Thai millionaire reveals lawyer’s 71 million baht fraud, political links

[george]

Mr. Thaksin can't relax

Thailand's Prime Minister Thaksin Shinawatra won a landslide victory in parliamentary elections held earlier this month. That win followed a completion of a full term in office, a historic accomplishment in its own right. Yet victory has not ended Mr. Thaksin's worries. Violence in the country's southern provinces is escalating, and there is little indication that the prime minister has a strategy to get it under control. This growing unrest could overshadow Mr. Thaksin's impressive political accomplishments to date.

Mr. Thaksin rode a tide of populist sentiment to victory four years ago. His Thai Rak Thai party capitalized on his image as a successful businessman -- as well as on promises of free health care and substantial aid to rural constituencies -- to convince Thai voters that they could share his good fortune if they voted him into office. They obliged, and Mr. Thaksin's policies yielded strong growth, despite misgivings from many analysts and observers. As a result, Mr. Thaksin is the first Thai prime minister in the post-coup era to serve his full term.

Mr. Thaksin used that record to push for another mandate in this month's elections. He wanted a parliamentary majority that would allow him and his party to rule without being forced to form a coalition government, as in his first term. Again, Thai voters obliged, giving his party 376 of 500 seats in the new Parliament. With that level of control, Mr. Thaksin can rule virtually without fear of censure.

In his second term, the prime minister says he will focus on "building" the country, in contrast to the "repair work" of his first term to essentially revive the Thai economy following the 1997 Asian financial crisis. He succeeded. Thailand's gross domestic product growth has averaged 5.2 percent annually since 2001. Government debt has shrunk from 57 percent of GDP to 48 percent. At the same time, unemployment has dropped from 5.7 percent in 2000 to 1.6 percent last year.

Phase two calls for big infrastructure projects, perhaps as much as $40 billion worth. While they are needed -- by one estimate infrastructure and communications bottlenecks cost Thai goods 40 percent of their export value -- it is yet unclear how the government will pay for them.

There are growing concerns about the transparency of decision-making in Thailand and accompanying worries about corruption, a regular complaint by foreign executives doing business in Thailand. By one estimate, net foreign direct investment in the country was zero last year, an indication of the anxieties about the country's economy.

Despite Mr. Thaksin's economic successes, during his four years in office there has also been an escalation of violence in Thailand's southern provinces. The south has been home to independence-minded Islamic movements in the past, but they had been pacified. Under Mr. Thaksin's government, their grievances have mounted. A series of attacks have resulted in dozens of deaths and rising concern that the region is becoming a breeding ground for Muslim guerrillas.

Shortly after his election victory, Mr. Thaksin visited the southern province of Narathiway. Hours after he left, a bomb exploded at a hotel, killing five people and injuring at least 40 more. The attack marked the first time that a car bomb had been used.

In response, the government has said it will crack down on Islamic schools thought to harbor or support rebels and it will stop providing aid to villages that support the insurgents. That is certain to harden local feelings against Mr. Thaksin, although his poor election showing in the region -- his party did not win a single seat in the south, after holding six in the previous ballot -- would suggest the damage has already been done.

The prime minister needs a more nuanced strategy to win back support in the south. Of course, violence must not be tolerated and every effort must be made to capture individuals who break the law. But southern grievances are rooted in the poverty and discrimination experienced by southern Thais. The country's economic boom has passed them by and additional isolation will only compound their anger.

During its first four years, Mr. Thaksin's government has shown a remarkable willingness to employ heavy-handed tactics when confronting enemies. The campaign against drugs resulted in thousands of suspicious deaths. A similar campaign in the south could yield widespread resentment, help spread violence and inflame relations throughout the region, especially with Thailand's Muslim neighbors. This is a legacy that Mr. Thaksin does not want to claim.

The question now is whether the prime minister, and the Thai political system, can use tact and wisdom to balance the urge to take action. Mr. Thaksin may yet discover that a landslide win can be perilous, too.

-- The Japan Times 2005-02-25

[Ned]

"Net direct foreign investment was zero last year". So why do they still talk about all the great economic successes of the present lot? Foreign investors don't want a bar of this circus!