Judicial storm-clouds hang over Thai economy, politics – Nikkei Asian Review

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Thailand's anti-government protest leader Suthep Thaugsuban greets supporters near Bangkok's central Ratchaprasong intersection on Jan.13 2014 (Photo: Simon Roughneen)

Thailand’s anti-government protest leader Suthep Thaugsuban greets supporters near Bangkok’s central Ratchaprasong intersection on Jan.13 2014 (Simon Roughneen)

BANGKOK — Thailand’s bitter political divide widened this week after two separate rulings by legal institutions forced Prime Minister Yingluck Shinawatra from office and raised the possibility that she could be banned from politics for five years.

The developments also cast doubt over Thai national elections planned for July 20 after the country’s Constitutional Court voided the results of an earlier poll on Feb. 2, citing disruptions by anti-government protesters that prevented the poll from being completed nationwide in a single day, as required by the country’s constitution.

On May 7 the Constitutional Court ruled that Yingluck and nine ministers had abused their offices when reassigning the National Security Council secretary in 2011 — a reshuffle that paved the way for the brother-in-law of Yingluck’s elder brother, former Prime Minister Thaksin Shinwatra, to take the position of police chief. That ruling was followed the next day by the National Anti-Corruption Commission — an independent judicial body — indicting Yingluck for “dereliction of duty” over a costly and mismanaged rice subsidy scheme. The latter case will be sent to Thailand’s Senate, where a 60% vote could see Yingluck barred from office for five years. In its judgement, the NACC also raised the possibility of a criminal case against Yingluck.

The rulings could lead to clashes between pro- and anti-government factions, with “Red Shirt” supporters of Yingluck and Thaksin planning to stage a mass rally on the outskirts of Bangkok on Saturday even as the anti-government side pledges to maintain its push to oust the government.

Asked whether there could be violent clashes between Red Shirts and anti-government activists, led by the People’s Democratic Reform Committee (PDRC), former Democrat Party lawmaker and Harvard University fellow Kriengsak Chareonwongsak said, “We will have to watch to see if the Red Shirt movement will mobilize enough people and whether the situation will escalate.”

Violent clashes between the two sides near a Bangkok soccer stadium last December left five people dead, and more than 20 have been killed since the anti-government campaign began in late 2013. Wutthipong “Ko Tee” Kochthammakhun, a Red Shirt who was accused of defaming Thailand’s King, an offence that carries a 15-year jail term, called for a “class war” after the ruling, while the ruling Pheu Thai party called the judgement “a new style of coup d’etat.”

Even so, the Constitutional Court’s decision not to disqualify the entire Cabinet is likely to ward off any extreme responses from the majority of Red Shirts, for now. The court dismissed nine ministers along with Yingluck, but left 24 of the cabinet minister in place.

Puangthong Pawakapan, a professor of politics at Chulalongkorn University, rejected any immediate risk of clashes. “For now there will not be a confrontation and I don’t think the next Red Shirt protests will be long-lasting,” he told Nikkei Asian Review.

Controversial reshuffle

The Constitutional Court ruled that Yingluck and nine of her ministers had abused their office by moving Thawil Pliensri from his job as National Security Council secretary in 2011, a switch that came shortly after Yingluck was elected in July that year. The reshuffle paved the way for the prime minister’s appointment of one of her relatives as national police chief, prompting accusations of nepotism from opposition supporters. Defending the ruling, the former Democrat Kriengsak noted, “You can see there was substance to the court interpretation.”

Yingluck’s Pheu Thai party described the ruling as “rushed” and unfair. According Thaksin’s lawyer, Noppadon Pattama, Thaksin himself described the ruling as “unlawful.”

Shortly after the court’s decision, the caretaker government nominated deputy premier and Commerce Minister Niwattumrong Boonsongpaisan as replacement prime minister.

Niwattunrong is a former employee of Thaksin. The appointment is likely to sustain anti-government anger, given that Thaksin is seen by many as the key decision-maker in exile, and because Niwattumrong as commerce minister was closely involved with the rice subsidy scheme. The subsidy program cost the country more than $4 billion over the period but left many farmers unpaid as world rice prices dropped and Thailand lost key export markets.

Thaksin’s opponents say the rice scheme is another example of government vote-buying tactics in the northeast region of Isaan, one of the nation’s most populous — and poorest — agricultural areas.

Thaksin was deposed as prime minister in a 2006 coup and fled Thailand in 2008 after accusations of abuse of office. Though his parties have won subsequent elections, three prime ministers backed by Thaksin have been ejected by court rulings — twice in 2008 and again on Wednesday. The Wednesday ruling ousting Yingluck from office “was not a surprise,” said Aim Sinpeng, a Thai academic based at the University of British Columbia in Vancouver, Canada.

The verdicts came the same week as Thailand’s aging and frail King Bhumibol Adulyadej made a rare public appearance at the resort town of Hua Hin. Anti-government protesters have made repeated reference to their fealty to Thailand’s monarchy and claim that Thaksin and his allies are seeking to undermine royal prestige, a charge that the government has denied.

But if Thaksin has not sought to undermine the monarchy, his parties’ successes at the polls, combined with alleged excesses in office, have galvanized a coalition of royalists as well as southern and urban middle-class Thais against the now Dubai-based businessman.

Pheu Thai members have claimed the judiciary is lining up with the anti-Thaksin side. Bhokin Blalakula, an adviser to Yingluck, told NAR that there is “a conspiracy group comprising some political parties — the PDRC, some constitutional organisations — to overthrow democracy.”

After Wednesday’s Constitutional Court verdict, a small group of female government supporters, some crying, handed roses to Pheu Thai party members who gathered for their leader’s “farewell” press conference.

“The good people must win, the bad people must lose,” read a placard carried by one woman. The slogan was an ironic take on the exhortations of anti-government protesters that “good people” — meaning those who oppose Thaksin — should lead Thailand and that elections should be postponed indefinitely.

Likely winner

Despite possibly losing some rural support over the failed rice subsidy scheme, Pheu Thai is thought likely to win any upcoming election, given that it has been 24 years since the Democrats, the main opposition party, have topped the polls.

Pheu Thai wants to proceed with the July 20 polls, although the date has yet to be confirmed. The Feb. 2 elections were disrupted by the PDRC and boycotted by the Democrats, and despite a strong Pheu Thai victory, the poll results were subsequently voided by the Constitutional Court.

Despite the Constitutional Court’s successive rulings against Pheu Thai and the PDRC’s drive to set up an appointed administration, Pheu Thai insists it is the legitimate party of government, having won successive elections — in various formulations — since 2001. “We stick to democracy and elections, and this is the way out for this country,” said Bhokin Blalakula.

The PDRC is headed by Suthep Thaugsuban, a former Democrat Party Deputy Prime Minister with a power base in Thailand’s rubber-growing south. His anti-government protesters celebrated Wednesday’s Constitutional Court ruling, but warned that their campaign to undermine Thailand’s remaining government would ramp up by the end of the week.

Suthep meanwhile renewed his threats to orchestrate what he called “D-Day” by his protesters.

As the risk of confrontation grows, so too do concerns that Thailand’s widening political divide could undermine the country’s economy and spook investors.

Growth is stalling in the wake of the now six-month-old protests by the PDRC to oust the government. Moody’s Investor Service said on May 7 that Thailand grew by an annual 2.9% in 2013, well below the 2012 growth of 6.5% and below the decade average of 3.8%.

As the political standoff looks set to roll on and the prospect of civil unrest increases, the country’s economic situation could worsen.

“If a resolution (of the political crisis) is not found soon, our below-consensus forecast of 2% for this year will come under threat,” said Krystal Tan, Asia Economist at Capital Economics.

Thailand is a major tourist destination and manufacturing base for automakers and computer peripheral manufacturers, but in an indication of how the political unrest is jarring companies with a presence in Thailand, Honda said in April that it was postponing construction of a new factory by at least six months.

Direct foreign investment meanwhile is slowing markedly, noted Stanley Kang, chairman of the Joint Foreign Chambers of Commerce in Thailand (JFCCT), who told NAR that the political turmoil has slowed the approval process for new investment.

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