The struggle in Thailand now is no longer economic: this time it's political
Thousands of yellow-shirted demonstrators have been having a garden party in Bangkok’s Government House in the last few months, while the latest prime minister of the elected government was forced in late September to take up a newly converted office in the former Don Muang International Airport.
Crisis, what crisis? Not in the downtown offices of Silom or Ploenchit or the gold shops of Yaowarat Chinatown. Certainly this latest political stand-off does not compare in real terms to the financial earthquake that stunned Thais after the July 2, 1997 devaluation of the currency – and left them largely insulated against the current US-led version of it. Not yet anyway.
The People’s Alliance for Democracy (PAD) is trying to kick out the third prime minister in two years, having first succeeded via the military coup against Thaksin Shinawatra’s populist but over-pushy government in September 2006. Then this September they secured the scalp of the so-called ‘Thaksin proxy’ Samak Sundaravej because of undeclared payments for a TV cookery programme – at a time of a state of emergency! Now they have got Thaksin’s brother-in-law instead. That’s Thai politics.
Safe house?
But businessmen and bankers believe the Thai economy will escape relatively unscathed from the US global financial mayhem. The reasons are simple: Thailand’s exports have diversified from their US-dependence compared to 1997, and Thai businesses have been through all this before and strengthened their balance sheets.
So too for commercial and investment banks – they paid their dues years ago, and the survivors are limited by sounder regulations and better risk management and accounting standards.
“Thailand’s financial system is strong enough to cope with the US economic turmoil,” says Aphisak Tantiworawong, president of Krung Thai Bank and chairman of the Thai Bankers Association. Moreover, the local banking industry should still post relatively strong results for the year, despite a slowdown in lending in the second half.
“Thailand has no liquidity problems right now: with the country’s large international reserve, the Bank of Thailand can support financial institutions if there are liquidity shortages,” says Tantiworawong. But he urges the finance ministry to ensure that sufficient funds remain in the domestic economy to support growth, and suggests the government should encourage foreign investors into the local currency bond market to boost domestic liquidity.
The worst-case scenario is that the 2009 budget is hamstrung by political uncertainty, he says. It is a familiar fear – and the reason why the country has seen declining foreign investment in the last few years.
The business and financial sectors have bounced back well from the crisis, says Thanong Khanthong, editor of The Nation, the country’s leading English language business daily. “But the politicians have not reformed, nor have they gone through any shake-ups at all to rise to the same standards as the business community and financiers. Governance in Thai politics has not improved a single notch.”
The Nation, like many papers in Bangkok, tacitly approved the coup d’etat of September 2006 that forced the end of Thaksin Shinawatra’s government as demanded by the PAD movement.
The view then was that Thaksin’s electoral mandate from the poor and populous north and north-east provinces had allowed him to ride roughshod over constitutional checks and balances. Unfortunately, despite Thaksin being in exile and most of his party banned, many of the same people came back to power in election victories earlier this year.
In other words, directly elected MPs were not the answer, and one of the leaders, Sondhi Limthongkul, began talking about New Politics – a format that would allow MPs to be appointed by some sort of monarchist-bureaucratic-academic body, something that sounded reactionary even to those who supported the PAD against Thaksin.
Sondhi is a media mogul, ironically once a student leader targeted by the military, who was once a friend of Thaksin in a number of media and telecommunications enterprises before the 1997 crisis. Their paths diverged dramatically thereafter: Sondhi went bankrupt and Thaksin, often accused of benefitting from the collapse of the baht, continued moulding the political machine that would allow him to take over the country.
Sondhi’s TV and radio outlets – the first not publicly controlled – have become the main source of dissent against the so-called bribe-for-votes money of Thaksin (although now the bulk of it – $2 billion – is still frozen in Thailand) and the rein his associates have on power in all sectors of power.
At a higher level, it is a struggle between old-money Thai establishment families against newly rich provincial businessmen; at grass-roots level, the country is dividing between the poor and often ethnic-Lao supporters of Thaksin’s populist cheap loans and free medicine policies and the educated Bangkok middle class fearful of losing their established place in the face of a rising populist dictatorship.—N.P.