Wrinkled Thai

Thailand has been a country in turmoil since the temporary military coup in 2006, but events have peaked in recent weeks. The country's troubles relate directly to two popular themes here at IPE Journal: the link between democracy & capitalism and economic crises.

The Thai people are currently facing two unpalatable alternatives. On the one hand, the current Prime Minister, Samak Sundaravej, is a rural populist with a sharp tongue that has not been particularly effective since being elected about 18 months ago. Moreover, his cabinet, which includes many members of the previously-deposed government of Thaksin Shinawatra, hardly inspires confidence. His government has been labelled "a shambolic misadventure" by the Bangkok Post, given its failure to deal with the deteriorating economy, food price inflation and a radicalized opposition. But in all likelihood, the alternative is worse.

The rioting and protesting of the past week has been spearheaded by the People's Alliance for Democracy (PAD). Despite it's name, the PAD seeks a regression of democratic rights: resenting populist governments that cater to the urban poor, this group wants to limit voting, reduce the number of elected representatives to 30 and allow the rest to be appointed by business and trade organizations. Yikes. The Economist editorial staff refer to the PAD leadership as "[a] gruesome bunch of reactionary businessmen, generals and aristocrats." But what's even more worrisome is that the PAD has the support of elements of the urban middle class. This, as Gideon Rachmond points out, is yet another qualifier for the overly-simplistic theory that the rise of the middle class will necessarily lead to more democratic reform - something we have discussed before with respect to China. The fact is, ineffective or otherwise, Mr. Samak was elected in a reasonably democratic election. He should be "un-elected" only if and when the population has had enough.

A second, and related, problem facing Thailand is the economy. With the political turmoil exacerbating an economy already weakened by slowing export revenues, the Thai stock market has tumbled to a 19-month low. This economic downturn risks spreading to other East Asian markets, some of which are already showing worrying similarities with the trends that led up to the economic meltdown ten years ago. This may not be the doomsday scenario it appears to be from the headlines, but the volatile mix of political instability and economic weakness in a country as significant as Thailand is something to keep an eye on.

(For possible implications for the USD, see Rory's post below; thanks for the pointer, M)