Wall Street Journal: Thaksin Slipping...

[Guest]

Anyone paying attention to Thailand knows about this, but it has now made the Wall Street Journal. The article:

 

Thailand's Leader Loses Momentum

After Landslide Election, Court Rulings,

Slow Growth Hamper Thaksin's Agenda

By JAMES HOOKWAY

Staff Reporter of THE WALL STREET JOURNAL

November 29, 2005; Page A17

 

BANGKOK, Thailand -- Thailand's prime minister and self-styled CEO is beginning to lose his reputation as a man of action able to shift his country's economy into a higher gear.

Thaksin Shinawatra has been hampered by slower economic growth, adverse court decisions and growing popular disenchantment with his often-confrontational style of government.

 

Early this year, it seemed everything was going his way. A landslide win in February parliamentary elections returned Mr. Thaksin to power and made him the first Thai prime minister to control an outright majority of seats. Investors expected the telecommunications tycoon to use that mandate to pursue an aggressive policy to deepen and expand Thailand's economy.

 

But in recent weeks a series of reverses and missteps have undercut Mr. Thaksin's ability to put his economic plans into action.

 

Among the setbacks: A court on Nov. 15 halted what would have been Thailand's biggest-ever privatization to hear a petition claiming that Mr. Thaksin's government broke the law by relying on special decrees to enable the partial sale of state-owned electricity producer EGAT PCL.

 

Worries over Thailand's current account deficit have also shunted to the sidelines a four-year, $41 billion program to modernize the country's infrastructure. New train lines have been shelved, and this year's tranche of spending was cut in half. Many economists consider the program vital to enhancing Thailand's long-term ability to compete with China and other regional rivals, which are beginning to suffer from power outages.

 

Awkwardly, some of the financing for the infrastructure program was supposed to be generated by planned privatizations, which include selling stakes in state telecommunications firms TOT Corp. PCL and CAT Telecom, as well as EGAT.

 

Finance Minister Thanong Bidaya has tried to reassure investors that the government will find a way to proceed with the listings of these state enterprises if the court finds the planned EGAT initial public offering illegal.

 

But with his two biggest economic initiatives either on hold or progressing in severely curtailed form, "it seems Mr. Thaksin's reputation as a man who can get things done is taking a bit of a bashing," says Simon Flint, an economist at Merrill Lynch in Singapore. Simmering violence in Thailand's Muslim-majority far southern provinces isn't helping matters.

Thailand's benchmark stock market index has fallen nearly 2% in the two weeks since the $800 million EGAT offering was suspended. Foreign investors have been net sellers of 1.39 billion baht ($33.7 million) worth of stock since then.

Somchai Phagavivat, a professor at Bangkok's Thammasat University, says Mr. Thaksin, instead of reaching out to other policy-makers and politicians to build a broader consensual base to further his economic agenda, appears to be retreating into a shell. His bunkerlike attitude came to the fore recently when he told reporters that the stars -- and the planet Mercury in particular -- are aligned against him until the end of the year.

 

"Mercury is no good, so if it's not good, I am going to request not to speak," Mr. Thaksin said. "I'll just wait until next year to talk."

 

It's a measure of Mr. Thaksin's troubles that his most prominent critic is turning out to be a maverick newspaper publisher.

 

Sondhi Limthongkul, owner of the Manager media group, used to be one of Mr. Thaksin's most biggest boosters. But in recent months, he has turned against his former friend, accusing him of corruption and trying to usurp some of the privileges of Thailand's revered monarch.

 

The exact source of friction between the two tycoons is unclear. In an interview, Mr. Sondhi says he decided to speak out against Mr. Thaksin earlier this year after concluding his former friend was trying to bring large blocks of the economy under his control and effectively sidelining Thailand's democratic checks and balances.

 

Mr. Thaksin, who denies the accusation, has responded by filing a $12 million libel suit against Mr. Sondhi. But that may have provided further ammunition for Mr. Sondhi, who has emerged as a lightning rod for criticism of Mr. Thaksin.

Tens of thousands of people attend Mr. Sondhi's regular open-air "talk shows" in Bangkok's Lumpini Park since his own hard-hitting television program was removed from a government-run channel. Among Mr. Sondhi's more damaging allegations is that Mr. Thaksin's sister and her friends commandeered a military C-130 transport plane to take them to a private birthday party in Chiang Mai -- a charge the air force has denied, saying she joined a flight already scheduled.

If the demonstrations in Bangkok continue, analysts say, they could provoke greater tension between middle-class Bangkokians and rural Thais, among whom Mr. Thaksin is still extremely popular because of his programs to eliminate farmers' debts. Dr. Somchai says the split between city and countryside echoes the conditions that led to upheavals in Bangkok in 1973 and 1992 -- the latter of which removed a military junta and restored democracy.

 

The Nation, a Bangkok newspaper, suggested in an editorial last week that Mr. Thaksin's own party, Thais Love Thais -- which is essentially a combination of several older political parties -- could fragment under the pressure.

 

*****

 

I can just imagine how the comment about Mercury not being good will go over in financial circles in places such as New York and London.

 

No link can be posted since you need an on-line account to access the article on-line

[enigma]

I have been following this somewhat closely (politics junkie), and have considered posting about it, but I have some reservations about getting into it here, since it has some potentially serious implications lately.

 

Then again, I once called Toxin* a fascist in this very forum. ::

 

KS, please opine as to the wisdom of discussing such issues here.

 

* "Toxin," so as not to be captured in text searches ::

[Flashermac]

Another take on things from the WSJ:

 

____________________________________________

 

Mr. Thaksin's Troubles

By DANA DILLON

 

November 29, 2005

 

 

Earlier this month, Thailand's Prime Minister Thaksin Shinawatra told journalists that the recent terrorist insurgencies in the south of the country formed part of a plot to end his political career. Some commentators dismissed the claim as paranoia. But a closer examination of the situation on the ground leads one to believe that local government leaders and security forces are, in fact, working against him.

 

Mr. Thaksin's efforts to quell the uprisings in Southern Thailand are ambitious. His plan includes, among other things, major infrastructure projects and the establishment of the National Reconciliation Commission, a group formed to research the causes of unrest and create policies to bring peace. But Mr. Thaksin's best efforts seem in vain, when viewed from a local's perspective.

 

I recently returned from a research trip to Southern Thailand where I visited the towns of Pattani, Yala, Krue Se and Tak Bai, among other places. The people I spoke with were disappointed and distrustful of Bangkok.

 

Local officials' activities -- many of which seem meant to offend Thai Muslims -- aren't helping. For example, when the evening call to prayer is broadcast from Pattani's mosques, local officials broadcast the Thai national anthem over loudspeakers at the same time, creating an earsplitting cacophony. Every mosque I visited flew Thailand's national flag. When I asked locals about the flags they claimed that flying Thai flags was a new government requirement. Meanwhile, most of the Buddhist temples I observed didn't follow the same guidelines. Also, when officials discuss the religious makeup of Southern Thailand, they do not use religious designations such as Muslim, Buddhist and Christian; instead, they differentiate between Muslims and Thais, as if Muslims cannot be good Thais.

 

The border crossings are another point of local tension. The bulk of Southern Thailand's population is ethnically Malay, closely related to Malays in Northern Malaysia. Many families have relatives in both countries. Crossing the border to visit family or engage in minor trade is routine. Mr. Thaksin has expressed concern that insurgents may be slipping back and forth in this daily wave of migration.

 

On November 13, I crossed at Tak Bai, Thailand over to Malaysia and back. The Malaysian side was orderly, the customs and immigration areas were secure and clearly marked, and incoming and outgoing travelers separated by fencing. Meanwhile, confusion reigned on the Thai side. Their customs and immigration area housed a big crowd with no visible controls on movement. Going through Thai customs felt like a voluntary process. Any notion of documenting who was crossing the border was nullified because the passport machines were broken. Despite the fact that there are military and police all over Southern Thailand (I saw 8 patrols on one stretch of road), there was little security at the border crossing. When I returned from Malaysia, back into Thailand, the ferry unloaded a hundred yards from the customs and immigration area. I had to walk through the crowded Tak Bai market to get back to the customs area, and not all my fellow passengers accompanied me. I could easily have walked away or dropped off a package without being observed by Thai customs officials.

 

The lapse of security on the Thai side is doubly significant. First, it allows unrestricted access to Thailand for anybody, including international terrorists. Second, Tak Bai was the location of an infamous protest that resulted in the deaths of more than 80 unarmed Thai Muslims. According to local residents, one of the protesters' grievances was the arrest and indefinite detention of people with improper visas. Considering the chaos on the Thai side of the border crossing, there is little doubt that there are many innocent people in Southern Thailand holding improper visas.

 

All of these actions beg the question: Why would government officials or members of Thailand's security forces sabotage reconciliation? Before Thaksin's tenure, the security forces and local officials in Southern Thailand had settled into a comfortable routine of corruption, getting wealthy from smuggling and protection rackets. In 2002, to crack down on rampant smuggling and corruption, Mr. Thaksin dissolved military led security agencies in Southern Thailand and turned security over to the police. The strategy proved enormously successful. But at the same time, there was a sharp spike in terrorist attacks.

 

Some observers speculate that rogue members of the Royal Thai Army (RTA), combined with disgruntled local smugglers, are either directly involved in some of the "terrorist" attacks or are intentionally provoking the attacks to force the Thai government to reinstate the RTA as Southern Thailand's responsible authority. Heavy-handed police tactics, unexplained disappearances of Thai Muslims, and the presence of chauvinist Buddhist monks fanning the flames of sectarian violence further aggravate the situation.

 

To regain control of the counter-insurgency efforts, Mr. Thaksin needs an alternative source of information than the police and military. Unfortunately, press freedom in Thailand is poor, at best. In an open letter penned this month, Reporters Without Borders blamed government restrictions, pressure on reporters from corrupt local politicians, militias, clandestine groups and criminal organizations for the lack of free information -- the same witches brew operating in Southern Thailand. Promoting freedom of the press and encouraging an open investigation into conditions in the south would provide Mr. Thaksin with the tools he needs to regain control of his policies. It is time for Mr. Thaksin to get his house in order.

 

____________________________________________

 

Mr. Dillon is a senior policy analyst at the Heritage Foundation's Asian Studies Center in Washington D.C.

[Guest]

Very interesting. I wish analysis of this quality was available in the local press, particularly the Thai language press.

[enigma]

Here's a lengthy above-the-fold piece from today's IHT. Note the disclaimer...

 

Sondhi, who declined to be interviewed for this article, was until this year better known as a cheerleader for Thaksin...Sondhi owns ThaiDay, an English-language daily newspaper, distributed in Thailand with the International Herald Tribune.

 

http://www.iht.com/articles/2005/11/30/news/thai.php#

[..]

There has been some excellent discourse on this sensitive subject on 2Bangkok.

 

And if you are very geeky on the subject of Thai biz and economics and politics, be sure to read Tom Vamvanij's excellent blog. I may not agree with all of his conclusions, but it is very well researched and presented. :up:

 

Cheers,

SD

[Guest]

Very interesting blog, demonstrating that it is not all black and white. His criticism of the Democratic party is very interesting:

Still this shows that the Democrats had no qualms about employing nationalistic tropes to woo the rabidly anti-American media, ?academia?, NGOs,

I was troubled by their opposition to the US-Thai FTA and arguments against privitization of state enterprises, but figured it was temporary political posturing, much like Kerry's pre-election pandering to protectionist groups in the US (Kerry has a pro-free trade track record in the Senate, and you could tell his heart really wasn't in supporting protectionist groups and my hope, in supporting him, was that, once elected, he would continue his support for free trade (we'll never know)). But in the case of the Democrats here, the blog makes it sounds as though there may be a bit more substance, or at least history, to their nationalism. Very troubling. I will need to explore this blog more.

 

On a more general note, I view this as a "hot button" issue everywhere, but particularly in countries such as Thailand that are very rapidly globalizing. The Asian Development Bank estimates that 70% of Thailand's GDP growth from 1993 to 2003 can be attributed to growth in exports. Like or not, Thailand is inextricably linked to the global economy and its furture economic growth and prosperity of its people depends on remaining linked. But this requires greater transparency in corporate governance and a society based more on the rule of law than the whims of vested interests. It also means the spread of values that cultural conservatives find difficult to accept. All of this makes it very tempting for vested interests to invoke nationalism when they feel challenged even though such ploys are bad for Thailand as a whole. From the blog you cited, it sounds as though the Democrats can be worse than Mr. T and that Thai academics are among the most virulent nationlists. Troubling.

 

P.S. I wouldn't consider myslef "very geeky on the subject of Thai biz and economics and politics", but others may disagree.

[..]

Agreed that it is worth further investigation. Do know that (if you did not get it from reading a bit of it) K. Tom is very pro-Toxin/TRT, so his analysis will be shaded in that direction. Not to say it is wrong...

 

I just wish I could find an anti-Toxin/TRT site that is as well done as K. Tom's. Most "anti" arguments seem to lack real substance and instead are little better than name-calling.

 

Cheers,

SD

[Guest]

You are right; this blog is refreshing, but I have only read a very small part of it. I will need to do a little more exploring over the long weekend.

 

I read his comments on Krugman. I generally like Krugman on economics (and mentioned him here years ago in the context of a debate ove free tade and someone - not you - mistakenly thought he was a pro-Bush apologist, which I thought was rather amusing), but his criticism of Bush - whom I generally don't support - does seem unbalanced.

[Guest]

I took a look at the EGAT privatization thread on the 2Bangkok site. Most of the comments were critical of Mr. T, but I thought the comments were very good.

 

Most of the posts I read acknowledged that privatization per se is not the problem and, indeed, that privatization benefits Thailand and the problem is the manner in which state monopolies here have been privatized. One member, Scuba22, hit (what I see as) the nail on the head by explaining that irregularities in share allocation involve more than vested interests obtaining unfair benefits; he also gave an excellent example of how the absence of transparency in share allocation also creates serious incentives to undervalue state enterprises:

Rather than attack preferential allocation itself, I would think that the real question is who was preferred - if the people who benefitted were guardians of the public trust, then this would create a clear conflict of interest because as investors they would want to set a low price whereas as public guardians they should try to raise the price as much as possible. That PTT shares increased 10x since the IPO raises serious questions about how that valuation was reached - has this been probed in any great detail? Do we know who got the allocations in the IPO and whether they were supposed to represent the public interest at any point?

This is one of the major problems here - conflicts of interest. In the US, if you can establish a conflict of interest, you really don't need to also demonstrate benefit. Here, however, it seems you need to provide copies of "receipts" to demonstrate or even claim impropriety