On the street, people were talking and walking about. Some arrived with their children. Grandparents came prepared with golf chairs and picnic boxes. Curious youngsters walked around, many of them with enthusiastic yet serious gazes and yellow bandanas on their heads proclaiming "Rescue the Nation." Street vendors busied themselves selling food and beverages to the flowing crowd. The traffic was not packed on the Outer Rachadamnern Road as it usually would have been, but it was the people who filled up this historical street and spilled onto the adjoining roads. This scene had been affirmatively repeated through the long, stressful month of March.
At the same time, in another corner of the great capital of Thailand, a caravan from provincial areas had planted itself in the Jatujak public park with another stage, waving the banners ‘Thaksin, Fight On!" Country music stars and speakers took their turn on the stage, focusing their speeches on the importance of elections in democracy and their reverence toward an honest and admirable figure, who had tirelessly been fighting for the good of the nation, the individual named Thaksin Shinawatr. Musical performance by provincial favorite stars would take the stage and give a sweet melody break to the audience below, who looked on quietly before some would jump up and dance traditional styles.
Just what is it that has divided this nation into half? Who is Thaksin Shinawatr? How could this figure provoke such extreme sentiment on two ends? The recent political conflict in Thailand, which has driven public opinion into a great divide between anti- and pro-Thaksin, is a tangible outcome of an ongoing process of dissent, which has been fueled further and further by public perception of corruption, cronyism and abuse of power. The conflict seems to have halted in recent weeks due to the public announcement from interim Prime Minister Shinawatr that he will not accept the post of premiere when the Parliament convenes after the Senator election on April 19, 2006. Yet, after the election result, which took place on April 2, 2006 great doubt is still lingering in the public mind as to how this conflict will end as there are still many municipalities that cannot finalize its election result. According to the active observers, there are reasons to believe that this break may just be the calm before the storm due to many unsolved problems. In order to understand the inside of this storm and acquire some perspective, it is helpful to be aware of the events which led to this political entanglement.
Thaksin: Conflicted Path to Power
The year 2001 saw the Thai Rak Thai party ("TRT" or Thais Love Thais in translation), under the leadership of Thaksin Shinawatr, a successful businessman whose multi-billion business was in the modern sector of information technology and telecommunication. The success of this business, once monopolized by the Army, was supposedly dependent upon strong political connections and subsequently helped strengthen the financial foundation of TRT, which partly led to an election victory, which resulted in the TRT’s placement of 200 constituency MPs out of the total 400 seats and 48 party-list MPs from the total of 100 seats. This translated to a total of 248 MPs, putting TRT as the first winner while the second-winning party, the Democrats Party, was only able to obtain a total of only 128 MPs, a wide margin behind TRT. Subsequently, TRT managed to co-opt other small parties into its own and went on to form a grand coalition with the Chat Thai, New Aspiration and Chat Phattana, the third (41 MPs), fourth (36 MPs) and fifth (29 MPs) party, respectively, leaving the Democrats Party as the only opposition party.
This outcome had come into an emergence under high pressure from social, political and economic forces which were brought about by the ongoing economic recession that began in the 1997 Asian Financial Crisis and the drafting of 1997 Constitution, or the "People’s Constitution". The crisis, on the one hand, had devastated the Thai national economy and bankrupted numerous businesses, both large and small, which were then liquidated or taken over by foreign businesses. Enterprises of all sizes could not pay back the short-term loans borrowed from foreign sources, especially after the devaluation of Thai Baht (national currency). These loans were converted to the status of non-performing loans (NPLs). The stock market, once a source of fast prosperity, crashed and burned, leaving a horrid taste in the mouth of urban middle class and drove up the suicide rates.
Further, A tremendous number of private real estate development projects, which had previously mushroomed throughout Thailand and were one of the main sources of the high speculative pressure, were strapped for money, and the majority of these projects collapsed and became non-performing assets (NPAs). One of the most expressive images of such times was a row of empty office buildings and houses, especially in Bangkok and its vicinity. The International Monetary Fund (IMF) intervened after it saw that the crisis could spread out further than they expected and potentially leave heavy tolls on other major economies connected to the Thai economy. Thailand then entered a loan agreement with IMF conditional upon adopting a structural adjustment plan bestowed by the institution, the same old neo-liberal agenda for deregulation, liberalization and cut backs in public spending. Predictably, the sentiment of a great number of people in urban and business sectors became increasingly hostile toward aggressive foreign capital, the IMF and the government, which at the time was under the primary guidance of the Democrats Party, a group characterized as too high-minded, bureaucratic and incompetent for fast-paced globalization.
On the other hand, the economic crisis did contribute to the acceleration of the process of political reform, which had been persistently pursued by NGOs, intellectuals and civilian groups since the last street uprising in Thailand, called the "Black May" in 1992, which turned violent when the Thai military repressed civilians, resulting in hundreds of deaths and thousands of disappearances. Despite the declining power of military dictatorship, the opening up of political space thereafter was still not sufficient enough for any real change to take place due to the unwillingness of the established political groups to forego their grip on power and the unsettled wrestling for power and benefit-sharing between different political factions and groups until the economic crisis hit Thailand, which impeded change. Critical skepticism from many areas of the society toward the performance of the government grew at the time due to its inept socio-economic policies, its bowing to the IMF, its inability to respond to the challenges posed by globalization and the lack of transparency in the handling process of the crisis, all of which played an important role in undermining the very foundation of trust in the conventional management style as employed by the Democrats Party. A civilian response came in the form of protests and demonstrations, which grew in number and size during such time. The most notable organized group was the Assembly of the Poor, a collective consisting of rural farmer, labor, marginalized population and NGO groups.
With mounting pressure for reform and the intensification of civilian demonstrations against the administration, a new constitution was drafted and passed in 1997. This ushered in a new political time, which included the creation of semi-judicial, independent bodies to act as checks and balances on the power of the executive and legislative branches. The objective of the 1997 Constitution was to suppress the influence of money politics, which had plagued Thai politics for the past decades. This was accomplished by strengthening the executive power, especially the prime minister, as well as increasing greater popular participation in political process through the creation of the Election Committee to promote and monitor election process, liberalizing broadcast media by setting up an independent television channel (ITV), reforming the educational system and providing legal frameworks for the decentralization of control over power and state budgets from the central government to municipalities.
For all its praises, the 1997 Constitution created a political environment for TRT to surface as a large, powerful party, one which would enable a strong leader to emerge, who would later consolidate the power factions within his party, as well as in the military, parliament, media and the public, particularly the rural and agrarian sectors.
However, despite its good intention to curb the influence of money politics, the 1997 Constitution carried with it the urban bias against the rural population due to its prohibition of anyone with less than a university level education to enter as a political candidate for the position of MP or Senator. In effect, this excluded the majority of the people in the rural sectors, who made up the majority of Thailand. The Constitution did pave the way for the privileged, urban class, the political and business elites, to rise to prominence amidst the country’s changing political landscape at a time when the urban sector needed someone to help guide the economy out of its dismal state while the rural sector hoped someone would step up to help become their voice and representative. Everyone was looking for some knight on a white horse to lead them toward such change.
Thaksin Shinawatr stepped in to fill such void. A highly successful telecom tycoon who had a police background and a doctoral degree in criminal justice from Sam Houston State University in Texas, Thaksin made a bold promise to the Thai people that he would employ his effective management skills, the ones that had made him so affluent in the first place, to help rescue Thailand from its economic distress. On top of this, another element that Thaksin used in his rhetoric in order to set himself apart from the old politics was the logic that he constantly brought up, which was that since his wealth was so great there was no need for him to be corrupt. He claimed to be beyond ideology, a practical man. Having experienced poverty and hard work when he was a child, Thaksin vowed to eradicate poverty and bring prosperity to Thailand, a goal that he later came to define quite narrowly around the growth of GDP. On his first day of work, Thaksin had a simple lunch with representatives of the Assembly of the Poor on plain, traditional mats on the sidewalk in front of the Parliament before sending the Assembly of the Poor, who had spent 99 consecutive days protesting in front of the Parliament, off with a promise that he would look into the issues and resolutions proposed by the group.
As for support, Thaksin was backed by a strong foundation, the Thai Rak Thai party, which was perceived in the beginning as a new political phenomenon for most observers due to the party composition. With a startling coalition of people from diverse background of business, academia, NGOs and technocracy, TRT had the advantage of including many respectable figures which were not associated with the military and a group elite technocrats, or the Old Power as conventionally perceived, and did not substantially rely on the intra-party factions as other parties did.
For an encouraging beginning, many of the core members of TRT were interestingly business people, former student leaders from the October 14, 1973 and October 6, 1976 democratic movements. Some of them used to be in the Communist Party of Thailand and took up arms to fight against the military dictatorship while some were university professors, who used to have reservation from taking active participation in the national political process. In other words, the profile of the TRT party composition sent out an extremely positive message that, for once, this political party could be an entity that might achieve what a political party was supposed to be doing according to the western model: a party with strong ideological grounds that defied the trap of money politics that most Thai political parties fell prey.
With the backing of a heavyweight political vehicle and riding the national sentiment for massive change, Thailand suddenly discovered a savior who came to them in the form of a highly capable businessman, a man who claimed that all he ever wanted to do was to make good for his country. His background, outspoken personality and rhetoric were highly convincing. The public was hooked.
Yet, it should be noted that the rise of Thaksin and TRT is not entirely considered new politics. The very fact that TRT co-opted and integrated other parties and then formed a grand coalition with old parties such as New Aspiration, Chat Phattana and Chat Thai (the first two parties were later dissolved and integrated into TRT) indicated the use of existing electoral networks of local MPs in provinces beside Bangkok and the continuing influence of local bosses and provincial MPs in national politics. By combining these necessary elements, Thaksin was able to consolidate his power within his own party and coalition.
However, the road to power for Thaksin and his party had not been too rosy. A month before the January 2001 election, Thaksin was charged with concealing assets by the National Counter Corruption Commission (NCCC), one of the semi-judicial independent bodies which had the responsibility of overseeing the corruption practice of anyone in political positions. The case traced back to the time between 1997-8 when Thaksin held a ministerial post and had been obliged to file statements declaring his assets. NCCC made an allegation that there was a deliberation on behalf of Thaksin to conceal his actual amount of assets. This was due to the fact that a sizable amount of shares in Shin Corp, a corporation belonging to Thaksin and his family, were registered under the names of Thaksin’s maid, chauffeur, security guard and business associates. For some years, two of the maids had figured among top ten holders of shares on the stock exchange. A brief moment of fame was secured for the two richest maids in the world right in the heart of Bangkok, in the very house owned by the richest man in Thailand.
The charge brought with it not only the indictment of practice that belonged to the old politics, but also a daring test to the 1997 Constitution: the issue now became a trade-off between upholding the 1997 People’s Constitution or supporting the leader so many believed would lead the country out of economic distress. If Thaksin was found guilty, he could face a political ban of up to 5 years. On the other hand, if Thaksin was acquitted, the rule of law could prove to be in a problematic state.
For Thaksin and his followers, this whole episode was just an "honest mistake", resulting from carelessness of his wife and secretary, who failed to complete the declaration process correctly and accordingly. Public uproar broke out in support of Thaksin, and there were pressures from many sectors toward the Constitutional Court judges to adopt a "political science" approach in making a verdict decision as opposed to a "legal" approach. The rise of Thaksin could thus be characterized as the conflict between the recent trend toward political reform and a claim to popular support by certain civilian groups behind Thaksin, especially those who wanted to see short-term economic change brought about by a knight-like figure and those who were hoping to ride and appropriate the wave of changes.
At any rate, Thaksin was not alone with the asset-concealing charge from NCCC. Nine other politicians were charged with the same allegation, including Prayuth Mahakitsiri, a close business associate of Thaksin and one of the TRT deputy leaders. The Constitutional Court later found Prayuth guilty on the morning of the very same day that Thaksin was to her the final verdict, resulting in political ban for 5 years. Thaksin, however, narrowly escaped such fate by a split 8-7 decision by the judges. This was followed by much criticism of the use of double standard by the judges in the Constitutional Court and accusations of political intervention in the process. After the verdict, one of the judges confessed that he felt strong pressure from the supporters of Thaksin and did receive verbal threats concerning his well being while one of the majority judges was accused of casting vote in favor of Thaksin in return for his son’s career move.
Consequently, this experience had given Thaksin a valuable lesson that semi-judicial independent bodies were a political threat if allowed to freely exercise their delegated power to which subsequent interventionist moves in these independent bodies, such as the Election Committee and NCCC, were observed through the reshuffling of individual placement within the Board of Directors of each independent body. Nevetheless, this event cast a great doubt on following episodes of the political life of Thaksin Shinawatr, which continued well into the time of Thaksin’s downfall.
Thaksinomics: The Luring of Rural Population and Differing Realities
One of the leading factors, which distinguishes TRT from the rest of other political parties in Thailand and cements its popularity and legitimacy, is its well-clarified policy platform aimed toward the rural and agrarian population that has come to be called by Thai academia and the press as ‘populist policies’.
Initially, three outstanding policies from the policy platform of TRT in the 2001 election were: 1) A universal health care scheme (30 Baht remedy for all illnesses); 2) A village revolving fund (1 million Baht to each village for micro-credit schemes); 3) A debt moratorium for farmers. These policies gained much popularity from populations in rural and agrarian sectors, which had been excluded from the benefits of the high economic growth of the period before the crisis, and became a focal point in the formation of later policies, which took these target groups into careful consideration.
For Thaksin, his rhetoric always seemed to stress the importance of an economic agenda before a political one. It was of no surprise then that, responding to the growing popularity of its initial success, TRT went on to craft a grand development strategy in hope of boosting up the domestic economy and balancing out the uneven economic development between urban and rural sectors, a blueprint which was given the name
‘dual-track development strategy.’ This signified the attention given to both internal and external aspects of the economy. The working of this strategy was twofold: to overcome the challenges from the crisis, namely the national economy in slump with underutilization of domestic factors of production, and solve the problem of unbalanced development, which was a result of previous urban-biased national development plans that led to dualism between urban and rural sectors with too much emphasis on the promotion of foreign investment and export of mass manufactured products as the main source of growth.
Therefore, the objective of the dual-track development strategy was to pull the economy out of slump by stimulating domestic market through the extensive provision of public spending and credit schemes in addition to finding new sources of growth other than export and foreign investment. The capacity of the domestic market, both in terms of its consumption and production, became the main focus of this strategy,
and policies kept pouring in forms of redistributive policies (SML municipal funds) to credit scheme (asset capitalization program) to domestic entrepreneurship promotion (One Tambon One Product or OTOP), all under the Keynesian principles of creating the effective domestic demand against the backdrop of recession.
At the same time, for the external track, this strategy continued to pay enthusiastic attention to the importance of the export sector and the inevitability of global market integration and further engaged itself with the scheme of export demand-led growth, a supposedly more sobering and reflective growth policy aimed at strengthening national
capacity in dealing with challenges posed by the international market. It was hoped that such strategy would prove to be more effective and sustainable than previous development policies. Interestingly, all these socio-economic policies were carried out with the perspective of corporate management and business-thinking as opposed to conventional economic theory that dominated the much-criticized high minded bureaucracy, reflecting the "Think New, Act New" slogan of TRT and the business-oriented thinking of Thaksin, his advisors and ministers, who hailed from corporate backgrounds with business-school educations.
For all the talks of paradigm shift, Thaksin had from the start made the bold claim that a country was a company and that how he would run the country the same way he had run his company. His business background illuminated this case, helping to further cement his creditability and capacity. Yet, the concept of corporate power hierarchy, which came attached with the idea of company structure and operation, suggested authoritarian inclinations more than anything else. Later did the public realize that, yes, he really meant business.
With all the grandiose conceptual framework, the dual-track strategy proved popular and effective in its initial phase. One of the decisive indicators came in the form of GDP growth that became positively green in 2003. The export rate grew and expanded remarkably while the stock market and investment again became a frequent topic of
the urban middle class and occupied much of their conversation on dinner table and during lunchtime.
Indeed, onlookers were ecstatic. The Thais felt like they could glimpse a hopeful and bright future ahead; those glorious days of economic boom that had been absent from the public conscience for years were no longer a far-fetched illusion. The economic success of these policies went beyond Thailand when President Gloria Arroyo of the Philippines admiringly gave a term to such economic policies as ‘Thaksinomics’ and researchers at the IMF were pondering whether Thaksinomics would be a new model for development in Asia and replicated elsewhere. The future for the Thaksin administration seemed bright and was moving to the direction where the consolidation of the power of the Thaksin administration appeared to monopolize the political landscape of Thailand toward the end of the first term and effectively silence any voice critical of the administration.
Despite hype at home and abroad, short-term stimulus programs brought forth heavy criticism from Thai academia and journalists that such programs were merely legal briberies to gain votes for the next election, an attempt to shift the existing patronage structure from local bosses and politicians to the people in the central government.
The argument went along the following logic: clearly, economic growth could only indicate that the economy was growing but did not necessarily guarantee that the distribution was efficient, even among all groups. As often the case with Thailand, the history of income inequality development suggested that some must have gotten a bigger piece of pie while many went starving. The so-called ‘populist policies’, for academia and journalists, were nothing more than bad fiscal disciplines that were employed for political gains due to the utilization of a hefty size of public spending for these programs and a lack of genuinely sufficient follow-up, assistance and facilitation. The argument continued further that those policies were not investments for the poor but through the poor, precisely because poor people and those in rural sector tended to have higher tendency (or, in economic term, marginal propensity to consume) to spend their newly acquired money toward goods such as mobile phone, mobile phone service, electronics, motorcycles or pick-up trucks, which were all products of businesses in the modern sector that had political connections with the cabinet members and Thaksin himself. The consequence, as the argument went, would be the increasing dependency of rural and poor population on the state handouts or subsidies and increasing household debt due to unproductive spending by households, which had a high potential for loan defaults.
Toward the upcoming election in 2005, criticism arose about lack of transparency and corruption scandals in the government performance. Such critiques had increased considerably over the years, especially in the face of the undertaking of multiple mega-projects on infrastructure ranging from bridges, roads, mass transport and airports. The redistributive and development policies were also heavily criticized for its unproductive result, as the domestic market did not seem to strengthen in value and capacity and for the suspicion that many development projects became another corruption and political patronage channel for provincial figures from MPs to vote canvassers, who could help mobilize resources, voters and people when needed.
Usually, Thaksin shot down these criticisms as ‘unpatriotic’ or merely an attempt by some groups, who had lost out, conspired together to undermine his position. Out of all occasional corruption scandals, one of the strongest corruption cases to surface against the government was the purchase of the American bomb detectors, CTX 900, for the new international airport. The case was exposed through the ruling of the U.S. Department of Justice and the Securities and Exchange Commission that the multi-million dollar deal between the Thai government and California-based General Electric violated foreign corrupt practice and soon made headlines in Thai newspapers and other media outlets. Public uproar ensued, which led to a reshuffling of the cabinet and resulted in the removal of the Minister of Transport, Suriya Jungrungreangkit, who was also the Secretary-General of TRT, and placing him into the lesser positions of Deputy Prime Minister and Minister of Industry. From that point on, more corruption scandals kept coming out one after another. Corruption news became a new favorite dish to anyone following political news of Thailand, especially audience of print media. Thaksin’s verbal assault seemed to hold less weight as media seemed to be relatively more outspoken about corruption and could now have confidence to carry out arguments against Thaksin, no matter how mild that was, which was something that had been rare during the first years of the Thaksin administration due to threats of both censorship and cuts in financial sponsorship for advertising.
Another factor against Thaksin was the fact that the world economy was experiencing a downward trend due to the rise in oil prices, terrorism threats and rising U.S. interest rates. This contributed to the slowing down of the Thai economy as well, which was still highly connected and open to the forces in the world market. Thaksin’s claim to economic efficiency and success sounded less and less convincing as time went on. Together with an increasing amount of scandals, skepticism became firmly imprinted in the public mind.
Stay tuned for Part II of this article.
Prakirati Satasut, known in brief for Biek among his friends and associates, is a student in the Political Economy Master Program in the Faculty of Economics at Chulalongkorn University. His utmost hope at this moment is to be able to finish and get out of school. Bangkok is his hometown, and he definitely does not like reading political commentaries in the Economist. You can reach him at prakirati@gmail.com, but there is no guarantee that he will be able to read the language and reply accordingly. Much understanding and sympathy have to be given. He is a foreigner, after all.
Photo from Wikipedia