January 13 2010
By David Pilling and Tim Johnston Financial Times (UK)
Like Banquo’s ghost, Thaksin Shinawatra still hovers at Thailand’s dinner tables, boardrooms and cabinet meetings. Few discussions about the social and political direction of the once-miracle economy are complete without a heated debate over the ousted prime minister’s influence – past, present and, quite conceivably, future.
The charismatic Mr Thaksin burst on the scene in 2001 when his party won a landslide. He went on to become the first prime minister in modern Thai history to serve a full term. Wildly popular among the poor but mired in persistent allegations of corruption and tax evasion, his government was ejected from power in 2006 when the military mounted its 18th coup d’état since the country became a constitutional monarchy more than 70 years ago.
Yet the discarded leader, whose appeal to millions of marginalised rural voters uncorked the genie of social aspiration, has hardly vanished from the scene. Though living in exile in Dubai, mainly to escape a two-year jail sentence imposed in absentia over a conflict of interest, he has continued to exert a powerful influence through two proxy governments and the “red shirt” demonstrators who regularly take to the streets in his name.
This week those supporters promised to resume indefinite protests until the fall of the latest government, this one headed by Abhisit Vejjajiva, a sharp critic of Mr Thaksin.
Indeed, recent months have been dominated by clashes between Mr Thaksin’s red shirts and the yellow shirts, supporters of the monarchy who nearly brought the country to a standstill in 2008 when they occupied the international airport for a week just as the tourist high season was about to start.
Further violence around the Association of South-East Asian Nations summit last April damaged Thailand’s international reputation still more when demonstrators stormed a conference centre in the resort town of Pattaya. Regional leaders including a bemused Wen Jiabao, China’s premier, were hurriedly evacuated from the Land of Smiles.
The debate about the direction of democracy is being closely watched by many in the region. The interest goes beyond that of investors such as Toyota, Tesco and Seagate, which have looked on nervously as political instability has gathered force. In a region where fully democratic systems in Taiwan and South Korea are exceptions, Thailand is being seen as a telling example of a fragile democracy struggling to breathe.
Political analysts are predicting that the street demonstrations could erupt into even worse violence when the six-decade reign of King Bhumibol Adulyadej comes to an end. Of the king’s protracted illness and fears of what might happen when his mediating presence is gone, Mr Abhisit says in an interview with the Financial Times: “When you have had a very strong, inspirational leader for six decades, there is always going to be a sense of anxiety about change.”
Thitinan Pongsudhirak, associate professor at Bangkok’s Chulalongkorn university, goes further, describing Thailand as a “tinderbox”. He regards the government of Mr Abhisit, nominated by parliament in late 2008 after two prime ministers loyal to Mr Thaksin were removed by the constitutional court, as a dam against the flood waters of social change.
“Abhisit is their last hope,” he says, referring to the monarchists, members of the armed forces and well-to-do who benefit from the present social arrangements. “He is the last democratic stop to put a lid on the forces unleashed by Thaksin.”
Mr Thitinan does not dispute there were negative aspects of Mr Thaksin’s populist administration, which was dogged by accusations of crony capitalism and, in its war on drugs and southern rebels, of extra-judicial killings. But he also points to Mr Thaksin’s introduction of a popular “30-baht healthcare” scheme – allowing a hospital visit for less than a dollar – and his championing of infrastructure and lending policies aimed at improving opportunities for the rural poor. These, he says, began to address the social and political demands of millions of Thais that had gone unheard for decades.
“They should see this as a wake-up call instead of smearing or demonising Thaksin,” he says of those in Thai society who would like to put the Thaksin years behind them. “Thaksin was a catalyst for what needs to happen.”
The present government has sought to borrow Mr Thaksin’s political robes and win over his north-eastern voters by continuing his progressive social programmes. Yet in spite of Mr Abhisit’s attempt to shut Mr Thaksin out, the ex-leader’s influence has, if anything, intensified. Provocatively, last year Mr Thaksin accepted the position of economic adviser to Cambodia, sparking a diplomatic standoff between the neighbouring countries. In a rhetorical flourish, he even suggested he stood ready to counter any intervention from the military by marching on Bangkok at the head of an army of loyal north-easterners.
Thai leaders have consistently paid lip service to the creation of a stable liberal democracy. Few have given much shrift to talk of “Asian-style democracies” proffered by the likes of Singapore, dominated by one political party since independence. Nor do many Thais, in spite of the hyperactive role the military has played in politics, countenance the idea of authoritarianism.
The sputterings of Thai democracy have also become intimately bound up with analysis of the country’s economic development. In 1995, after a decade of growth that outstripped even China’s, commentators began to chatter excitedly about Thailand joining the ranks of the world’s top 10 economies within a generation. The reality has been otherwise. Thailand’s development has stalled. Income equalities have widened.
T rue, the economy has regained a modicum of traction since the Asian financial crisis of 1997 slashed 15 per cent off its gross domestic product in 18 disastrous months. But even before last year’s global crisis lopped off a further 3.5 per cent, it had been struggling to grow above 4-5 per cent a year. That puts it towards the bottom of regional league tables, outstripped by countries such as Vietnam and Singapore, let alone China. Thai GDP per capita, at some $3,850 (£2,360, €2,640), remains less than one-quarter of that of Taiwan, an economy with which not long ago it was being compared.
Tarisa Watanagase, governor of Thailand’s central bank, lays the blame clearly on political turmoil. Private investment, growing at 12 per cent a year earlier this decade, has ground to a halt, she says. Bank lending to businesses languishes at two-thirds of 1990s levels, while the economy has become far more dependent on exports than it was before the 1997 crisis. “The biggest problem is the political situation,” she says. “With that, neither the private nor the public sector can really focus on what needs to be done.”
The reasons for Thailand’s disappointing performance go deeper than that. Stimulated by US capital inflows during the Korean and Vietnam wars and, in the 1980s, by a wave of foreign investment from Japan, Thailand’s economy grew beyond the tourism and agriculture on which it had traditionally relied. But it never fully developed an indigenous capitalist class able to compete internationally. Instead, local entrepreneurs – of whom Mr Thaksin was one – prospered by forging close relationships with politicians, carving out monopolies in service industries such as telecommunications and construction.
In Thaksin: The business of politics in Thailand, their book on the populist mogul, Pasuk Phongpaichit and Chris Baker write: “Big business was closely connected to politics. The businessmen shared some of their profits with the generals, who in return constructed a friendly environment for business, and rewarded their particular friends with contracts, favours and other profit-sharing advantages.” As well as stalling the creation of world-class businesses, that cosy arrangement also held back the social transformations, particularly land reform, that underpinned rapid take-off in Japan, Taiwan and South Korea.
Much of the Thai elite is fearful of the aspirations stirred by Mr Thaksin. Even Anand Panyarachun, a former prime minister associated with more inclusive social policies, insists Thailand should shun the blind pursuit of economic growth. “We have ambitions, but we don’t have exaggerated ambitions,” he says.
Playing down social needs, he adds: “Here we are lucky in the sense that we have such a temperate climate, and you don’t need much shelter, and you don’t need much clothing and everywhere you go you can always get people to give you food.”
But Mr Thaksin has shaken those paternalistic convictions. Political analysts say it is not clear whether the status quo will survive the death of King Bhumibol, now 82, who is widely credited with using his moral suasion to keep Thailand’s delicate social peace – and that given that his unique role depends more on the man than the institution, he will be all but irreplaceable. Mr Abhisit says of the king’s unifying role: “Thai society has got to mature to a point where we can sort out our own problems.”
Some are less coy, predicting outright social conflict when the king dies. Mr Thitinan, implying some constitutional questions have been postponed out of respect for the king, says: “Some of the vestiges of latent feudal society will have to give way.”
Whether those vestiges go rapidly or gradually and whether they do so with or without the direct involvement of Mr Thaksin is anybody’s guess. But many Thai activists are braced for what they are certain are coming political convulsions.
“Even if you remove Thaksin, there are still a large number of people left to fight for democracy,” says Chaturon Chaisang, one of 111 opposition MPs banned from politics. “In certain aspects, Thai politics have gone far beyond Thaksin.”
As King Bhumibol ails, Thais contemplate a more fractured future
The formal title of Bhumibol Adulyadej, Thailand’s king and the world’s longest reigning monarch, runs to 35 syllables of exaltation, but for most Thais he is simply “Por”: father, writes Tim Johnston.
The king’s formal powers are circumscribed by the constitution, which says that the monarchy is above politics, but 63 years of hard work and astute positioning have earned him what is in practice almost absolute moral authority.
He has become the centre of gravity around which the dysfunctional political firmament orbits; the source from which the unelected power elite aspires to draw its legitimacy; and the revered embodiment of the qualities that most Thais want to preserve in the face of huge social and economic upheaval: community, charity and serenity.
But political divides that have recently widened seem immune to the traditional appeals for unity that the monarch has used in the past to bring the country together. The colour-coded battle between the red shirts and the yellow shirts – both sides say they are fighting for the soul of Thailand – is threatening to pull the “high institution”, as the Thais tend to refer to it, into the middle of the conflict. Palace insiders say the king is unhappy with the way his name is being invoked by different factions but is wary of intervening lest it be interpreted as being too overtly political.
King Bhumibol inherited the throne in 1946 from his brother, who died from a pistol shot to the head. The institution was already on its knees and the generals were firmly in charge.
During the following six decades, the king has criss-crossed the country dispensing largesse and comfort to the poor, and has provided a stable pivot in a country that swings erratically between democracy and military rule. His constancy has earned him undying love in a nation that has been serially failed by both its politicians and its generals.
But King Bhumibol is now 82 and in uncertain health. He has been in hospital since mid-September, originally with inflammation of the lungs and – although the palace says he has now recovered and is merely receiving rehabilitation care – it has rattled the population, most of which has never known the country without him. More than 1.8m people have signed a get-well book outside the Bangkok hospital where he is a patient.
Many people here say privately that the country is moving on from the patriarchal style personified by the king and needs to have a more open debate about the role of the monarchy in a post-Bhumibol Thailand. However, ill-defined lese majesty laws, which are supposed to shield the royal family from insult but more frequently are used by politicians to attack their opponents, have muzzled any substantive discussion.
------
Foreign investment
After the airports paralysis, ground is fast lost to regional rivals
Thailand’s political turmoil has come at a high price, with foreign direct investment tumbling in the short term. But given the worries for investors, FDI has been notably resilient over the longer term.
“It is still coming in,” says Tarisa Watanagase, governor of the Bank of Thailand, the country’s central bank. “We thought that last year, with the global situation and the political situation, FDI would dry up, but it still came in.”
The fall was steep, however. In the first 11 months of 2009, FDI disbursements were some Bt266bn ($7.7bn, €5.6, £5bn), down 43 per cent on the same 2008 period. The slide was much greater than Vietnam’s full-year fall of 13 per cent or Indonesia’s 28 per cent drop.
Analysts are reluctant to attribute the entire fall to political turmoil, pointing out that Vietnam has benefited from being a low-cost producer and Indonesia from its natural resources. Another factor in the mix was that Japan and Europe, Thailand’s main foreign investors, were themselves hit disproportionately hard, with Japanese FDI falling 75 per cent.
Long-term investors in Thailand are a hardy bunch, acclimatised to the unpredictable rise and fall of governments and the enthusiastic participation of the military in running the country. In the past, these upheavals had little practical effect on the business environment.
That changed in December 2008, when thousands of anti-government protesters took over Bangkok’s airports for a week, trapping tourists and businessmen and blocking air freight export routes. The Bank of Thailand estimated that the siege cost some $8.5bn.
Analysts say the problem is not so much that Thailand’s allure has declined in absolute terms, though it has, but that it has declined so much relative to rivals.
The charismatic Mr Thaksin burst on the scene in 2001 when his party won a landslide. He went on to become the first prime minister in modern Thai history to serve a full term. Wildly popular among the poor but mired in persistent allegations of corruption and tax evasion, his government was ejected from power in 2006 when the military mounted its 18th coup d’état since the country became a constitutional monarchy more than 70 years ago.
Yet the discarded leader, whose appeal to millions of marginalised rural voters uncorked the genie of social aspiration, has hardly vanished from the scene. Though living in exile in Dubai, mainly to escape a two-year jail sentence imposed in absentia over a conflict of interest, he has continued to exert a powerful influence through two proxy governments and the “red shirt” demonstrators who regularly take to the streets in his name.
This week those supporters promised to resume indefinite protests until the fall of the latest government, this one headed by Abhisit Vejjajiva, a sharp critic of Mr Thaksin.
Indeed, recent months have been dominated by clashes between Mr Thaksin’s red shirts and the yellow shirts, supporters of the monarchy who nearly brought the country to a standstill in 2008 when they occupied the international airport for a week just as the tourist high season was about to start.
Further violence around the Association of South-East Asian Nations summit last April damaged Thailand’s international reputation still more when demonstrators stormed a conference centre in the resort town of Pattaya. Regional leaders including a bemused Wen Jiabao, China’s premier, were hurriedly evacuated from the Land of Smiles.
The debate about the direction of democracy is being closely watched by many in the region. The interest goes beyond that of investors such as Toyota, Tesco and Seagate, which have looked on nervously as political instability has gathered force. In a region where fully democratic systems in Taiwan and South Korea are exceptions, Thailand is being seen as a telling example of a fragile democracy struggling to breathe.
Political analysts are predicting that the street demonstrations could erupt into even worse violence when the six-decade reign of King Bhumibol Adulyadej comes to an end. Of the king’s protracted illness and fears of what might happen when his mediating presence is gone, Mr Abhisit says in an interview with the Financial Times: “When you have had a very strong, inspirational leader for six decades, there is always going to be a sense of anxiety about change.”
Thitinan Pongsudhirak, associate professor at Bangkok’s Chulalongkorn university, goes further, describing Thailand as a “tinderbox”. He regards the government of Mr Abhisit, nominated by parliament in late 2008 after two prime ministers loyal to Mr Thaksin were removed by the constitutional court, as a dam against the flood waters of social change.
“Abhisit is their last hope,” he says, referring to the monarchists, members of the armed forces and well-to-do who benefit from the present social arrangements. “He is the last democratic stop to put a lid on the forces unleashed by Thaksin.”
Mr Thitinan does not dispute there were negative aspects of Mr Thaksin’s populist administration, which was dogged by accusations of crony capitalism and, in its war on drugs and southern rebels, of extra-judicial killings. But he also points to Mr Thaksin’s introduction of a popular “30-baht healthcare” scheme – allowing a hospital visit for less than a dollar – and his championing of infrastructure and lending policies aimed at improving opportunities for the rural poor. These, he says, began to address the social and political demands of millions of Thais that had gone unheard for decades.
“They should see this as a wake-up call instead of smearing or demonising Thaksin,” he says of those in Thai society who would like to put the Thaksin years behind them. “Thaksin was a catalyst for what needs to happen.”
The present government has sought to borrow Mr Thaksin’s political robes and win over his north-eastern voters by continuing his progressive social programmes. Yet in spite of Mr Abhisit’s attempt to shut Mr Thaksin out, the ex-leader’s influence has, if anything, intensified. Provocatively, last year Mr Thaksin accepted the position of economic adviser to Cambodia, sparking a diplomatic standoff between the neighbouring countries. In a rhetorical flourish, he even suggested he stood ready to counter any intervention from the military by marching on Bangkok at the head of an army of loyal north-easterners.
Thai leaders have consistently paid lip service to the creation of a stable liberal democracy. Few have given much shrift to talk of “Asian-style democracies” proffered by the likes of Singapore, dominated by one political party since independence. Nor do many Thais, in spite of the hyperactive role the military has played in politics, countenance the idea of authoritarianism.
The sputterings of Thai democracy have also become intimately bound up with analysis of the country’s economic development. In 1995, after a decade of growth that outstripped even China’s, commentators began to chatter excitedly about Thailand joining the ranks of the world’s top 10 economies within a generation. The reality has been otherwise. Thailand’s development has stalled. Income equalities have widened.
T rue, the economy has regained a modicum of traction since the Asian financial crisis of 1997 slashed 15 per cent off its gross domestic product in 18 disastrous months. But even before last year’s global crisis lopped off a further 3.5 per cent, it had been struggling to grow above 4-5 per cent a year. That puts it towards the bottom of regional league tables, outstripped by countries such as Vietnam and Singapore, let alone China. Thai GDP per capita, at some $3,850 (£2,360, €2,640), remains less than one-quarter of that of Taiwan, an economy with which not long ago it was being compared.
Tarisa Watanagase, governor of Thailand’s central bank, lays the blame clearly on political turmoil. Private investment, growing at 12 per cent a year earlier this decade, has ground to a halt, she says. Bank lending to businesses languishes at two-thirds of 1990s levels, while the economy has become far more dependent on exports than it was before the 1997 crisis. “The biggest problem is the political situation,” she says. “With that, neither the private nor the public sector can really focus on what needs to be done.”
The reasons for Thailand’s disappointing performance go deeper than that. Stimulated by US capital inflows during the Korean and Vietnam wars and, in the 1980s, by a wave of foreign investment from Japan, Thailand’s economy grew beyond the tourism and agriculture on which it had traditionally relied. But it never fully developed an indigenous capitalist class able to compete internationally. Instead, local entrepreneurs – of whom Mr Thaksin was one – prospered by forging close relationships with politicians, carving out monopolies in service industries such as telecommunications and construction.
In Thaksin: The business of politics in Thailand, their book on the populist mogul, Pasuk Phongpaichit and Chris Baker write: “Big business was closely connected to politics. The businessmen shared some of their profits with the generals, who in return constructed a friendly environment for business, and rewarded their particular friends with contracts, favours and other profit-sharing advantages.” As well as stalling the creation of world-class businesses, that cosy arrangement also held back the social transformations, particularly land reform, that underpinned rapid take-off in Japan, Taiwan and South Korea.
Much of the Thai elite is fearful of the aspirations stirred by Mr Thaksin. Even Anand Panyarachun, a former prime minister associated with more inclusive social policies, insists Thailand should shun the blind pursuit of economic growth. “We have ambitions, but we don’t have exaggerated ambitions,” he says.
Playing down social needs, he adds: “Here we are lucky in the sense that we have such a temperate climate, and you don’t need much shelter, and you don’t need much clothing and everywhere you go you can always get people to give you food.”
But Mr Thaksin has shaken those paternalistic convictions. Political analysts say it is not clear whether the status quo will survive the death of King Bhumibol, now 82, who is widely credited with using his moral suasion to keep Thailand’s delicate social peace – and that given that his unique role depends more on the man than the institution, he will be all but irreplaceable. Mr Abhisit says of the king’s unifying role: “Thai society has got to mature to a point where we can sort out our own problems.”
Some are less coy, predicting outright social conflict when the king dies. Mr Thitinan, implying some constitutional questions have been postponed out of respect for the king, says: “Some of the vestiges of latent feudal society will have to give way.”
Whether those vestiges go rapidly or gradually and whether they do so with or without the direct involvement of Mr Thaksin is anybody’s guess. But many Thai activists are braced for what they are certain are coming political convulsions.
“Even if you remove Thaksin, there are still a large number of people left to fight for democracy,” says Chaturon Chaisang, one of 111 opposition MPs banned from politics. “In certain aspects, Thai politics have gone far beyond Thaksin.”
As King Bhumibol ails, Thais contemplate a more fractured future
The formal title of Bhumibol Adulyadej, Thailand’s king and the world’s longest reigning monarch, runs to 35 syllables of exaltation, but for most Thais he is simply “Por”: father, writes Tim Johnston.
The king’s formal powers are circumscribed by the constitution, which says that the monarchy is above politics, but 63 years of hard work and astute positioning have earned him what is in practice almost absolute moral authority.
He has become the centre of gravity around which the dysfunctional political firmament orbits; the source from which the unelected power elite aspires to draw its legitimacy; and the revered embodiment of the qualities that most Thais want to preserve in the face of huge social and economic upheaval: community, charity and serenity.
But political divides that have recently widened seem immune to the traditional appeals for unity that the monarch has used in the past to bring the country together. The colour-coded battle between the red shirts and the yellow shirts – both sides say they are fighting for the soul of Thailand – is threatening to pull the “high institution”, as the Thais tend to refer to it, into the middle of the conflict. Palace insiders say the king is unhappy with the way his name is being invoked by different factions but is wary of intervening lest it be interpreted as being too overtly political.
King Bhumibol inherited the throne in 1946 from his brother, who died from a pistol shot to the head. The institution was already on its knees and the generals were firmly in charge.
During the following six decades, the king has criss-crossed the country dispensing largesse and comfort to the poor, and has provided a stable pivot in a country that swings erratically between democracy and military rule. His constancy has earned him undying love in a nation that has been serially failed by both its politicians and its generals.
But King Bhumibol is now 82 and in uncertain health. He has been in hospital since mid-September, originally with inflammation of the lungs and – although the palace says he has now recovered and is merely receiving rehabilitation care – it has rattled the population, most of which has never known the country without him. More than 1.8m people have signed a get-well book outside the Bangkok hospital where he is a patient.
Many people here say privately that the country is moving on from the patriarchal style personified by the king and needs to have a more open debate about the role of the monarchy in a post-Bhumibol Thailand. However, ill-defined lese majesty laws, which are supposed to shield the royal family from insult but more frequently are used by politicians to attack their opponents, have muzzled any substantive discussion.
------
Foreign investment
After the airports paralysis, ground is fast lost to regional rivals
Thailand’s political turmoil has come at a high price, with foreign direct investment tumbling in the short term. But given the worries for investors, FDI has been notably resilient over the longer term.
“It is still coming in,” says Tarisa Watanagase, governor of the Bank of Thailand, the country’s central bank. “We thought that last year, with the global situation and the political situation, FDI would dry up, but it still came in.”
The fall was steep, however. In the first 11 months of 2009, FDI disbursements were some Bt266bn ($7.7bn, €5.6, £5bn), down 43 per cent on the same 2008 period. The slide was much greater than Vietnam’s full-year fall of 13 per cent or Indonesia’s 28 per cent drop.
Analysts are reluctant to attribute the entire fall to political turmoil, pointing out that Vietnam has benefited from being a low-cost producer and Indonesia from its natural resources. Another factor in the mix was that Japan and Europe, Thailand’s main foreign investors, were themselves hit disproportionately hard, with Japanese FDI falling 75 per cent.
Long-term investors in Thailand are a hardy bunch, acclimatised to the unpredictable rise and fall of governments and the enthusiastic participation of the military in running the country. In the past, these upheavals had little practical effect on the business environment.
That changed in December 2008, when thousands of anti-government protesters took over Bangkok’s airports for a week, trapping tourists and businessmen and blocking air freight export routes. The Bank of Thailand estimated that the siege cost some $8.5bn.
Analysts say the problem is not so much that Thailand’s allure has declined in absolute terms, though it has, but that it has declined so much relative to rivals.
