Monday, October 27, 2008

Thailand's PAD-Good people?

Good people?

By Amy Kazmin

Published: October 28 2008 02:00 | Last updated: October 28 2008 02:00

Once the main gateway to Thailand, Bangkok's old Don Mueang airport has been little used since the city's new international hub opened in 2006. But Don Mueang's VIP terminal is these days the unlikely refuge of an elected government struggling to retain control in the face of an extraordinary challenge to its rule.

In hastily refurbished offices previously occupied by airline executives, Somchai Wongsawat, Thailand's new prime minister and brother-in-law of the exiled Thaksin Shinawatra, his predecessor but two, is trying to keep the wheels of state turning - and steer the economy through the current global financial turmoil - even as the coalition led by his People's Power party fights to survive.

The coalition, dominated by Thaksin loyalists, took power in February after winning a general election with strong support from rural voters still devoted to the former telecommunications mogul. But in a stand-off that this week entered its third month, ministers and officials have been shut out of the sprawling Government House compound - the jewel of which is an Italianate palace - by thousands of protesters who reject the legitimacy of the Thai electoral system and the PPP-led administration it has produced.

Calling themselves the People's Alliance for Democracy, the protesters, drawn mainly from Bangkok's middle class, are demanding a new political order to replace the one-person, one-vote parliamentary democracy that they say permits poorly educated rural voters repeatedly to deliver power to corrupt politicians unworthy of leading the Buddhist kingdom. This month, protesters trying to prevent Mr Somchai's government from unveiling its programme in parliament clashed with police in some of the worst political violence Bangkok has seen since 1992.

The PAD, whose followers mainly wear royalist yellow, insists its proposed "new politics" will improve Thailand's democracy. But critics say the PAD - and its powerful behind-the-scenes military, bureaucratic and palace backers - are seeking nothing less than a rollback of hard-won democratic gains so as to restore the political influence of traditional Bangkok elites.

"It's just a power grab," says Thitinan Pongsudhirak, a political scientist at Bangkok's Chulalongkorn University. "The PAD is the vanguard of the establishment. This is a counterrevolution to the right. It's a disguised manipulation of democratic rules to preserve and retake the prerogatives of the establishment."

The struggle, which along with the global financial crisis is taking its toll on the export-oriented Thai economy (see below), will reverberate well beyond a country long seen as a model for developing economies gradually transitioning towards democracy. Any rollback - or even the widespread embrace of the idea that democracy has failed - could embolden traditional elites elsewhere to resist or even reverse democratisation. "If the old guard can roll back the clock and reclaim lost prerogatives, it will set a bad example for other transition countries," says Mr Thitinan.

Aloose grouping, the PAD has yet to define fully how it would achieve its aim of reducing political corruption. It has backed away from its first idea of a parliament in which 70 per cent of members would be appointed. Instead it is proposing a voting system with indirect elections based on occupational groups. PAD leaders "want to destroy party politics in Thailand and reduce the power of the population to vote", says Giles Ungpakorn, author of a book critical of the 2006 military coup that removed Mr Thaksin.

The tycoon, who had served more than five years as prime minister and now lives in the UK, was last week sentenced in absentia by Thailand's supreme court to two years in jail on a charge of corruption in a land deal.

Chaturon Chaisang, a former deputy prime minister in Mr Thaksin's government, says the Bangkok showdown reflects the "fundamental political conflict" that has haunted Thailand since the abolition of its absolute monarchy in 1932 (see right). "It's a question of whether a tiny group of 'good people' should run the country or do people have the legitimacy to choose their own leaders."

Yet the battle is unlikely to end quickly. Supavud Saicheua, a Phatra Securities economist, predicts that the conflict could take three to four years to play out - with the economy suffering plenty of collateral damage. "The crux of the issue is the ability for political power to be shared amicably between the elites and Bangkokians on the one hand, and the more united rural based voters on the other," he wrote in a recent report.

"If one-man, one-vote cannot produce an acceptably trusted government, then many in Bangkok would support judicial activism to check and balance the government, or resort to appointed leaders."

During 18 months of militaryinstalled government, Thailand adopted a new constitution that replaced the elected senate with a half-appointed upper chamber and strengthened judicial and bureaucratic power while diluting elected officials' authority. The strong mandate the primarily rural electorate gave to Mr Thaksin's loyalists last December prompted PAD leaders' agitation for further such curbs. "Thaksin excited such animosity that their hatred of him has evolved into hatred of the system that brought him to power," says Chris Baker, a Bangkok-based historian and analyst.

The number of PAD protesters besieging Government House is far smaller than those who joined the 2006 marches against Mr Thaksin. But they have shown a willingness to adopt confrontational tactics, such as forcing the closure of airports including Phuket for several days in September.

The PAD also appears to have strong financial support - and protection - from elite forces. Not only has the military refused to remove the protesters from Government House by force, or even to put pressure on them by restricting the flow of food and people into the compound, but serving officers have been training PAD guards on how to resist any eviction effort.

Queen Sirikit, wife of the revered King Bhumibol Adulyadej, attended the funeral of an antigovernment protester killed in this month's violence, a gesture Thais interpret as a display of support for the PAD cause. The continuing political role of the military was meanwhile in evidence when Gen Anupong Paochinda, the army chief - flanked by the heads of the navy and air force - in a televised interview called on Mr Somchai to resign to show responsibility for the violence. Surayud Chulanont, the privy councillor who served as prime minister after the 2006 coup, has urged the PPP to negotiate with the PAD on its demands.

"The distinguishing features of the movement are its wealth, its explicit and its implicit use of violence, and its magical protection against threats, including police action, court orders, and legal process," Chang Noi, the pseudonym for two acute observers of the Thai political scene, wrote recently in The Nation newspaper. "These are the politics of class and privilege."

Mr Somchai, who became prime minister last month after his predecessor was removed by a court for hosting a cookery show while in office, is trying to reduce tensions, avoiding any provocation that might trigger further disruption or violence that could be used to justify a new military coup. He has suggested that he is open to negotiating with the PAD.

Yet even as Mr Somchai tries to defuse the PAD challenge, his administration faces another threat to its survival: charges of electoral fraud brought against his party at the constitutional court. The court has the power to dissolve the PPP and ban its leaders from political life, by invoking draconian laws imposed after the 2006 coup that provide for the punishment of an entire political party, and its leadership, for the misdeeds of a few.

That such laws exist at all - and are so readily invoked - highlight what a long way Thailand still has to go in building sustainable democratic institutions, even if the PAD elite fails to win further legal changes. Says Mr Ungpakorn: "Whatever the outcome, it doesn't look very good for democracy."

Coup history

Seven decades of squabbles

Ever since a 1932 revolt by top bureaucrats and military officers ended absolute monarchy, Thais have been fighting over the allocation of political power.

For decades, Thailand was under the thumb of repressive military dictatorships, which ruled with the backing of the US - then battling communism in Asia - and allies in the palace.

In the 1980s, urban middle-class demands for greater political participation and social justice were accommodated with a "managed democracy" in which General Prem Tinsulanonda, the army chief who is now the top adviser to King Bhumibol Adulyadej, served as prime minister for 11 years. An appointed senate packed with military officers and bureaucrats also wielded great clout.

The clamour for more participatory politics peaked in the 1990s, when Thailand adopted a reformist constitution intended to boost both government stability and accountability. In its effort to lay solid democratic foundations, the 1997 charter required the prime minister to be an elected MP and it created a wholly elected senate.

In 2001, Thaksin Shinawatra, a billionaire telecommunications mogul, swept to power with broad-based urban and rural support, after promising that his wealth would make him immune to corruption. Mr Thaksin fulfilled populist promises to pump money into the neglected countryside and make state social services more accessible. But urban elites grew disillusioned with his authoritarian tendencies, vigorous taxation to fund his populist programmes, policies benefiting his family's business interests, and his suspected republican leanings.

Tapping into a sense of betrayal among those who had previously looked to Mr Thaksin as a national saviour, the People's Alliance for Democracy mobilised the Bangkok middle classes to join protests against him. In September 2006, a military coup drove him from power, just months before elections that, due to his enduring popularity among rural voters, Mr Thaksin was widely expected to win.

Economic impact

'Revival requires a political equilibrium that is years away'

With its pliant workforce, well developed infrastructure and easy living, Thailand nearly always makes the short list for foreign companies searching for a suitable south-east Asian investment location. But as Thais have grown increasingly consumed with their political battles in the past few years, investors have opted to go elsewhere and foreign direct investment inflows have dropped off sharply.

From a peak of $9.2bn in 2006, foreign direct investment dropped to $6.1bn in 2007, reflecting the turmoil that accompanied massive anti-government protests and a September 2006 military coup. In the first six months of 2008, Thailand, south-east Asia's second largest economy and a hub of foreign manufacturing, received just $1.69bn in foreign investment inflows.

"People are just sitting on their hands waiting to see what happens politically," says Sriyan Pietersz, head of research at JPMorgan in Bangkok.

Thailand, like other Asian nations, is holding its breath to see how the crises in the US and European financial systems will hit its economy. The finance ministry has cut its gross domestic product growth forecast for the year to 5.1 per cent, down from a previous 5.6 per cent, and projected an even worse performance for the coming year.

But Thailand, which grew far more slowly than its regional peers last year, will face an even tougher time if its government is so hamstrung by legal and political challenges that it cannot adopt aggressive pro-growth policies. Investor and consumer confidence would both be further undermined.

"Restoring Thailand's medium-term growth prospects requires a sustained revival of public and private investment," Supavud Saicheau, an economist at Phatra Securities, wrote in a recent report. "We doubt that such a revival is possible until a new political equilibrium is re-established, which we believe will be about three to four years from now."

The impact of recent strife on Thailand's tourist trade - which employs about 1.8m people and accounts for around 6 per cent of GDP - is another worry.

Tourism had been strikingly resilient to the recent years of political instability, with foreign visitors to Thailand increasing steadily since 2005. Yet all that changed this month, when a state of emergency was temporarily declared in Bangkok after a deadly clash between government supporters and opponents. The People's Alliance for Democracy, which has been leading the protests, also closed three regional airports, including that of the tourist island of Phuket, for several days.

With countries warning citizens against travel to Thailand, arrivals in Bangkok's international airport plummeted. The finance ministry has estimated that the industry lost anything between $880m and $2bn in September as a result of the trouble.

Tourism professionals are still hopeful of a rebound in the coming high season, as the state of emergency has been lifted and the PAD has backed away from such tactics as closing airports. Apichart Sankary, president of the Association of Thai Travel Agents, says: "In Thai, we call this damaging your own rice cooking pot."

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