international analysis and commentary

Thailand: why the new coup is no solution


Thailand is prone to coup d’états.  Historically, they have had a tonic effect, creating the space necessary for the military or judiciary to muzzle politicians, size-up the crisis of the day, and force some kind of neatly packaged compromise that could be consecrated by King Bhumibol Adulyadej. For the past several decades, the crisis-coup-compromise schedule has become all too familiar in Thailand, so much so, in fact, that for the last two decades it has hardly been a drag on economic growth. Markets would flutter briefly on the headline risk of violent street clashes perhaps, but recessions and credit downgrades were reserved for Thailand’s dysfunctional Southeast Asian neighbors. But now the narrative has changed. Thailand’s most recent coup is a sharp diversion from this well-worn path, a departure with political and economic ramifications.

A peculiar pattern
At first glance, it is not immediately clear why Thai democracy should suffer these episodic crises. Thailand holds multiparty elections that see a high degree of popular participation. Since 2001, there has been a noticeable shift to politicians campaigning on issue-based platforms.   Moreover, the country’s political energy is sustained by a strong economy. Its per capita GDP is higher than China, Indonesia, the Philippines and Vietnam, and its economy has proven just as dynamic as any of these countries.

Yet, the country is plagued by this succession of military and judiciary coups. Most recently, seven months of protests from November to May led to a snap election, invalidated by the judiciary, which, in turn, set the stage for a controversial constitutional court decision to remove the Prime Minister. Army Chief General Prayuth Chan-ocha, recognizing the intractability of political differences, called on the military to assume command.

There are two crucial political forces in play. The central figurehead of the first group is Thaksin Shinawatra, the former Prime -Minister in self-imposed exile who has been running the Pheu Thai political party through his sister for the last several years. A police general turned billionaire businessman and an incredibly savvy politician, Thaksin was the first to deploy populism meaningfully in Thailand, which has won him a deeply loyal core constituency of working class Thais mostly from the agrarian northeastern region of Isaan.

These loyal Thaksinites form the bedrock of the Red Shirt movement, but it oversimplifies the Red Shirt agenda to say that it is the street-level civil-society face of any one of Thaksin’s parties over the years. The Red Shirts represent a diverse array of interests, most of them mainstream rural poor, but some of them radical socialists and anti-monarchists. Thaksin is simply the lowest common denominator – he provides the best opportunity to access political power for anyone outside the traditional Bangkok elite. Thaksin or his proxies have won every election since 2001 on the platform of asking what people want and promising to give it to them. If Thaksin and other party bosses used their office to take what they wanted, “so what?” they asked. Thaksin helms an electoral juggernaut: however he rules, he does it with the mandate of the people.

The second group forms what Thailand scholar Duncan McCargo calls “Network Monarchy”, or the coalition of politicians, palace officials and business leaders who have a vested interest in the institutional strength and legitimacy of the monarchy. Its political wing is represented by the Democrat Party, the oldest political party in the country.  If you had to ascribe them an ideological position it would look and sound a lot more like feudalism than many of its Western-educated leaders would care to admit publicly. For more than a decade they have been a rudderless and reactive party struggling to find anything that could challenge Thaksin’s electoral might.

Network Monarchy holds that the King, who is widely revered, is an anchor of social stability. King Bhumibol Adulyadej has indeed won the devotion of many Thais simply by overseeing an unprecedented rate of economic development and relative peace over the last six decades. However, his legitimacy is also used to justify the continued control of government institutions by the political elite allied with the crown.

The king’s reputation is carefully protected because it is seen as one of the most important sources of legitimacy for the Thai elite’s continued control of important institutions such as the bureaucracy and the judiciary. Though the Democrat Party has some supporters, much of its strength lies not in the power to win elections, but in the checks on electoral democracy that allow it to brush aside Thaksin’s victories by other means.

A “trickle-down” political crisis, and no easy way out
In Thailand, political leadership ensures access to power in order to advance elite parochial interests and claim rent-seeking opportunities. In the words of two leading scholars of Thai politics, Chris Baker and Pasuk Phongpaichit, “in Thailand, the coincidence of political leadership and commercial leadership is absolutely traditional.” Political power is indivisible from financial gain – a statement most Thais recognize as a simple matter of fact. By repeatedly demonstrating that he’s capable of winning landslide elections (including through proxies while in exile) Thaksin inflamed fears that he would systematically displace the palace power network with a new set of connections. Consequently, Thaksin is seen as far more than just a populist or a corrupt statesman; to Network Monarchy, Thaksin represents an existential threat to their continued control over the country.

However, economic development has played a key and growing role in shaping the political landscape. Even though the political conflict was set off by some of the wealthiest individuals in the country, evolving demographics have produced a much larger population of Thais eager to participate in politics, cast ballots to improve the economy, make money and create opportunity for their children. More Thais aspire to give their children a level of educational attainment that they themselves could not access. Within this context, the gradual erosion of elite control is inevitable.

Additionally, Thailand’s political paroxysm is spurred on by elite rivalries within the context of a monarch who is nearing the end of his reign. The stakes couldn’t be higher, as no one wants to allow one’s political opponents to be in charge when the King dies. But while episodes of crisis still originate in this tier of politics, the cell-phone wielding social groups the elite mobilize to support them are more difficult to pacify than the feudal peasants of an undeveloped Thailand. The result is that even when the military intervenes to pry sparring politicians apart and send them to their respective corners, the political base on both sides of the conflict remains energized.

Whatever political rewiring takes place under the current military junta, it will reflect the conservative predilections of the junta bosses. Election laws and the system of checks and balances will be revised to ensure that Thaksin’s political machine will not simply sweep to victory again. At the bare minimum, this new government will need to change the system enough to return the country to weak coalition governments, rather than allow for the Shinawatra family political machine to cruise to total legislative control. The military failed in 2006 to weaken Thaksin’s grip on the policy agenda, and General Prayuth will be less compromising this time around.

There is no visible pathway out of the political crisis because neither side in this conflict will accept being governed by the other. This problem significantly raises the likelihood of a sustained impasse for the next 24 months, which could periodically spill over into violent protests. While the military can suppress a reaction in the very near term, their ability to control the situation will be put to severe, repeated tests.

Within this context, Thailand’s economy is likely to suffer a significant downturn in the business environment, regardless of the junta’s efforts to stabilize it in the next several months. In the long term, Thailand is likely to become a less appealing base for international investors, particularly those with high operational risk exposure such as manufacturing. Already there is strong evidence that businesses have hedged political risks by diversifying their supplying chains away from Thailand, and a number of large auto and consumer electronics manufacturers have delayed new investments or diverted them to Indonesia and Vietnam altogether. In a region of such strong industrial growth and fierce competition on thin margins, it is perhaps Thailand’s Southeast Asian neighbors who stand to gain the most from a military coup in Bangkok.