Thailand’s coup after the political stand-off last year is just over a year old. As predicted, the aftermath of the coup saw the growth rate of Southeast Asia’s second largest economy slashed by more than half with growth this year running at around 3 per cent, compared with its past and potential rate of growth around or above 6.5 per cent.
8 June 2015
Author: Peter Drysdale, East Asia Forum
Thailand’s coup after the political stand-off last year is just over a year old. As predicted, the aftermath of the coup saw the growth rate of Southeast Asia’s second largest economy slashed by more than half with growth this year running at around 3 per cent, compared with its past and potential rate of growth around or above 6.5 per cent.
Superficially the economy looks as if it’s in better shape than it was last year when there was a sharp initial contraction in GDP. There is calm on the streets after the protests that surrounded the coup. Income growth is at least up at 3 per cent. Business is more confident and tourism is back up. Real private investment is rising moderately. But these economic data are hardly reassuring. Both output growth and tourism levels are still less than half their pre-coup levels. Private investment is well below its peak and consumer sentiment is weak. The economy remains fragile and there is little prospect of a strong recovery without resolution of the ongoing political crisis.
The secret of Thailand’s past growth has been its open, flexible and globally connected economy — a thriving hub of production networks that enhance regional productivity and efficiency. Thailand has been at the centre of efforts to regionalise the ASEAN market and was in a position to take most advantage of the regional opportunity. Not only do political troubles and the coup pose the usual issues of international investor confidence for Thailand itself, but they have also raised questions about the regime’s ability and commitment to follow through on the ASEAN Economic Community undertaking.
Martial law, imposed last May, has been a major source of Thailand’s international economic and diplomatic problems over the past year. Although tourist arrivals have held up, the geographic structure of Thailand’s tourist intake has changed considerably, away from Western tourists towards tourism from other East Asian nations. US and European dealings with Thailand across the board are on notice and that continues to put a dampener on Thailand’s internationally-oriented economic expansion.
Hence, doing away with martial law became a priority for coup leader and self-appointed Prime Minister, General Prayuth Chan-ocha — as a path to lifting international business confidence in the Thai economy and enabling Western tourists to once again obtain travel insurance and favourable advisory notices from their governments.
Last month’s abolition of martial law has superficially made it easier for the private sector and foreign stakeholders to deal with each other. And democratic governments in the West and elsewhere will, in principle, find it easier to deal with the government of Thailand. Martial law is antithetical to democratic institutions and protections. It invokes human rights violations and automatic opprobrium in the international community. So its abolition on 1 April was welcomed as a step towards constitutional reform and the eventual installation of a democratically elected government in Bangkok.
Yet, as our lead essays this week from Thitinan Pongsudhirak, Pavin Chachavalpongpun and Patrick Jory warn, the military-led government’s invocation of Article 44 of the interim constitution to replace martial law might be cause for a very short-lived celebration. For starters, the controversial article vests complete power and authority in Prayut Chan-ocha in his capacity as head of the National Council for Peace and Order, the junta that has governed through martial law for over 10 months so far. So what we have in effect is the replacement of martial law by Prayut’s absolute authority, as some might argue, a return to very long run normal.
‘Article 44 depoliticises draconian rule in the eyes of the international community but further consolidates and personalises it at home under Prayut’, Thitinan explains. ‘It is designed to indicate that Thailand’s conflict is more about Thais than foreigners. Not since the Cold War has Thailand experienced this sort of absolute rule under one individual’.
When it took control, the army initially promised that elections could be held by October 2015, later pushed back to early 2016. Deputy Prime Minister Wissanu Kreangam announced recently that the polls would not now be held until August 2016 at the earliest.
‘Within weeks of receiving royal endorsement to use Article 44′, Jory notes, ‘the junta-appointed Constitutional Drafting Committee released the draft constitution, which the military regime requires to be in place before new elections can be held… a Constitution … designed with the sole aim of weakening the role of elected politicians, political parties, and the National Assembly, in favour of unelected bureaucrats or kha ratchakan (servants of the king)’.
Article 44, as Thitinan points out, is complicated and sophisticated, involving fine print and levels of interpretation which some foreign capitals will be unprepared to digest when they work their way through it. Washington is clearly less than impressed with Bangkok’s chosen path to ‘democracy’ despite its desire to rein Thailand in from its tilt towards Beijing. The immobilisation of relations with Washington and the limits that puts on Washington’s influence upon the emerging regional order is just one side-consequence of developments in the Thai polity.
The era of King Bhumibol’s authority is coming to an end. His looming departure, Pavin points out, ‘has elevated anxiety levels among the traditional elites, of which the military is a part. This has driven the military to intervene in politics at this critical period’, as it tries to manage the royal succession and defend the interests of the old elites. It aims to ensure that the political infrastructure it leaves behind can be used to maintain the military’s political position.
‘The royal family itself is not innocent in this outcome’, Nicholas Farrelly has argued. ‘During the twilight of King Bhumibol Adulyadej’s unprecedented almost seventy-year reign, at a time when the institution needed to unite the people, it has taken sides in an unbecoming battle for political dominance — and democratic voices identify palace aides as their enemies’.
If things go badly wrong, Thailand — one of the most successful societies in Asia and comfortable with its positive international and regional standing — could topple further from its perch.
Peter Drysdale is Editor of the East Asia Forum.