The political aftershocks of the crisis

4 January 2000

Earthquakes have aftershocks. Thailand’s economic crisis may be easing. But the crisis shook the society with a violence nobody foresaw. There has been an unprecedented step-change in the foreign penetration of the economy. Whether that is good or bad is irrelevant. It is a fact, and will have consequences. There is a new constitution which would probably never have been passed in normal times. There is a great deal of hurt—and hope. Many stresses and strains are still buried below the surface. They will set off tremors through society and politics over the months to come.

These tremors will run through formal politics. In the coming year we will have two path-breaking elections, and the party system will do a somersault. But these tremors will also run through non-formal politics staged in the media and on the street. There are four groups to watch: business nationalists, rural protesters, civil society activists, and establishment radicals.

Business nationalism. The Democrat government chose to follow the IMF advice to launch a major financial restructuring in the eye of the crisis, and to leave firms in the real economy to survive as best they could. You can argue there was no other way. But this marked a dramatic change in business-government relations. The unspoken principle of Thai economic policy over the past generation was that government would help Thai firms to grow—by creating a benign environment, and providing lots of small bits of personalised assistance. In this crisis, that world disappeared. Thai firms called for help, and got none.

Small and medium businesses were especially hard hit. Their customers disappeared. Their bankers disappeared. Their savings disappeared. When they asked why, the IMF and ministers like Phisit Lee-ahtam told them they had been "crony capitalists". In fact, the mistakes they made were believing what their government told them and following the signals of the market.

It would be surprising if there were not some resentment, some nationalism. But in truth, the attempts to rouse nationalist feeling during the crisis have been amazingly weak. Some individual businessmen in the senate have used their position to some personal advantage. We have had some entertaining billboards about "selling the country" along the expressway. But there has not been one serious nationalist demo.

Yet the resentment is there. Many businessmen may admire the way the Democrats handled the crisis. But they may not be sure that a Democrat government will be in their best interests in the future.

Rural protest. Before the crisis, farmers got their income in two roughly equal parts. One part from agriculture. The other from sending off their sons and daughters to work in the city. In the first year of the crisis, the second part disappeared. The sons and daughters lost their jobs and stopped sending money home. In the second year, the first part shrank because crop prices fell, and the sons and daughters came back home to share in the family ricebowl. Urban Thailand survived the social disruption of this crisis because 2-3 million people left. This transferred the impact away to the villages where it is not so visible but just as hurtful.

Rural protest comes in two forms. First, even for comparatively well-equipped farmers, agriculture has become increasingly unprofitable because of low investment, and minimal technological input. Farmers protest against the symptoms of this problems—against low prices and high debts. Second, many farmers do not have secure rights to land, water and other resources.

There is no formal mechanism to express these problems. There is not one MP who really counts as a farmer. The new constitution, by demanding MPs have degrees, disqualifies 99.9% of them. Over the last three years, rural protest has grown: the Assembly of the Poor’s 99-day siege of parliament in 1997; two waves of protest over rural debt; land invasions by the landless; price protests over rice, rubber, sugar, garlic, cassava—protests which resemble the tactics of European farmers 20 years ago.

Behind this has been a build-up of organisation, and a long-running debate on whether farmer organisations need to get into parliament. A year ago, the feeling on that debate was: "no, because at best we will get torn apart by sectarian division, and at worst our leaders will get shot" (as in the past). Now, the feeling seems to be: "yes, we must get into formal politics or we will always get ignored."

Civil society activism. The 1997 constitution includes a whole range of provisions over which activists had been campaigning for years—decentralisation, protection of human rights, stronger counter-corruption measures, community control over natural resources, liberalisation of the media, freedom of information. Passage of this constitution was a victory which made activist groups bolder and more optimistic.

But passage of the constitution also provoked a cunning conservative reaction to delay, dilute and diminish these changes. The Council of State deflects the enabling laws. The Constitutional Court muddies key decisions. Politicians and bureaucrats team up to sandbag challenges to corruption and the abuse of power. The result is rising frustration, but also increased determination and a renewed attention to parliamentary politics. The Chuan ministry exemplifies the problem—one good man shielding a lot of bad ones. Civil society activists increasingly see that parliamentary politics cannot be ignored.

Establishment radicals. There is a small but influential cadre of the great and the good who have a big influence on public debate. In times of stress they take on a responsibility for guiding the country away from disaster. Several took part in drafting the constitution to stem the growth of money politics. Now they are looking warily at the big changes and social strains caused by the crisis. Two years ago, they were enthusiastic about "good governance". Now, they seem more concerned over growing social division and the increased foreign penetration of the Thai economy. This is not because they are anti-foreign in any cultural or political sense. Most are very westernised. But they are concerned that the speed and extent of the current step-change in foreign penetration may be too difficult for the society to absorb. They fear some chemical reaction between increasing social division and economic nationalism.

How these forces will develop, and how they may combine, is difficult to predict. What is clear is that Thailand’s relatively open public politics will provide space for them. The process of accommodating the political after-shocks of the crisis will be right out in the open.

It will look very, very messy. Scandals, demos, blocked roads, heavy rhetoric, dirty elections, disastrous coalitions, absurd no-confidence debates etc etc. People who write news analyses and political risk reports from Hong Kong (where there has always been a good dictatorial government to look after such things) will get quite spooked and say some very silly things about political instability.

But it is worth noting that MITI just surveyed Japanese firms on their perception of the region. Were they planning to increase or decrease their commitment in Thailand in the short term? The vast majority said "increase". What was their main reason for preferring Thailand over alternative investment sites? Political stability. Over the past two years these firms have sunk US$ 2.6 billion into manufacturing investments here.