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Changing of the guard in Thailand

Asia Times - July 6, 2011

Shawn W. Crispin, Bangkok In a tightly scripted and richly financed campaign, former premier Thaksin Shinawatra's Puea Thai party notched a majority in Sunday's highly anticipated Thai elections, handing the outgoing Democrats another humbling defeat. Despite widespread concerns of a possible post-poll coup or street upheaval, all signs so far point towards a smooth democratic transition.

While an earlier accommodation reached between the royal palace, military and Thaksin representatives to allow Puea Thai to form a government has held in the election's immediate aftermath, the potential for instability will rise in the months ahead as the party moves to implement its many campaign vows, including an amnesty in the name of national reconciliation for the criminally convicted Thaksin. (See The deal behind Thailand's polls - Asia Times Online, June 30)

Led by Yingluck Shinawatra, Thaksin's younger sister and a political novice, Puea Thai won 265 out of a possible 500 seats, outpacing widely the second-placed Democrats' 159. On Monday, Yingluck announced plans for a five-party coalition, which, if formalized, will account for 299 parliamentary seats. Those numbers could narrow after the Election Commission disqualifies an unknown number of winning candidates for electoral fraud. The commission is now weighing 190 different complaints and historically has penalized scores of candidates.

Yingluck ran on a mix of populist promises, a push for national reconciliation and her family namesake. Despite the hint of nepotism in her appointment and background, Yingluck's inexperience was sold as an asset by Puea Thai spin doctors, while local media and foreign commentators fawned over her looks, gender and polished campaign posters. Thaksin referred to Yingluck as his "clone" in press interviews from self-imposed exile, intimating he was the brains behind her candidacy and campaign.

Nonetheless, voting patterns were consistent with past elections, where Thaksin-aligned parties dominated the populous north and northeast regions while the Democrats held sway over the capital and less-populated south. While some analysts interpreted Puea Thai's win as a popular rebuke by the rural poor against a Democrat-aligned urban elite, mappings of the result showed more clearly a geographical rather than ideological bias to the vote. Both top parties maintain formidable political machineries in their geographical strongholds.

The Democrats' electoral strategy fell short on two key fronts. The party failed to capture the rice-growing central plains region, a swing geography the party targeted while in office through populist policies, including a rice price insurance scheme it expected would win rural votes. Its loosely allied Bhum Jai Thai party, meanwhile, underperformed expectations that it would split the populous northeast region vote after breaking away from a previous Thaksin-aligned party in 2008.

The timing of the polls also militated against the Democrats. Analysts believe the party squandered an opportunity earlier this year to leverage last year's robust economic rebound from global crisis to its electoral advantage. By the time now-defeated prime minister Abhisit Vejjajiva called the polls, globally driven higher prices had trickled down to Thailand's grassroots. Puea Thai campaigned on its ability to tackle inflation through a vowed 40%-75% increase in the minimum wage.

From rhetoric to reality

While Puea Thai's win was popularly portrayed as a landslide, Yingluck's coalition government is expected to be weak and potentially short-lived.

Foreign investors sold down the Thai stock market by over US$1.5 billion from when it became apparent in early May that Puea Thai was leading in opinion polls. International investment banks advised clients to sell Thai shares ahead of the election, a pre-emptive vote against a Puea Thai-led government's ability to maintain political stability and manage the economy.

With a stable transition in sight, the bourse bounced back by nearly 5% on the day after the polls. Still, economic analysts say Yingluck will be hard-pressed bureaucratically and ill-advised fiscally to implement all of the populist pledges her party made on the campaign trail, including distribution of free iPads for all eight million of the country's school students and a rice price guarantee that promises to pay nearly double current market rates.

Investment bank HSBC wrote in a post-poll report that Puea Thai's populist policies threaten to raise rather then relieve mounting inflationary pressures. The research said that increasing minimum wages would "come back to bite" Thai consumers as producers and employers inevitably passed on the higher costs and potentially hurt the country's competitiveness as a regional foreign direct investment destination.

Other analysts foresee a stability-versus-growth clash between Yingluck's economic team and the Bank of Thailand, which before the polls was poised to raise interest rates from 3% at present to 3.75% by the end of year to contain inflation. Tighter monetary policy, including a possible rate rise on July 13, would dampen prospects for the post-election, feel-good economic bounce Puea Thai clearly aims to manufacture through ramped-up populist spending.

The bigger risks, however, will be political. As part of the behind-the-scenes election deal reached with the palace and military, Thaksin reportedly agreed to refrain from intervening in military affairs, including the annual reshuffle that comes into effect in October and determines the army's leadership and rank-and-file promotions. Hints that outgoing defense minister General Prawit Wongsuwon could be reappointed under Yingluck would be consistent with the terms of that deal.

At the same time, former "red shirt" protest leaders elected on Puea Thai's party list will be expected to push for greater civilian control over military affairs and justice for the 91 deaths caused during last year's protests and military crackdown. Any push to prosecute top soldiers for the deaths would jeopardize the pre-election accommodation and put the new government on a collision course with army commander and palace favorite General Prayuth Chan-ocha. Prawit has said the military accepts the election result while Prayuth has declined to make a public comment.

Amnesty for all

Future stability will be determined largely by how hard and how fast Yingluck's government pushes for an amnesty that paves the way for Thaksin's return and rehabilitation after he was ousted in a military coup in September 2006 and later fled Thailand after a court found guilty of corruption in 2008. If Puea Thai had won a more commanding majority of 300 or more seats and thus was less reliant on coalition partners for stability, analysts believe Thaksin would have aimed to fast-track the amnesty program. Yingluck has said her government will give first priority to addressing economic problems.

People familiar with the party's pre-election plans say a new body to be formed alongside the Democrat-appointed Truth and Reconciliation Commission will be tasked with making recommendations designed for a national reconciliation referendum. That vote, the sources say, will pave the way for a general election next year in which the 111 pro-Thaksin politicians banned from politics after the 2006 coup would be eligible to run. Many Puea Thai MPs, including party leader Yingluck, are believed to serve as proxies for more influential banned politicians.

Any amnesty plan passed instead by parliament would legally require King Bhumibol Adulyadej's signature to become law. A similar push for amnesty in April 2008 during the Samak Sundaravej government sparked "yellow shirt" protests that laid siege to Government House and crippled the workings of two Thaksin-aligned administrations. Those protests climaxed in the week-long seizure of Bangkok's two international airports, a move many analysts speculated had implicit military backing.

It's unclear now whether the same anti-Thaksin forces have the wherewithal or unity of purpose to launch an equally destabilizing street movement. Recent "yellow shirt" protests targeted their once-allied Democrats and failed to galvanize significant popular support for their nationalistic agenda. Nor is it clear that the movement has the same high-level military and royal backing it once had. The group announced it will dismantle its protest site near Government House on Abhisit's departure and ahead of Yingluck taking office.

The bigger shadow over her administration will be the threat of a judicial intervention, similar to court decisions that dissolved two previous Thaksin-aligned parties in 2008. Democrat Party members hinted on the campaign trail that they would challenge the legality of a Puea Thai win on the grounds Thaksin has acted as party leader while being a banned politician. The Department of Special Investigation, meanwhile, is set to investigate whether Yingluck perjured herself as a witness in one of Thaksin's recent asset cases.

There are already signs Puea Thai plans to pre-empt those charges. An alleged leaked "red shirt" memo circulated over the Internet during Sunday's polls indicated plans to appoint new, and presumably more sympathetic, judges to top courts in the name of judicial reform. Complaints of political meddling in nominally independent institutions animated the protests that led to Thaksin's 2006 military ouster and Puea Thai moves against royally-endorsed top judges could provide the first spark of resistance to Yingluck's rule.

[Shawn W. Crispin is Asia Times Online's Southeast Asia Editor.]

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