Thursday, March 6, 2008

Thanksin's interview with the Financial Times

Deposed former Thai prime minister Thaksin, who some say is the real power behind the PPP Party led government of PM Samak, returned to Thailand from exile last week. He told the Financial Times that the political situation in Thailand had shaken investor confidence:
Confidence is very expensive economically. When it’s gone it will cost a lot of money to bring it back – and time, not just money. People don’t understand well enough the worth of confidence.'
Regarding the strong baht and weak dollar, Thaksin said:
So it is now the time to invest. The government has to facilitate the import of more of the capital goods and machinery to upgrade our production quality. That is what we should do now . . . We are an export-led growth economy. . . Especially in the mega-projects. It’s time to invest now. We have quite healthy reserves. We should invest now.
One thing new about Thailand at this juncture is that -- as the world seems poised to slip into recession -- this country now has the foreign reserves to stimulate growth. In past recessions, Keynesian economics was only an instrument of rich countries. Responding to a question about how to how to get the economy moving, it's clear that Thaksin remains an ally of poor Thais:

FT: What can be done to bring back confidence in Thailand?

TS: We have to start with the consumer confidence. You have to inject the money down to the grassroots levels, so their spending will start to turn.
The "grassroots levels" refers to poor, predominantly rural Thais.* Their needs are the most pressing; they spend whatever money they can get in meeting those needs; the economy benefits. (The poor spend their money most aggressively; it is a lesson politicians in the US seem to have forgotten).

Thaksin wants the new constitution -- rammed through by the interim government by a referendum in August 2007 -- changed. Thaksin views the previous junta-appointed government as akin to a company run by a management team which had ignored the wishes of its shareholders. To Thaksin's mind, a state is similar to a corporation; writing a constitution like a building a house. Thaksin said:
You form a company – shareholders are supposed to have the most power. ... Now the people have less power, the structure is wrong. …Those key people who were involved in drafting the constitution are not the democratic men. When the non-professional architects write a plan without asking the owner, when the house is finished, its not the house that you want to live in.
Thaksin's response to a question about the 2006 coup was interesting:
FT: Many people were very shocked at the September 2006 military coup because they thought that Thailand had put the era of military coup behind it. Do you feel now that there is a risk of military coup in the future? Or do you think this was the last coup?

TS: I believe always that democracy is the best. There should not be any hiccup in democracy development in any country. When you start the democratic process, you should continue until it matures. If you take it back, it’s difficult to bring back confidence. During my administration, I believe there should not be any coup. But still it can happen. So Thailand is different. When there is a coup it is not that bad in terms of the impact both domestically and internationally. Even if we have a coup, the Thai monarchy is very strong, very well respected domestically and internationally. So that is different than other countries. We have some impact definitely but it’s not that much when compared with other countries. It’s difficult to predict there will be no coup in the future. But I cannot think about the near future. It might be later on. But it will be quite many years, not now. . .

If you were to have another coup, it will cost the country too much. …If it were to be a near future coup, the country is still very fragile. … That is dangerous…
So Thailand is different. When there is a coup it is not that bad in terms of the impact both domestically and internationally. When your reigning monarch is eighty years old, and some uncertainty surrounds succession, the era of the "safe coup" is long past. Thaksin might have acknowledged this. Thailand isn't really any "different" from any other country. The personality of HM the King is the stabilizing factor. The idea that one's country is "different" from the others can have disastrous consequences, whether that country is Thailand or the United States.
Transcript here.
* A new stimulus package (discussed here) announced this week would amount to a $300/year tax reduction for those Thais earning about $400/month (the salary of a low-level civil servant or teacher).

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