The Vongthip Letter Sep 08

This month’s Vongthip Letter was more eagerly awaited than ever by me. We know Khun Vongthip’s political affiliations. How will she analyze the crisis and the new “demasked” PAD.

“Thai voters no longer have the choice”, concludes banker and economist Khun Vongthip. “They would have to go down the highly disturbing, very rough and even bloody reform path.”

“Thaksinatra no more,” “Thailand’s image,” “Rebels with a cause” and “The awakening giant” are some of the subjects she dwells upon. Khun Vongthip remains undisturbed. The country cannot do without the PAD’s fight.

Big spenders

Through out 8/08 Samak cabinet was busy pushing through new projects to be included in the Budget Bill that would have to be approved by the parliament before fiscal year ending on 30/9/08. Although it was obvious that our citizens have been hurting badly by the steep rise in oil and food prices, Samak cabinet chose instead to ignore conventional wisdom in favor of huge government spending on projects that were extravagant and unnecessary.

Under the prevailing negative circumstances e.g. the new THB 35 billion parliament house, THB 110 billion 6,000 NGV buses, THB 150 billion new highway net-work. Meanwhile, private sector were complaining bitterly that they were being “asked’ to cough up as high as 30% “facilitation fees” if they were to bid for new government procurement projects!

Accomplishments

Notwithstanding fierce lobbying and in-fighting, PM Samak has managed to complete the annual reshuffles of government officials (influenced by the Gang of Four), police force (dominated by Thaksinists) and the military (as submitted by the forces), before the mandatory retirement deadline on 30/9/08.

In spite of public outcries, the government has gone ahead to appoint their supporters and cronies on the boards of several key government enterprises, particularly that of the Bank of Thailand! The cabinet has also chosen to ignore the series of court’s rulings against their members. Against strong public opposition, MP’s from coalition parties have started to ram through to amendment of the 2550 Constitution.

Monetary situation

In 8/08, the Governor Tarisa of the Bank of Thailand was given the much needed boost to continue her policy to fight against climbing inflation. As anticipated, the central bank’s repo rate was upped by 0.25% to 3.75%. They have also planned to switch their target from core inflation to headline inflation rates. As bank loans to deposits ratio climbed to 90%, bankers have started to brace themselves in earnest for the impending credit crunch.

Meanwhile, foreign investors continued to move their funds out. The Baht weakened to THB 34.50 from THB 33.50 level. SET index fluctuated wildly to 620 before ending the month at 640. Oil prices weakened to USD 107 but continued to yo-yo in respond to any sensitive events e.g. Hurricane Gustav in the Gulf of Mexico.

The staggering economy

Economic indicators in 7/08 still gave mixed signals. Private consumption weakened to 29.3%. Exports totaled USD 16.8 billion, up 43.9%. Imports were USD 17.6 billion, up 53.4%. Trade balance showed a deficit of USD 762 million. Current account recorded a USD 555 million deficit. Balance of payment showed a small surplus of USD 51 million.

International reserve was lower at USD 104.8 billion. Although the Thai economy has managed to thrive well up to now because of exceptionally good farm prices, still healthy exports, and sustainable tourist arrivals, the favorable situation could take a turn for the worse soon because of the on-going political crisis, softening commodity prices and impending world recession.

Thaksinatra no more

In 8/08, Thaksin’s fans were more than impressed when they heard that his Abu Dhabi oil tycoon friend would be paying him Sterling 140 million for ownership of Man City. Having bought Man City for only Sterling 90 million, Thaksin has made a cool profit of Sterling 50 million in a matter of two years!

Anti-Thaksinists, however, were quick to conclude that the huge profit was indeed a “payment in disguise” for offshore oil exploration rights in the overlapping claimed area in the Gulf of Thailand. This belief was also based on the fact that purchase-and-sale of football league clubs has nowadays become one of the most effective ways for some of the newly-rich billionaires of the world to laundry their money!

Rebels with a cause

Throughout 8/08, tens of thousands of Pantamits from Bangkok and up-country took turn to continue their daily sit-in demonstration (in heavy rain storms and scorching sun) at Makawan. After 95 days of seemingly fruitless results, the 5 PAD leaders decided to go for broke. On 26/8/08, they took bold actions to strengthen their demand for PM Samak’s resignation.

They raided the government’s NBT TV station, surrounded key ministry buildings, climbed over and camped out on the ground of the government house (9 days now) to keep out PM Samak, his cabinet and some 3,000 staff! The federation of 43 unions joined forces, calling their 200,000 unionists to start work-to-rule and promising to go on 100% strike if the Pantamits were harmed.

In various degrees, the railways were partially closed down. Planes were delayed, airports in Phuket, Krabi and Haat Yai were temporarily blocked. Pipe-water shut-downs and electricity black-outs occurred in selected areas.

As PAD continued their uphill task with a lot of sweat, blood and tears, they could not help envying their counterparts in Taiwan, South Korea, Japan and Belgium where prime ministers were ready to apologize and resign whenever they faced big demonstrations – in lesser numbers, shorter periods and over comparatively minor political issues!

Throwing oil into the fire

The sudden turn of events has taken PM Samak as well as the general public by surprise. Although PAD has been heavily criticized by the public for their rash and “unlawful” behaviors, PM Samak’s ways and means of solving the political crisis, have intensified rather than eased the confrontation. On 29/8/08, Samak ordered hundreds of anti-riot police to smash PAD’s strongholds.

Overnight, public’s sentiments turned against both the police and the government. TV viewers were appalled to see how thousands of unarmed demonstrators (70% women over 40) in the government house’s compound were bracing themselves for the onslaught of the police.

On 30/8/08 the beleaguered PM obtained court orders and police warrants to arrest the 9 PAD leaders for treason and the demonstrators for breaking entry!

Angered by the “unreasonable” charges, thousands more unarmed protesters streamed into the government house to form human walls to protect themselves and their leaders. As tension grew, court eviction order against the protesters was withdrawn.

Thailand’s image

PAD’s recent escalation of civil-disobedience actions has generated an unprecedented publicity for them at home and abroad. PAD’s “noble quest”, to cleanse the existing “corrupt” political system in Thailand, has been attracting both admirers and opponents among the Thai society. As the displaced Samak government tried in vain to clam down on the PAD and to switch off ASTV, more and more people, especial students, have joined the demonstration.

PAD’s international mass media coverage too has increased since their D-Day on 26/8/08. Human rights champions were monitoring Thailand case-study with great interest and curiosity. When PM Samak declared a state of emergency in Bangkok on 3/9/08, foreign governments did not hesitate to issue travel advisories that resulted in the cancellation of tour groups and MICE events.

As strikes at airport and ports loomed, export orders were being rerouted. New FDI projects were put on hold. Fear of escalating violent outbreaks has finally taken its tolls on consumer and business confidence.

No way out

On 31/8/08 Samak called a special parliamentary meeting. At the end of the 11 hour heated debate, Samak announced that he would not resign nor dissolve the House. In the dead of the night of 1/9/08, pro government group, Nor Por Kor, led some 1,000 “Red Shirts” (hired thugs) from Sanam Luang to attack PAD’s Makawan stronghold.

In the terrifying melee, one was killed and 43 were wounded, while 200 unarmed police stood by. The army was then asked to send in their unarmed military contingents to sandwich off the attackers. Academics, NGO’s, business groups came out to condemn the bloody incident and call for Samak’s resignation.

Contrary to all expectations, Samak declared a state of emergency in Bangkok on 3/4/08 and, when the army chief, General Anupong, failed to use force against PAD, his cabinet called for a national referendum and issued orders to give Samak full power over the army on 4/9/08!

The awakening giant

At last, the Thai society, elites as well as grassroots, could no longer ignore the fast deteriorating political situation in the country. More and more people have started to question PAD’s reasons and motives for change. More and more people have come to realize why Thailand could no longer afford to leave the governing of the country to unethical and corrupt politicians who could not distinguish between the welfare of the state and its people from the welfare of the politicians and their supporters and cronies! Thai voters no longer have the choice. They would have to go down the highly disturbing, very rough and even bloody “reform path.”

Good luck to us all!