Plenty of uncertainty in Thailand after election

Plenty of uncertainty in Thailand after election

By Peter Janssen

BANGKOK (DPA): Thai Rak Thai, the political party of tycoon
Thaksin Shinawatra, 51, was handed a clear mandate to rule in
Saturday's general elections, but their triumph is unlikely to
usher in an era of political and economic stability for Thailand.

Thaksin's party won nearly half of the 500 contested seats in
the House of Representatives, clearing the way for him to become
Thailand's 23rd prime minister and to push through the host of
popular economic policies he has promised the people.

The closest rivals of Thai Rak Thai (literally -- Thai Love
Thai), the 30-year-old Democrat Party under incumbent Prime
Minister Chuan Leekpai, came in a distant second, slating them
for the opposition.

"This is a strong message for the Democrats," said Chaiwat
Khamchoo, dean of political science at Chulalongkorn University.
Chuan's coalition government stepped in to save the nation in
November 1997, after Thailand's entered its most serious
financial crisis in decades.

In 1998, despite or partly because of tight fiscal policies
recommended by the International Monetary Fund (IMF), from which
Thailand borrowed US$17.2 billion, the economy contracted by 11
percent.

By 1999 a slight recovery was already under way with 4 percent
growth, which was matched again in 2000, driven primarily by a
good export performance. But for the common man on the street and
the average Thai businessman, there is little sign that the good
times are back.

"Chuan hasn't improved the economy. I wanted to give Thaksin a
chance to see what he can do," said Ngo Sae Tang, a Bangkok
voter.

Thai Rak Thai (TRT) campaigned on popular policies, such as a
promise to provide each of Thailand's 70,000 villages with one
million baht ($23,000) each in direct development funding and a
three-year debt moratorium for farmers on 300 billion baht ($6.9
billion) in loans from the state-owned Bank of Agriculture and
Cooperatives (BAAC).

TRT has also backed the setting up of a state asset management
company to take over some of the worst debts to Thailand's ailing
bank system, a move that would no doubt please the country's
business elite.

Telecommunications tycoon Thaksin, who began the process of
forming a coalition government with smaller Thai parties over the
weekend, has insisted that TRT be handed control over economic
ministries, such as finance and commerce, to implement his
economic schemes.

"A very challenging path lies ahead for Thaksin, because he
has set such high expectations," said Chaiwat. "He needs to make
sure that all these policies will be implemented in a short
period of time."

Economists have warned that although TRT's rural policies may
have a positive short-term impact on the economy, they have
worrisome long-term implications for the country.

"I wonder what will happen with the debt moratorium after the
three years are up," cautioned Ammar Siamwalla, a senior advisor
to the Thailand Development Research Institute (TDRI). "Because
by then farmers will be in the habit of not paying back their
debts."

There is a danger that the estimated 300 billion baht in
farmers' debts to the BAAC will need to be taken on by the
government, adding to public debt which already stands at 54
percent of gross domestic product (GDP) in the wake of Thailand's
recession years.

A similar scenario is likely for the asset management company
and the $1.6-billion village funding scheme. Thaksin has promised
to finance all these programs by improving tax collection, but
not raising taxes.

"If he can't make it from taxes then he will need to borrow
money," warned Ammar.

But Thaksin is under pressure to perform, and it is likely to
be a short act.

On Dec. 26 the National Counter Corruption Commission (NCCC)
indicted the baht billionaire, whose fortune is estimated at 60
billion baht ($140 million) for intentionally concealing his
assets with the transfer of millions of dollars worth of company
shares to his servants in 1997, when he was deputy premier.

If the Constitutional Court upholds the NCCC's verdict in
coming months, which is likely, Thaksin will be barred from
national politics for a five-year period.

He would be forced to immediately resign, as would his entire
cabinet, and a new government would be formed, although TRT could
still lead it.

The uncertainty of Thaksin's political fate has not put him in
a strong position to lobby for coalition partners in coming
weeks.

His most likely choices are the New Aspiration Party (NAP) and
the Chart Thai Party, which won about 50 seats each. The parties
are led by former prime ministers Chavalit Yongchaiyudh and
Banharn Sipaarcha, who ran the country between 1995 to 1997,
leading up to Thailand's economic collapse in mid-1997.