The Straits Times, January 18, 2007
By Bruce Gale, for The Straits Times
Govt grapples with political instability, security woes and economic concerns
SHOW OF POWER: A Thai boy standing next to an Army helicopter at Bangkok's Royal plaza. The military-backed government's priorities include ensuring that the post-election administration will be friendly to the coup plotters.
THIS year is likely to be a difficult one in Thailand, with political instability and disruptive demonstrations a distinct possibility. Meanwhile, the economy can be expected to slow further as a distracted government struggles to provide economic direction and foreign investors continue to shy away.
Last September's putsch may appear to be just another in a long series of similar coups experienced by the country since the overthrow of the absolute monarchy in 1932. In reality, however, it took place amid quite different circumstances. And it is these circumstances that will cast a shadow over the political landscape in the coming months.
Like previous military-backed governments, Prime Minister Surayud Chulanont's interim civilian administration has promised to deal firmly with the corruption of the old regime, write a new Constitution and hold fresh elections. But like similar governments of dubious constitutionality, the leadership has another - far more important - set of priorities.
These priorities dictate that the new administration formed after the elections must be friendly to the coup plotters. It must also be one that does not ask awkward questions about the performance of the current administration.
Achieving these latter priorities this time around, however, will not be easy.
Before the coup, it was common for analysts to focus on the way Mr Thaksin Shinawatra was able to transform Thai politics by building up his Thai Rak Thai (TRT) party to the point where he controlled an outright majority in Parliament.
This was certainly an important departure from the weak coalition governments of the past and was a major factor helping to establish Mr Thaksin as the dominant player in Thai politics. Indeed, under Mr Thaksin, the office of the prime minister threatened to overshadow that of the bureaucracy and the military and even appeared at one point to challenge the authority of the country's revered King.
But the fact that the Thai political elite eventually turned on Mr Thaksin to remove him from office is less important now than understanding the extent of the former prime minister's support base.
Through the TRT, he built up a remarkably effective political machine. His populist policies ensured that, months after he was forced from office, he remains genuinely popular in many rural areas. Even more important, he has the financial resources to fund a political comeback. Meanwhile, his presence outside the country means that he remains free to gain international publicity.
Unlike the leadership of previous Thai coups, therefore, the military will have a tough time ensuring that the prime minister it ousted does not return to the centre stage of Thai politics.
From the point of view of the military, the TRT must be either dismantled or somehow prevented from contesting the promised elections effectively.
One possibility would be to detain key TRT leaders on the grounds of national security. But it may be difficult to do this without turning them into martyrs or prompting demonstrations by pro-democracy groups worried that the military is planning a more general crackdown.
Already, the ban on local broadcasters reporting on the activities of the former premier risks alienating important sections of the media hardly known for their pro-Thaksin sympathies.
Notice how quick the authorities were to accuse Mr Thaksin's supporters of being responsible for the New Year's Eve bomb attacks in the capital. The military desperately needs to discredit the former premier in the eyes of the public, but it has yet to bring formal corruption charges against him.
One possibility is that military leaders are worried that the ousted prime minister could return to defend himself in court. Such a move would give Mr Thaksin a convenient platform from which to question the legitimacy of the coup and denounce the alleged abuses of the current government.
Meanwhile, the opposition Democrats are almost certainly trying to figure out ways of taking advantage of the TRT's troubles in order to regain lost influence.
From the military's point of view, the Democrats would also need to be thwarted even though they are not Thaksin supporters by any measure.
A future Democrat-led administration may not be prepared to question the legitimacy of a coup that threw out a major political opponent, but such a leadership would almost certainly move to limit the influence of the military in the government and the bureaucracy.
In this respect, the outcome of the current fraud trials involving the actions of the TRT and the Democrat Party during the April 2006 elections - as well as the inevitable court appeals - will be interesting to watch. If the parties concerned are dissolved, their leaders would be barred from forming new ones for five years. Verdicts are expected in early May.
Then there is the security situation. The coup plotters blamed Mr Thaksin's hardline policies for the increasing unrest in the south, where a Muslim-based separatist conflict has killed more than 1,800 people in the past three years. Things have not improved under the Surayud administration. Regardless of who was responsible for the New Year's Eve blasts, the fact that they took place at all has dented the credibility of the generals.
With the government and the powerful Council for National Security (CNS) headed by army chief Sonthi Boonyarataglin preoccupied with political and security concerns, it is little wonder that economic policy decisions are being made without sufficient study of their possible impact. The result has been a series of embarrassing policy flip-flops.
The announcement of capital controls in mid-December, for example, produced a stock market crash that forced the government to backtrack. This month, just one day after announcing new foreign investment rules that resulted in the stock market plunging again, this time to a two-year low, the government indicated that it was prepared to be flexible on its decision to force companies to reduce their stakes in certain sectors of the economy.
Singapore's Temasek Holdings has been taken for a particularly bumpy ride. The initial announcement regarding changes in foreign investment rules suggested that the company would be forced into a painful sell-down of its controlling interest in Shin Corp - the Thaksin-family holding company. The public was later told, however, that telecommunications companies would not be affected because they fell under the Telecoms Act.
This clarification has only made economic planners appear even more muddle-headed. After all, it was the fierce controversy over whether Temasek had broken the law by using nominees to take control of Shin Corp that led to the Foreign Investment Law being considered for amendment in the very first place.
None of this is likely to inspire the confidence of foreign investors.
In the 10 months to October last year, political uncertainty had already halved the value of new projects approved by the Board of Investments. There seems to be no good reason why this situation should change in the immediate future.
As the government and military work on eliminating Mr Thaksin's political influence and networks, economic policy formation will continue to take a back seat to more immediate political imperatives.
It is even possible that investigations into Mr Thaksin's business affairs and those of his immediate family and friends will raise further concerns among foreign investors regarding a variety of widely accepted business practices.
Should the drive against the former premier prove difficult, the CNS could announce a postponement of the elections and promote the formation of a new pro-military political party. An early indication of the level of confidence the military has in current efforts to secure its position after the election will be the provisions of the new Constitution. One possibility: an appointed Senate.
Such developments will not go down well with Thaksin supporters. Nor will they be appreciated by Bangkok's politically active middle class. In such circumstances, both groups can be expected to stage demonstrations in the capital as the country becomes increasingly polarised.
An alliance of opposition forces seems unlikely now, but it might not appear so far-fetched later in the year, particularly if the government comes under pressure from hardline elements within the CNS who believe Gen Sonthi has bungled the coup by letting Mr Thaksin's supporters off too easily.
Dr Bruce Gale is an independent political risk analyst based in Singapore
By Bruce Gale, for The Straits Times
Govt grapples with political instability, security woes and economic concerns
SHOW OF POWER: A Thai boy standing next to an Army helicopter at Bangkok's Royal plaza. The military-backed government's priorities include ensuring that the post-election administration will be friendly to the coup plotters.THIS year is likely to be a difficult one in Thailand, with political instability and disruptive demonstrations a distinct possibility. Meanwhile, the economy can be expected to slow further as a distracted government struggles to provide economic direction and foreign investors continue to shy away.
Last September's putsch may appear to be just another in a long series of similar coups experienced by the country since the overthrow of the absolute monarchy in 1932. In reality, however, it took place amid quite different circumstances. And it is these circumstances that will cast a shadow over the political landscape in the coming months.
Like previous military-backed governments, Prime Minister Surayud Chulanont's interim civilian administration has promised to deal firmly with the corruption of the old regime, write a new Constitution and hold fresh elections. But like similar governments of dubious constitutionality, the leadership has another - far more important - set of priorities.
These priorities dictate that the new administration formed after the elections must be friendly to the coup plotters. It must also be one that does not ask awkward questions about the performance of the current administration.
Achieving these latter priorities this time around, however, will not be easy.
Before the coup, it was common for analysts to focus on the way Mr Thaksin Shinawatra was able to transform Thai politics by building up his Thai Rak Thai (TRT) party to the point where he controlled an outright majority in Parliament.
This was certainly an important departure from the weak coalition governments of the past and was a major factor helping to establish Mr Thaksin as the dominant player in Thai politics. Indeed, under Mr Thaksin, the office of the prime minister threatened to overshadow that of the bureaucracy and the military and even appeared at one point to challenge the authority of the country's revered King.
But the fact that the Thai political elite eventually turned on Mr Thaksin to remove him from office is less important now than understanding the extent of the former prime minister's support base.
Through the TRT, he built up a remarkably effective political machine. His populist policies ensured that, months after he was forced from office, he remains genuinely popular in many rural areas. Even more important, he has the financial resources to fund a political comeback. Meanwhile, his presence outside the country means that he remains free to gain international publicity.
Unlike the leadership of previous Thai coups, therefore, the military will have a tough time ensuring that the prime minister it ousted does not return to the centre stage of Thai politics.
From the point of view of the military, the TRT must be either dismantled or somehow prevented from contesting the promised elections effectively.
One possibility would be to detain key TRT leaders on the grounds of national security. But it may be difficult to do this without turning them into martyrs or prompting demonstrations by pro-democracy groups worried that the military is planning a more general crackdown.
Already, the ban on local broadcasters reporting on the activities of the former premier risks alienating important sections of the media hardly known for their pro-Thaksin sympathies.
Notice how quick the authorities were to accuse Mr Thaksin's supporters of being responsible for the New Year's Eve bomb attacks in the capital. The military desperately needs to discredit the former premier in the eyes of the public, but it has yet to bring formal corruption charges against him.
One possibility is that military leaders are worried that the ousted prime minister could return to defend himself in court. Such a move would give Mr Thaksin a convenient platform from which to question the legitimacy of the coup and denounce the alleged abuses of the current government.
Meanwhile, the opposition Democrats are almost certainly trying to figure out ways of taking advantage of the TRT's troubles in order to regain lost influence.
From the military's point of view, the Democrats would also need to be thwarted even though they are not Thaksin supporters by any measure.
A future Democrat-led administration may not be prepared to question the legitimacy of a coup that threw out a major political opponent, but such a leadership would almost certainly move to limit the influence of the military in the government and the bureaucracy.
In this respect, the outcome of the current fraud trials involving the actions of the TRT and the Democrat Party during the April 2006 elections - as well as the inevitable court appeals - will be interesting to watch. If the parties concerned are dissolved, their leaders would be barred from forming new ones for five years. Verdicts are expected in early May.
Then there is the security situation. The coup plotters blamed Mr Thaksin's hardline policies for the increasing unrest in the south, where a Muslim-based separatist conflict has killed more than 1,800 people in the past three years. Things have not improved under the Surayud administration. Regardless of who was responsible for the New Year's Eve blasts, the fact that they took place at all has dented the credibility of the generals.
With the government and the powerful Council for National Security (CNS) headed by army chief Sonthi Boonyarataglin preoccupied with political and security concerns, it is little wonder that economic policy decisions are being made without sufficient study of their possible impact. The result has been a series of embarrassing policy flip-flops.
The announcement of capital controls in mid-December, for example, produced a stock market crash that forced the government to backtrack. This month, just one day after announcing new foreign investment rules that resulted in the stock market plunging again, this time to a two-year low, the government indicated that it was prepared to be flexible on its decision to force companies to reduce their stakes in certain sectors of the economy.
Singapore's Temasek Holdings has been taken for a particularly bumpy ride. The initial announcement regarding changes in foreign investment rules suggested that the company would be forced into a painful sell-down of its controlling interest in Shin Corp - the Thaksin-family holding company. The public was later told, however, that telecommunications companies would not be affected because they fell under the Telecoms Act.
This clarification has only made economic planners appear even more muddle-headed. After all, it was the fierce controversy over whether Temasek had broken the law by using nominees to take control of Shin Corp that led to the Foreign Investment Law being considered for amendment in the very first place.
None of this is likely to inspire the confidence of foreign investors.
In the 10 months to October last year, political uncertainty had already halved the value of new projects approved by the Board of Investments. There seems to be no good reason why this situation should change in the immediate future.
As the government and military work on eliminating Mr Thaksin's political influence and networks, economic policy formation will continue to take a back seat to more immediate political imperatives.
It is even possible that investigations into Mr Thaksin's business affairs and those of his immediate family and friends will raise further concerns among foreign investors regarding a variety of widely accepted business practices.
Should the drive against the former premier prove difficult, the CNS could announce a postponement of the elections and promote the formation of a new pro-military political party. An early indication of the level of confidence the military has in current efforts to secure its position after the election will be the provisions of the new Constitution. One possibility: an appointed Senate.
Such developments will not go down well with Thaksin supporters. Nor will they be appreciated by Bangkok's politically active middle class. In such circumstances, both groups can be expected to stage demonstrations in the capital as the country becomes increasingly polarised.
An alliance of opposition forces seems unlikely now, but it might not appear so far-fetched later in the year, particularly if the government comes under pressure from hardline elements within the CNS who believe Gen Sonthi has bungled the coup by letting Mr Thaksin's supporters off too easily.
Dr Bruce Gale is an independent political risk analyst based in Singapore
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