmakers for their votes and identify what obstacles were ahead.
"We will find more votes from the Senate and other parties," Pheu Thai leader Chonlanan Srikaew told a press conference.
"Article 112 was the condition that blocked us, we will need to get more votes."
HURDLES AHEAD
Pheu Thai, the political juggernaut of the billionaire Shinawatra family, does not support Move Forward's plan to change the law on insulting the monarchy, which many lawmakers have identified as a red line.
It is expected Pheu Thai will nominate 60-year-old real estate mogul and political newcomer Srettha Thavisin for prime minister for the next vote on July 27. Chonlanan said no decision had been made.
Pheu Thai could face many of the same hurdles as Move Forward and has its own bitter history with the military, which overthrew two of its governments, leading to criminal charges that forced two prime ministers - siblings Thaksin Shinawatra and Yingluck Shinawatra - into self-imposed exile.
The benchmark Thai index and baht were both up slightly in Friday trade, extending gains from Thursday on hopes that a government could be formed soon.
"We have to do everything to get a prime minister by July 27," Pheu Thai's deputy leader Phumtham Wechayachai said.
Move Forward said its priority was not fighting to save Pita's prime ministerial&nbsp;bid&nbsp;but returning democracy to the country and delivering on the wishes of the people.
"It is clear that conservative forces - from politicians, business monopolies and institutions - they will not let Move Forward become government," party secretary Chaithawat Tulathon told a press conference, announcing its backing for Pheu Thai.
The alliance needs more than half of the bicameral parliament to get behind its next prime ministerial candidate to form a government, including the Senate, where many members have expressed diehard opposition to changing 112, which prescribes jail terms of up to 15 years for each perceived royal insult.
"They used 112 as an excuse and used loyalty (to the monarchy) to clash with the public vote," Move Forward's Chaithawat said.
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(Reporting by Panarat Thepgumpanat and Chayut Setboonsarng; Editing by Martin Petty, Robert Birsel)
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