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The Thai military coup and the Thai economy

The Thai military coup and the Thai economy Anthony Harrington

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When the Thai military finally stepped in to oust the government of Yingluck Shinawatra after months of increasingly violent street protests against her government, few should have been surprised. Army chief General Prayuth Chan-ocha had been warning all sides that the army would act to restore stability if the politicians could not resolve their differences, and if the violence looked to be reaching the point where the police were losing control.

The question now is whether Thailand's coup in 2014 will be a rerun of the coup in 2006, with a similarly negative impact on Thailand's economy, or whether this time round, the generals manage to demonstrate that they have learned a few lessons from 2006.

Thailand's politics have been dominated by the gulf between, on the one hand, the country's royalist conservative elite, who run the country's industries and provide the cadre for its senior military officers, and on the other, the rural poor. The 2006 bloodless coup, led by General Sonthi Boonyaratglin, took place on 19 September 2006 when the country's prime minister, Thaksin Shinawatra, was out the country. Thaksin was a highly controversial figure. He came to power at the April 2006 elections through his ability to mobilize the rural poor, then used his office to vastly increase his personal wealth in a very short time frame.

His short-lived administration is widely regarded as having been intensely corrupt and this was the charge the military brought as their excuse for the coup. However, in a paper entitled The 2006 military coup and its implications for the Thai economy, Johannes Schmidt argues that the military's assessment was probably that Thaksin's vast wealth and the political dominance of his Thai Rak Thai (RTR) party was such as to make a coup the only way of getting rid of him.

Thaksin was found guilty of corruption in his absence and has since lived abroad in self-imposed exile, but that did nothing to dampen the political dominance of the party that had evolved out of his Thai Rak Thai party, namely the Pheu Thai Party (PTP). When, after 15 months, the military allowed a general election, another forerunner to the PTP, the Peoples Power Party (PPP), came to power. That party, like the RTR before it, was dissolved by the Thai Constitutional Court in May 2007 for violating election laws. In the 2011 Thai elections, the PTP  invited Thaksin's younger sister Yingluck, a Thai business woman, to run for prime minister as their candidate. The PTP had originally asked her to be their candidate when the party was formed in 2008, but Yingluck had then declined, saying she wanted to focus on business. This time round she accepted and won, becoming Thailand's first female prime minister.

However, she proved to be an indecisive and ineffective politician. Corruption allegations became widespread and protests against her government began to grow. The military finally stepped in, arresting Yingluck and dozens of other political figures and activists on 23 May 2014.

It is important to note that the 2006 coup, which seems to have parallels with the current coup, and even some of the same actors (General Prayuth Chan-ocha was a prominent figure in the 2006 coup), was Thailand's first coup for 15 years. It threw a dark shadow over Thailand's claims to be a stable democracy at the heart of South East Asia, and that shadow has now returned.

One of the main reasons why Thaksin ran into difficulties was his efforts to dismantle the "old boy" network around King Bhumibol Adulyadej and his increasing rift with the King over the direction of Thai politics. Yingluck appears to have run into trouble with the Thai conservatives, not least because of an addle-headed attempt to introduce a far reaching amnesty rule that would have exonerated her brother. Now the military are once again in control and all the signs are that General Prayuth has no intention of relinquishing control again until he has "fixed" the problems in the Thai political system. This is currently being taken to entail crafting legislation that will prevent any party of which the military disapproves, from taking power. Meanwhile the economy will be run not by a democratic government but by dictate, with the military making it up as they go along.

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Further reading on South East Asia:

Asia Future Perspectives, by Jim Rogers
Asia's unprecedented opportunity, by Ian Fraser
Emerging market bonds in East Asia on a roll, by Anthony Harrington

Tags: corruption , democratic , General Prayuth Chan-ocha , King Bhumibol Adulyadej , Thai , Thailand , Thaksin Shinawatra , Yingluck Shinawatra
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