Thailand: Tsunami carries Thaksin back to power.

Prime minister Thaksin Shinawatra (pronounced "Chin-a-what") and his Thai Rak Thai (TRT) party are on course for a crushing parliamentary majority following the elections in Thailand on Sunday 6 February.

With votes still being counted, TRT may capture as many as 400 seats in the 500 seat parliament (compared to 248 seats in the 2001 elections). In particular, Thaksin seems to have benefited from a mood of "national unity" behind the government following December’s tsunami disaster. In the wake of his landslide victory, political commentators are warning of an "elected dictatorship" and a "one-party state".


The Thaksin phenomenon – he has been compared to Italy’s Silvio Berlusconi – underscores the fragile nature of parliamentary democracy in this former economic "tiger" with 63 million inhabitants. The army, still a powerful polictical factor in Thai politics, has staged 17 military coups in the last 75 years. Elected governments are typically corrupt, unstable and based on shifting alliances between powerful provincial elites which reflect the country’s not so distant feudal past. Thaksin is head of the country’s richest family and founder of the business conglomerate Shin Corporation, which in addition to Thailand’s biggest mobile-phone company has interests in banking, media, air travel, internet, advertising and property.

Thaksin is the first elected politician in Thai history to survive a full four-year term and win reelection. According to The Nation (Bangkok) he is "riding on a crest of popularity unseen in the post-World War II period". Opinion polls show an approval rating of over 80 per cent. His economic policies, dubbed "Thaksinomics" are largely given the credit for this. These can best be described as a hotchpotch of standard neo-liberalism with a sizeable element of keynesian "pump-priming", economic opening and "globalisation" tinged with nationalist rhetoric and talk of promoting a "grass-roots economy".

The introduction of cheap health care – 30 baht (around €0.60) for a doctor’s appointment – has undoubtedly been a big hit among poor Thais who previously faced crippling medical costs. Similarly, Thaksin’s introduction of Village Funds – a €1.33 billion program to provide low-interest loans to farmers in 70,000 villages across the country – has led to a burst of rural growth, reinforcing the impression that Thaksin has delivered on his promises. An example of his populist flourishes came shortly after Sunday’s election when he thanked Thai workers for voting for him: "Low-income people, who make up the biggest group in the country, made an effort to travel home to vote. As a result, I will do what I can to serve these people in return."

This time around, Thaksin has promised major new investments in infrastructure of 1 trillion baht (€20 billion), which includes five new subway routes across the capital, Bangkok, over the next 6 years. He has also promised to bring electricity and tapwater to every rural home, an ambitious slum renovation programme and more schools and hospitals. This brought forth a monsoon of competing promises from the "big three" opposition parties (who together seem to have won only a quarter of the popular vote). The largest opposition party, the Democrats, offered welfare funds and low-interest loans for the poor, while Mahachon, a split from the Democrats, promised free medical services for the poor and a 1,200 baht cheque every month to pensioners.


But despite his media image, Thaksin is no friend of the working class. The Bangkok stock exchange hit a one-year high upon news of his victory, in the knowledge that this government is the best option for capitalism. In particular, shares in the construction and telecoms sectors rose on expectations of juicy state contracts as part of Thaksin’s planned infrastructure projects. "Thaksin Shinawatra will continue his market-friendly policies," said a spokesman for the Thai-based Finansa Securities. Thai and international capitalists appear confident of a renewed government effort to privatise state utilities, after previous attempts stalled a year ago. Thaksin confirmed this on polling day when he declared "We have been entrusted by voters to run the country again, and we won’t tolerate pressure against the privatisation policy." This was a reference to trade union resistance, for example at the state-owned Electricity Generating Authority of Thailand (EGAT). Union leader, Sirichai Maingram, quoted in the Bangkok Post, made clear that "We are still anti-privatisation and will continue fighting to keep EGAT’s status unchanged because the power sector should remain part of the country’s basic infrastructure."

That Thaksin has been able to camouflage the pro-big business content of his policies is largely thanks to an economic boom which began shortly after he took office. The Thai economy grew by 2.1% in 2001 (the year Thaksin was elected), 5.4% in 2002, 6.8% in 2003 and 6.2% last year. Growth has been fuelled by exports as in the past, but also by a consumer credit-driven boom which Thaksin’s policies have encouraged. While government debt has been reined in since the baht crisis of 1997 – falling from 54% of GDP in 2000 to 39% now – much of Thaksin’s neo-keynesian spending has been funded "off-budget" using the state-owned banks (nationalised following a wave of bank collapses in 1997).

Once again the banking sector is living dangerously. US rating agency S&P estimated that non-performing loans were around 25% of all bank loan at the end of 2004. With the property sector booming once more, many commentators are drawing parallels with the period just before the 1997 crash. With the economy set to slow this year, it may be much harder for Thaksin to deliver on his election pledges this time around.

Will the Thaksin bubble burst?

For the vast majority of Thais, the effects of "Thaksinomics" have been quite different from what government propaganda would have us believe. Rural incomes have risen, but mainly due to higher fram prices rather than the government’s loans scheme. A study by the National Institute of Development Administration found that only a fifth of the money lent was invested productively. As The Economist explained, "The rest went on consumption, or the re-financing of higher interest loans." This has actually left the rural population more heavily indebted than before Thaksin came to power. Whereas the 1997 crisis revealed huge debts in the corporate sector (companies and especially financial institutions), now for the first time consumer debt is a major problem. Judged in this light, "Thaksinomics" looks like a populist variant of the credit-driven expansionary policies pursued by Bush and Greenspan in the USA.

USA Today quoted Serm Borasut, a landowner in a rural district north of Bangkok, who reported that "many farmers in his area have been forced to sell their land to pay off debts incurred under Thaksin’s easy-money policies." As the newspaper pointed out, "Serm himself has been buying them out: His holdings have expanded from 20 acres to 240 acres" as a result of Thaksin’s rural policies. The rural protest group the Assembly of the Poor dismissed Thaksin’s policies as "populist" adding that "there are no political parties that reflect the concerns of the poor."

This sums up the dilemma of Thai politics. In the absence of a real alternative, a party based on the working class and rural poor, Thaksin was able to win by default, against an opposition that is largely compromised by its role in the 1997 crisis.

December’s tsunami which killed at least 5,393 people in Thailand, also played into Thaksin’s hands. The economic damage has been much lighter than for Indonesia or Sri Lanka. The affected provinces account for only 2.7% of Thailand’s GDP. While tourist numbers will almost certainly decline this year, most economists believe the overall impact on the economy will be confined to the first quarter of the year. Like India’s government, Thaksin refused international aid, saying Thailand could take care of itself. Before the tsunami, Thaksin had been losing ground in opinion polls, and in August 2004 suffered a humiliating setback when his candidate lost the race to become Bangkok’s governor. "The tsunami saved his butt," commented James Klein of the Asia Foundation in Bangkok. "The whole anti-Thaksin movement ground to a halt the month before the election," he told USA Today. Thaksin’s lightning tour of the affected areas was a major publicity coup, used to create a feeling of "national unity" behind his leadership. His "hands-on" style of management, publicly berating officials for not dealing with the crisis effectively enough and forcing authorities to open public buildings to the homeless, allowed him to cover up his own role in what is perhaps the biggest scandal of the whole tsunami: the Thai authorities’ decision on 26 December not to issue a public warning. This was not the only scandal which Thaksin seems to have shaken off. Last year’s government cover-up of the bird flu epidemic led to seven fatalities before they admitted the problem. Thaksin’s heavy-handed drug war has resulted in 2,500 deaths and accusations of an unofficial shoot-to-kill policy by Thai police. Above all, the violent crackdown on unrest in the southern provinces where Thailand’s Muslim minority are concentrated has strained relations with neighbouring Malaysia and could pose major problems for Bangkok in the future.

Thaksin punished in the South

The elections confirmed that the south is now an anti-Thaksin stronghold. The opposition Democrats swept the board in the three provinces of Yala, Narathiwat and Pattani where the majority of people are ethnic Malay muslims, a development Thaksin described as a "wake-up call". Last year, 500 mostly young Thai muslims were killed by the police and armed forces in response to rising protests against the neglect of the south, rising unemployment and religious discrimation by the country’s buddhist elite.

Thaksin has defended the police to the hilt, even when 78 demonstrators died in Tak Bai last October of asphyxiation after being locked in the back of military trucks for several hours. On that occasion Thaksin blamed Ramadan, claiming that the men would have survived if they had not been fasting!

Thaksin’s "iron fist" approach has inflamed the situation in the South and is a comment on his increasingly autocratic style of government – a phenomenon marxists call parliamentary bonapartism – which may be further reinforced by his landslide victory. He has been widely criticised for nepotism – appointing his cousin as head of the armed forces and his brother-in-law as assistant police chief – and for concentrating enormous power in his own hands. The 1997 constitution, an extreme makeover designed to strengthen the prime minister’s role and reduce the traditional scope for unstable coalition politics, has been skilfully manipulated by Thaksin to shore up his own position against potential challengers within his own party. The disadvantage, from a capitalist standpoint, with autocratic rulers is that the risks for a social explosion are greater in the long run. With the Thai economy experiencing a new credit bubble – and all bubbles burst eventually – the problems may just be beginning for Thailand’s richest man.

Sources: Asia Times, Asia News, International Herald Tribune, The Economist, Bangkok Post, The Nation, USA Today.


From, cwi website in support of workers struggles in China

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