Thailand seeks to boost clout with regional pact

Thailand seeks to boost clout with regional pact

Reuters
Bagan, Myanmar

Thailand, seeking to boost its regional influence and improve
prickly relations with its neighbors, pledged on Wednesday to
offer soft loans to Laos, Cambodia and Myanmar and waive import
duties on their goods.

"The summit is an auspicious start for four countries which
used to be suspicious of one another," Thai Prime Minister
Thaksin Shinawatra told reporters after signing an economic
agreement with his three counterparts at a summit in Myanmar.

"Soon we will have four nations, one economy in which our
neighbors will supply us farm land and raw materials and we will
be their producer and seller of their goods."

In their final communique, the leaders pledged to work
together to accelerate economic growth and resolve differences
through "mutual understanding, confidence and good
neighborliness".

Wealthier Thailand's big-brother-on-the-block image has often
led to strained relations in the region.

Thaksin sparked a war of words with Myanmar in August when he
ordered Thai troops to kill Myanmar drug smugglers and hinted
Thailand may go after drug factories across the border.

Thailand's relations with Cambodia were damaged severely in
January when mobs torched the Thai embassy and several Thai
businesses in Phnom Penh.

Diplomatic ties, downgraded in the aftermath of the riots,
have been restored, but damaged Thai businesses are still arguing
about compensation from Cambodia.

Thailand, with an economy eight times the combined size of its
three neighbors, is pushing for a new trade zone it says would
uplift their economies and strengthen regional stability.

Bangkok sees economic development as the best way to deal with
the flow of migrant labor, refugees and drugs from its
impoverished neighbors.

Military-ruled Myanmar, Communist-led Laos and newly
democratic Cambodia, still recovering from the "Killing Fields"
of the 1970s, will be offered about 11 billion baht ($275
million) in grants and soft loans for development projects.

Analysts say the so-called Economic Cooperation Strategy will
pry open doors for Thai companies, particularly in Myanmar where
vast energy reserves are coveted by Thailand to power its auto,
electronics and textiles factories.

Myanmar awarded two offshore blocks to Thailand's PTT
Exploration and Production PCL on Wednesday. Thailand also agreed
to help Myanmar develop its downstream gas sector, everything
from pipelines to petrochemical plants.

"The zone reportedly will foster a high degree of economic
dependence on Thailand for the three countries, solidifying
Bangkok as the preeminent political power in peninsular Southeast
Asia," Strategic Forecasting said in a report.

Thaksin has been touted as Southeast Asia's next leader
following the retirement of Malaysian Prime Minister Mahathir
Mohamad last month.

While Thailand stands to gain the most, closer ties will
relieve pressure on neighbors shunned by the West.

"Myanmar and Laos will benefit greatly from being able to
circumvent current or future trade sanctions imposed by the
United States and Europe by running its commodities and finished
goods through Thailand," said Strategic Forecasting.

The promise of loans to Myanmar is a practical example of
Thaksin's "constructive engagement" policy he says will draw the
once wealthy, now poor country towards democracy.

Thaksin scorns U.S. and European sanctions on Myanmar as an
non-Asian way of dealing with an Asian problem.

The United States and the EU have tightened sanctions since
Myanmar's generals detained democracy icon Aung San Suu Kyi after
a violent clash between her supports and government backers on
May 30.