The Wall Street Journal-20080117-Politics -amp- Economics- Thailand-s Political Uncertainty Crimps Economy- Pro-Thaksin Result In Parliament Vote Deepens Old Rifts
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Politics & Economics: Thailand's Political Uncertainty Crimps Economy; Pro-Thaksin Result In Parliament Vote Deepens Old Rifts
BANGKOK, Thailand -- Last month's parliamentary election was supposed to put Thailand back on the road to civilian democratic rule after 15 months of military rule. Instead, the results have exposed the depth of rifts dividing the country and left it in political limbo. Uncertainty about who will ultimately run Thailand is stalling a hoped-for revival in one of Southeast Asia's key economies, frustrating local businesses and investors.
The crux of the problem is that a new party allied with former Prime Minister Thaksin Shinawatra -- ousted in a 2006 military coup -- came out on top in December's election, winning a plurality of seats in the new legislature. That has irked the army leaders who overthrew Mr. Thaksin, a populist leader, hoping to end his political career. The military, supported by Thailand's conservative royalist establishment, now hopes to block the pro-Thaksin People Power Party from forming Thailand's next government.
"The supporters of the coup have established a range of options with which to respond to the PPP election victory. It depends how they want to play it," says Thitinan Pongsudhirak, a political-science professor at Bangkok's Chulalongkorn University. "We could be in for a protracted period of polarization."
Mr. Thaksin's opponents are taking advantage of Thailand's court system to launch their offense. The PPP now has to overcome a series of legal challenges to be able to rule and to fulfill their goals of exonerating Mr. Thaksin, who faces arrest on an array corruption charges, and bringing him home.
Among other cases, Thailand's Supreme Court is considering a complaint contending that the PPP should be banned for being a proxy for Mr. Thaksin. Some of the court's judges also participated in a constitutional tribunal's decision last year to dissolve Mr. Thaksin's old Thais Love Thais Party and to ban Mr. Thaksin and more than 100 allies from politics for five years.
The Supreme Court also is hearing a suit charging that some procedures for last month's election were unconstitutional; if the court agrees, the results could be voided. In addition, Thailand's Election Commission is investigating allegations of voting fraud that could lead to the dissolution of the PPP. The court rulings could come as early as this week.
At the same time, the Supreme Court is hearing a case involving criminal charges against Mr. Thaksin's wife, Pojamarn Shinawatra, who is accused of illegally using her influence to profit from land deals while her husband was still in power. She was arrested last week on her return to Thailand after an extended stay overseas.
The legal tangles have set back Thai businesses, which had been hoping for a new, business-friendly government to kick-start a series of infrastructure spending programs to lift Thailand's economy.
One of Southeast Asia's most attractive economies and a magnet for foreign investment, Thailand has lost momentum since Mr. Thaksin's overthrow. Although exports, helped by continued manufacturing investment from overseas, have reached record levels in recent months, confidence among domestic consumers has weakened, leading to relatively subdued economic growth last year. Thailand's central bank recently said it expected gross domestic product to grow about 4.5% in 2007, down from 5% in 2006.
The tussle between Mr. Thaksin's supporters and opponents in the military and the country's traditional ruling elite also is derailing Thailand's equity market. The benchmark Stock Exchange of Thailand Index has fallen 5% since the election, going against the Thai market's historical propensity to perform well when a new government is expected to take power.
That has knocked the wind out of the Thai business community, which had hoped the vote would restore a civilian government after a year of drift under a lackluster interim administration appointed by the army.
Although in exile, Mr. Thaksin, who has said he doesn't want another shot at Thailand's premiership, remains the key factor in the country's political debate. A former policeman who made a fortune in the mobile-phone business before entering politics, he exploited the resentment of poorer Thais who were left behind as their richer compatriots in Bangkok prospered.
Thailand's military leaders bristled at the way Mr. Thaksin sought to bring the army firmly under his command by meddling in promotions and appointments, which historically had been left to the military. When they decided to oust Mr. Thaksin, the coup leaders accused him of insulting Thailand's revered monarch.
Civilian opponents, meanwhile, say Mr. Thaksin had little regard for democratic processes and systematically worked to undermine the checks and balances on his own political power as prime minister, a post he won in 2001 and defended in a 2005 parliamentary ballot.
After the 2006 coup, the military was counting on last month's election to heal the political wounds and put Thailand back on the road to recovery without Mr. Thaksin in the picture. But Mr. Thaksin's supporters were undaunted and formed the People Power Party to contest the election. Mr. Thaksin helped his cause by buying English professional soccer club Manchester City from his exile home in London, a move that kept him constantly in the public eye back in soccer-mad Thailand.
Mr. Thaksin's supporters' election strategy was simple. They pledged to clear his name and continue his economic policies that helped the poor. Campaigning aggressively in northern and northeastern Thailand, which for decades has lagged behind the economic growth in Bangkok, the PPP won more seats than any other party in Parliament, although it fell short of an outright majority.
With the PPP now negotiating with smaller parties to form a coalition government, Thailand's courts may have the final say in whether it succeeds.
