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4/05/2007

`Bangkok Post' daily acts as voice of Zionist lobby in Thailand

`Bangkok Post' daily acts as voice of Zionist lobby in Thailand

Kuala Lumpur, April 4, IRNA

Thailand Zionists

The Thai daily Bangkok Post affiliated to Thailand's Zionist lobby has been acting as the voice of Tel Aviv in the major developments of the Middle East and world of Islam.

During the 33-day war launched by the Zionist regime against the defenseless people of Lebanon, in particular the disastrous genocide in Ghana which provoked worldwide protest, in the articles of Bangkok Post, the oppressed Lebanese people were branded as terrorists.

Meanwhile, concerning the issued related to Iran, the Thai daily gives special attention to the interests of the Zionist regime.

The growing trend of Iran-Thailand political, economic and cultural relations, which naturally makes Iran's role in the issues associated with Thai Muslims more decisive, has always been challenged by this daily.

In the editorial of its Monday issue, Bangkok Post raised questions on Iran's stance on British marines' violation of the country's territorial waters by repeating the claims of the media associated with Zionist organizations.

The daily accused Iran's coast guards of taking into custody the British marines in the territorial waters of Iraq.

Upon illegal entry into Iran's territorial waters on March 23, 2007, fifteen British marines were arrested by Iranian coast guards.

Following such a violation, without paying any attention to the data and information registered in the Global Positioning System (GPS) of the arrested marines, British officials attempted to pretend through extensive media and political propaganda that their servicemen have been arrested in Iraqi waters.

The arrested marines confessed to their illegal entry into Iran's waterways and apologized to the Iranian people.

The media experts of Southeast Asia believe that the Bangkok Post editorial is in line with the goals of the media centers associated with Zionists aiming to make Iran give up its inalienable international rights.

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3/11/2007

Dismantling Thailand's Shin Corp

Dismantling Thailand's Shin Corp


By Shawn W Crispin

BANGKOK - With this week's takeover of iTV, Thailand's new military rulers have made their first move toward dismantling the telecommunication and media empires that once provided the behind-the-scenes financial firepower for ousted prime minister Thaksin Shinawatra's once powerful, now diminished, political juggernaut.

iTV represented a small part of the Shin Corp's corporate expanse, which currently includes major holdings in telecoms, satellites, aviation, property development, consumer finance and the Internet. Its mobile telecoms subsidiary, Advanced Info Services (AIS), provides the lion's share of the conglomerate's profits and catapulted Thaksin to billionaire status before he divested his shares to family members when he took up the premiership in 2001.

The company's profits soared during Thaksin's political tenure, padded by his government's policies aimed at pumping up domestic consumption through aggressive state-bank lending and assorted cheap-credit schemes. With Shin Corp's share price near a record high, and popular political pressure mounting against Thaksin, in January 2006 his family sold the company to Singapore's state-run Temasek Holdings in a controversial US$1.9 billion transaction.

The company has been under political assault ever since the military seized power from Thaksin in a bloodless putsch last September. A Thai court last year ruled that iTV had breached the terms of its original 1995 build-transfer-operate concession with the Prime Minister's Office and imposed more than $2.2 billion in fines, fees and owed interest payments. The station failed to meet a recent payment deadline and the military junta rescinded its operating concession and is in the process of determining which assets it can legally repossess.

To some market watchers, the highly anticipated move represents a form of forced nationalization of a foreign-held asset. Shin Corp's shares fell 2.6% the day after iTV's closure and so far Temasek has remained mum about the losses it will incur because of the station's demise. In part, that's because iTV was the only perennial loss-maker among the Shin Corp's otherwise profitable stable of companies.

But iTV's nationalization likely represents the first of a series of controversial moves to dismantle and then redistribute to politically preferred players the Shin Corp's various communications assets operated under state concessions. Coup leader General Sonthi Boonyaratklin has in recent weeks stated the junta's intention for national-security interests to seize three communications satellites that Temasek now majority-owns through Shin Corp subsidiary Shin Satellite.

The potentially bigger blow will come if and when the junta follows through on its apparent plans to rescind AIS's operating concession. Pridiyathorn Devakula, the interim military government's finance minister and deputy prime minister for economic affairs until last week, in January told a private meeting of foreign analysts gathered to discuss amendments to the Foreign Business Act that it was "only a matter of time" before they rescinded AIS's build-operate-transfer concession, according to an analyst who was in attendance and who spoke to Asia Times Online on condition of anonymity.

The Council of State is now reviewing legal matters surrounding a possible concession rescission, which reportedly could be justified by alleged irregularities in the manner in which AIS received its concession from the state-owned Telephone Organization of Thailand (TOT) back in 1992. If so, it's unclear whether the council's legal interpretation would allow for the government to make retroactive demands - as it did in the iTV case - that would require AIS to pay the state potentially billions of dollars' worth of penalties on previous profits and revenues.

Money in the bank
Those penalties could potentially be seized from the $1.9 billion the Shinawatra family received in the Temasek transaction and now reportedly holds in interest-bearing accounts at Siam Commercial Bank, which is controlled by the royal family's Crown Property Bureau. Arguably, financial markets have not fully priced this risk into the Shin Corp's share price, which has fallen from 31 baht per share on the day of last year's coup to 24.6 at Thursday's close of trading.

Large foreign hedge funds, including the United States' Farallon Capital, at least into February held AIS's liquid shares in some of their emerging-markets portfolios. Fitch Ratings recently placed AIS on a rating negative watch because of what it referred to as "heightening policy, regulatory, and legal risks that could substantially affect the major telecom operators in Thailand" and that "rising policy uncertainties may lead to a review of concessions".

HSBC has recently warned its clients about the possibility of a nationalization of Shin Satellite's assets, but one of its senior analysts who spoke on condition of anonymity to Asia Times Online said that its telecommunications department had not yet issued a similar downgrade warning on AIS because of a lack of evidence about the government's plans. Shin Corp chief executive officer Boonklee Plangsiri failed to reply to e-mailed questions from Asia Times Online about reports that AIS is poised to lose its operating concession.

Certain hedge-fund managers and investment bankers who have recently visited Thailand and met with Asia Times Online have universally asserted that if the government moves on AIS on perceived flimsy legal grounds it will further undermine broad investor confidence, not only in its economic management but, more crucially, in its ability to protect foreign investments legally.

"It would represent the last straw," said one senior hedge-fund manager, who, like many foreign portfolio investors, ill-received the junta's December 19 surprise move to impose capital controls on certain types of short-term foreign investments as well as its planned nationalistic amendments to the Foreign Business Act, which are scheduled to take effect this month.

Dampened foreign sentiment is arguably already taking an adverse toll on the Thai economy. Some foreign investment banks have recently downgraded their economic-growth forecasts below 4% for this year, because of stagnant new private investment, declining domestic consumption, and signs that the bureaucracy has been slow to disperse fiscal stimulus measures. According to Phatra Securities, a local investment bank, nearly $1 billion worth of capital flowed out of Thailand in January because of the 30% non-interest-bearing reserve requirement on foreign investments included in the capital controls.

That increasingly puts the junta between a rock and a hard economic place in its apparent pursuit of dismantling Thaksin's commercial legacy. Yet there are a number of other legal avenues the junta could pursue against Shin Corp, including possible charges of tax evasion, subversion of the judicial process, and constitutional transgressions, that would present a more genuine veneer of legal impartiality - while allowing the junta to accomplish the same political ends.

Never tried charges
Shin Corp and its subsidiaries were widely recognized throughout their corporate histories as some of Thailand's best-managed companies. Yet there are a handful of controversial episodes that under Thaksin's political tenure were arguably under-investigated, but through new independent probes might cast the company's tightly managed image of good governance into doubt - or worse.

One strongly alleged - but never investigated nor tried in court - tax-evasion case stands out in particular. A lightly circulated October 2003 research report by Pyramid Research, a US-based consulting firm, raises hard questions about possible tax evasion related to AIS's use of the 1800 bandwidth frequency acquired in its purchase of the Digital Phone Company (DPC) in 2000 from Samart PCL and Telekom Malaysia.

The well-reasoned report contends that AIS, then facing a serious capacity crunch, was systematically underreporting the number of post-paid customers it was roaming on to DPC's network, in effect allowing AIS to avoid paying the higher concession fees DPC contractually owed the state. Under the DPC's operating concession, it was required to pay 32% of its revenues to the state-owned operator-cum-regulator TOT; AIS's concession, on the other hand, only required it to pay 24%.

Moreover, the report made compelling thitherto-unexplored allegations that under Thaksin's government the TOT and AIS had entered into a de facto "strategic partnership" that gave AIS an edge over its local competitors. The report noted one particular example of AIS selling its loss-making pager company in 2002 to TOT for 255.78 million baht (about $7.75 million at the current exchange rate), a generous amount considering the state agency already legally owned the assets and previously had not paid anything for other decommissioned pager companies. [1]

There are also the unresolved tax-evasion allegations lodged against Shin Satellite by an opposition politician, who based his charges on information he had received from a former company customs employee who apparently had access to documents related to the import of expensive capital equipment. That case's proceedings were thrown into a tailspin when the witness was shot and killed in 2003 by masked assassins while he was riding on his motorcycle in the northern province of Chiang Rai.

There has arguably never been a proper official investigation into the circumstances surrounding the former Shin Satellite employee's death. When this correspondent inquired about the situation in an interview with Shin Satellite CEO Dumrong Kasemset in January 2006, he immediately broke off the one-on-one interview.

At the very least, there is a compelling case for the military government to open an independent probe into both the mysterious murder and the original tax-evasion charges - neither of which has ever been given proper official treatment. It could also look into the circumstances behind the eight-year tax holiday worth $400 million the Prime Minister's Office-run Board of Investment granted Shin Satellite in 2003, representing the first, and apparently only, time the foreign-investment promotion agency made such an award to a Thai-owned company.

The government could also have pursued a more damning case involving iTV on charges that Thaksin violated constitutional press-freedom guarantees through his government's alleged manipulation of the station's news coverage to his political party's advantage. Unfortunately, the junta is in no position to take the moral high ground on press-freedom issues because of its abolition of the 1997 constitution and its own heavy-handed policies and overt censorship of the broadcast media.

Instead, the junta's handling of Shin Corp seems set to mirror its stumbling ways in prosecuting the other charges it has leveled against Thaksin and his associates to justify last year's coup. The government's enduring failure to nail down with hard corroborating evidence the corruption and political crimes Thaksin allegedly committed risks losing the support of the Bangkok elite and middle class that initially strongly backed the military intervention.
Should the junta similarly be perceived to mishandle its pursuit of charges against the Shin Corp, perhaps even more dangerously, it risks further undermining already waning foreign-investor confidence in its leadership, bringing on a destabilizing economic meltdown.

Note
1. See John Barrett's "AIS: De Facto Dual-Band Network", Pyramid Research, Asia Pacific Perspective, October 3, 2002.

Shawn W Crispin is Asia Times Online's Southeast Asia editor.

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3/05/2007

Thailand's Royal Wealth

Thailand's Royal Wealth

Thai Banner

AsiaSentinel

How Thailand’s Royals Manage to Own All the Good Stuff

A man, let’s call him Somchai, lives in a prime location in central Bangkok. Now in his sixties, Somchai designed and built his house himself nearly 30 years ago. He doesn’t own the land, but he only pays about 400 baht ($11) in rent to his landlord.

So why does he now wish he lived somewhere else?

“If I could do it all over, I wouldn’t build on this land,” he told Asia Sentinel. “There is no security. I can get kicked off at any time.”

But he won’t go voluntarily. Somchai’s land, you see, is owned by the King.

In fact, most of Bangkok’s best real estate is owned by Thailand’s royal family through the Crown Property Bureau (CBP), which manages the monarchy’s land holdings. Somchai was able to build the house by bribing bureau officials a few decades ago. Now if he sells it, 75 percent of the money will go to the CPB, giving Somchai—who is retired with little savings—no incentive to leave.

 “The people around here all worry that they might be forced out, but we are too scared to talk about it,” he said.

That fear of upsetting the monarchy goes a long way to explain why so little has been written about the Crown Property Bureau. King Bhumibol Adulyadej’s golden robe shields the bureau from public criticism, allowing it to oversee a modern form of feudalism with little scrutiny.

More than any institution over the past hundred years, the CPB has shaped Bangkok and in recent years it has only picked up speed. Since recovering from huge debts incurred during the 1997 financial crisis, the CPB has aggressively sought to boost profits from its prime Bangkok land plots, often pushing out poorer shop owners and tenants that have lived on the land for generations.

The ceaseless development of huge malls, hotels and office buildings is rarely debated as the bureau avoids public criticism. When its officials do speak, they simply tout the king’s theory of a sufficiency economy, which preaches moderation, reasonableness and immunity. As the bureau has found, however, the best immunity from an economic downturn is to make sure its birthright properties are yielding large amounts of cash.

Claiming the land

Talk of that sufficiency economy has been replaced with a 13-billion-baht grand vision to turn famed Rajadamnoen Avenue in Bangkok’s historical district into a shopping street known as the “Champ Elysees of Asia” – that brand name ought to bring a smile to former Prime Minister Thaksin Shinawatra, who royalist coup leaders have blasted for failing to adhere to “sufficiency economy”. The bureau owns much of the area, and said it would not renew 137 contracts after they expired in 2004.

A new part of the CPB’s strategy was to turn much of its prime land into shopping centers and luxury housing. The CPB also signed a 30-year lease with Central Pattana to transform the World Trade Centre near the Chidlom Bangkok Transit System station into Central World Tower, an enormous hotel, office and shopping plaza in the heart of Bangkok. It also joined hands with Singaporean property firm CapitaLand to form a local subsidiary.

In addition to Central World, the CPB owns the land on which a host of the city’s largest malls are located, including MBK Shopping Center, Siam Center, and Siam Paragon. Coincidentally, Kempinski Hotels and Resorts, a Europe-based company majority-owned by the bureau, will manage the new luxury hotel being built next to the Paragon.

In recent years the bureau has also shocked longtime residents of various traditional marketplace districts by giving them eviction notices. Previously they had always felt safe living on “the king’s land.” In Chinatown, Thai-Chinese families that lived on CPB land on Soi Luenrit for three generations were kicked out so a property developer could put up a jarring shopping mall that is out of character with the historic neighborhood.

In Charoen Phon, residents were told to leave their shophouses to make way for a Tesco Lotus superstore. In Klong Thom, another Chinatown market, the bureau sent marching orders so a developer could build a new market that yielded higher rents. At the old fish market on Charoen Krung on the Chao Phraya River, traders fear that thousands of unskilled laborers will soon be out of work. The CPB wants to turn the traditional market into a 7-billion-baht high-rise hotel, condominium and commercial complex. The Silom Club, an 89-year-old sports club that some regard as a historical monument, will also be turned into a high-rise.

The results of the new strategy have paid off grandly. In 2003, the CPB recorded revenue of four billion baht. About 1.7 billion baht of that came from increased rents, shattering the 1 billion baht target Bureau director-general Chirayu Isarangkun na Ayutthaya had set four years earlier. In 2004, the bureau’s earnings reached five billion baht. Chirayu announced that the CPB was now healthier than before the 1997 crisis.

Bangkok’s tallest skyscraper

Image

The Crown owns vast tracts of Bangkok

But as the bureau’s ambitions grow, the more it is entering the public spotlight. While eviction is never easy, two high-profile spots are getting more press. At Bo Bae market, City Hall asked vendors to move off the street, where they had been blocking traffic, and into another building. Although the CPB is not evicting anyone, it owns the land and offered a concession to a developer to build a new market that was supposed to house the evicted Bo Bae vendors. Police were called in at one point when vendors refused to budge, and some have gone elsewhere. The developer, meanwhile, is upset that many in the market have not moved into the new building. The fight looks set to go on, as some vendors are standing firm and have vowed to go to jail if necessary.

A larger fight could potentially take place at the Suan Lum Night Bazaar, where reluctant vendors have been given until April to vacate what has quickly become one of the city’s surprising tourist attractions. Some see the battle over the largest plot of land in Bangkok’s central business district as a prime example of how the CPB is patient in getting what it wants.

In the 1950s, the Navy controlled this valuable plot of land next to Lumphini Park, but the military-run government of Sarit Thanarat transferred it to the Army after he suspected Naval officers of using the site to plot a coup against him. It then became home to the Armed Forces' Preparatory School, which opened in 1958.

In 1993, the CPB told the Supreme Command to move the school when its lease expired in 1999 in order to ease traffic congestion. Since then, plans for the 20.6-hectare site have been mired in controversy. Initially it was to become a 350-meter tall telecommunications tower 49 percent-owned by the bureau. Then it was set to become the headquarters for Siam Commercial Bank, in which the CPB has a controlling stake.

But all along, the military pushed for the land to become a public park in a city starved for green space. So when it emerged in 2000 that the bureau would turn the land into the Suan Lum Night Bazaar, a kitschy night market for tourists, many criticized the move. “The shopping mall is an eyesore and a disgrace,” said leaflets distributed at the site by military school alumni. “This is against a social contract made with pre-cadet students.”

The CPB responded in 2002 by saying the move was intended only to recoup some cash spent relocating the military school. In a statement reported at the time, the bureau said that long-term the land would be used for “educational, cultural and recreational purposes.”

Many suspected, however, that the bureau only wanted to lease the area to the night market in order to change the zoning from educational use to commercial and residential. That happened in 2002, when Thaksin’s government passed a law changing the status of the land plot. Indeed, by 2004 it was clear that the site was actually the pillar of the CPB's expansion plans.

Director-general Chirayu said the sprawling market would be turned into a 100-billion-baht commercial complex filled with offices, retail outlets, condominiums, entertainment venues and a hotel.

Last June, the bureau announced that it had short-listed Central Pattana Plc, Sansiri Plc and TCC Land as developers for the site. The company that operates Suan Lum also submitted a proposal to expand the site while retaining the popular Night Bazaar and its many vendors; that was rejected.

Central Pattana, which runs Central World Tower, has said it wants to redefine the city’s skyline by erecting Bangkok's tallest skyscraper on the site. The bureau is expected to announce the winner next April.

Royal cloak

Image

This popular night market was used as a ploy to change zoning regulations Despite any setbacks, what keeps the bureau strong over the long haul is the lack of critical public input or media coverage. Sure, some attacks do appear on certain web boards, but business editors in Bangkok know better than to write anything about the CPB for fear of upsetting the monarchy, and the bureau is happy to keep it that way.

This immunity was most apparent after Singapore-government run Temasek Holdings bought Shin Corp from Thaksin’s family in January 2006. The sale was the tipping point for Thaksin, who responded to mass protests by calling early elections. Months of deadlock ensued before the military, with the backing of the palace, pushed the twice-elected premier from office. Most criticism of the deal centered on the complicated shareholding structure Temasek used to purchase Shin in such a way that it could bypass foreign ownership restrictions.

Although this seems devious, the practice had been standard operating procedure in Thailand for decades before Thaksin’s political opponents seized on the issue.

It turns out that Kularb Kaew, one of the companies in the Temasek-led consortium, was acting as a nominee for Temasek. Shareholders of Kularb Kaew included Pong Sarasin, the brother of Arsa Sarasin, King Bhumibol’s principle private secretary. Kularb Kaew owns part of Cedar Holdings. The other owners of Cedar are Temasek and Siam Commercial Bank, in which the Crown Property Bureau has a controlling stake. SCB also played a crucial role advising and providing financial support for the deal.

Despite these interlocking interests, public anger was directed solely at Thaksin for “selling off” a valuable Thai national asset to foreigners. SCB and CPB were barely mentioned in the local press, even though they actively helped Temasek allegedly violate the law.

The issue gets even more bizarre. The currently military-appointed government recently proposed changes to the law to stop the longstanding practice of foreigners using nominees to buy Thai companies. The new Commerce Minister Krirkkrai Jirapaet had said the changes were necessary because the Shin purchase through nominees “led directly to the fall of a government”— the implication being that Thaksin himself was responsible for the army driving tanks into Bangkok and tearing up the Constitution.

The Crown Property Bureau also has longstanding ties to Singapore. Temasek owned a stake in SCB long before the Shin deal transpired, and Chirayu has said the state-owned investment vehicle has been a “good partner for years.”

Chumpol NaLamlieng, who served as president of Siam Cement for 12 years, is now chairman of SingTel, which is owned by Temasek and holds a 21 percent stake in Advanced Info Service, the market-leading telecommunications company founded by Thaksin and Shin Corp.

Since everyone knows everybody in this elite circle of friends, it came as a shock to many that Tongnoi Tongyai, the private secretary to Crown Prince Maha Vajiralongkorn, seemed set to join the Shin board and then was quickly disowned by the palace. The episode was certainly awkward. While the sequence of events remains opaque, some claim the prince gave the go-ahead for Tongnoi to join the board, which led to a public announcement, but King Bhumibol nixed the deal. Vajiralongkorn then issued a bizarre and shocking public statement lashing out against Tongnoi.

“HRH the Crown Prince's Personal Office considers MR Tongnoi Tongyai a perverse abuser of power for his own benefit,” the statement said. “His acts have misled the public and harmed HRH the Crown Prince's Personal Affairs Office, which thus finds itself obliged to publicize the facts of the matter.”

Of course, since he had offended the throne, Tongnoi was not able to defend himself.

The incident didn’t go away easily, however. Post Today, the Thai-language sister paper of the Bangkok Post, had to pull thousands of copies off the printer one recent night because a story quoting a leftist academic said the press should investigate why Tongnoi was dismissed in such a strange manner. Vajiralongkorn eventually called a group of reporters to the palace, where he reportedly asked them: “Do you have a problem with me?” Nobody spoke up.

Moral money-making

The Crown Property Bureau’s operations are important to scrutinize in light of the September 19 coup. It was argued that the coup was justified because Thaksin abused his powerful position to boost the financial gains of his many companies, intimidated the media into favorable reporting, and flaunted foreign ownership laws and tax loopholes in his family’s sale of Shin Corp.

These arguments certainly have merits, but they are dubious justifications for the palace-supported coup. The CPB is also guilty of what Thaksin is accused of. The bureau has used its powerful position for decades to acquire its massive landholdings, winning favorable business deals and paying no taxes. It intimidates the media by linking itself to the god-like Bhumibol, leaving newspapers afraid to touch it for fear of violating lese-majeste laws.

Some may argue that this doesn’t matter, as the Crown Property Bureau’s assets are technically national property. Yet if that’s the case, then it should shed its opaque “semi-private, semi-public” legal status and open its books for all to see where the money is going. As of now, all anyone has to go on is the words of executives and the general belief that they must be morally outstanding because of their closeness to the royal family.

This moral image is crucial to the success of the monarchy and its financial arm. Thaksin was certainly well loved in many parts of Thailand, but was reviled in Bangkok by royalist elites who eventually saw him as a rival to the all-powerful Bhumibol. This opened the door for attacks that questioned Thaksin’s moral ability to lead after his family sold Shin to Temasek.

Thaksin didn’t help his cause when he openly boasted that his critics were “jealous” of him. Enraged opponents called him greedy and said he didn’t have the kingly attributes to run the country.

Bhumibol, on the other hand, has adeptly crafted an image of a loving father who always has the country’s best interests at heart. He preaches sufficiency economy in an effort to distance the palace from the consumerism that it helps create through opening lavish malls on some of Bangkok’s best properties. You don’t see CPB using much of that land for green space to contemplate the serenity of nature.

If this image was not so carefully cultivated—if Bhumibol were a mere man with rather than a Buddhist dhamma king—then ordinary Thais might ask how it came to be that one family managed to grab so much land. They might even start to demand that they receive “fair value” and an opportunity to have a slice of the pie.

As long as the elderly Bhumibol is around, this is unlikely to happen. But the monarchy must ensure a smooth succession, otherwise the public may demand that some light finally shine on the bureau’s murky finances.

The Crown Property Bureau and How it Got That Way:

Centuries of Thai history have solidified into massive property ownership by the Thai monarchy

The history of the land owned by the Thai monarchy, and thus the Crown Property Bureau, can be traced as far back as the Buddhist kingdom of Sukothai in the 13th century, as traditionally in Thailand the king owns all the land.

In the 1800s, the monarchy set up the Privy Purse to use the profits from royal trading to pay the royal household, and it was later used to finance overseas education for royals. At least five percent of government revenues were transferred into the Privy Purse each year.  In 1890, it became the Privy Purse Bureau (PPB), acting as the monarchy’s investment arm, according to “A History of Thailand” by Chris Baker and Pasuk Phongpaichit.

The government funds flowing into the PPB increased to about 15 percent of state revenues and the money was used to invest in rice mills, property developments, shops and provincial markets.

“As roads were built the price of land increased, and this attracted the elite and the PPB to invest in land and land related business such as market places and row houses,” wrote Porphant Ouyyanont, an economist at Thammasat University, in an academic paper. “A survey of land prices in Bangkok in the first decade of the 20th century shows that the price of land was highest in the areas where roads were cut.”

During this time many Chinese families who prospered through royal patronage formed banks and shipping companies to export rice. But a series of poor harvests from 1904 to 1908 led to a financial crisis.

The monarchy, meanwhile, had set up Siam Commercial Bank with capital from government revenues, allowing it to survive that economic downturn. SCB extended loans to the Chinese merchants, who survived for a little while longer before the monarchy’s bank seized their assets when they defaulted on loans.

By 1910, the PPB was the country’s largest property owner, with about one-third of all land in central Bangkok. It held investments in railways, tramways, electricity, banking, cement, coal mining and steam navigation. In addition to reclaiming land through bad debts, it was able to occupy public land, and could directly buy land from whomever it wanted.

The bureau “always had the advantage in terms of obtaining information on road cutting, the price of land, the advantage of land location and so on,” wrote Porphant. “In this way the PPB acquired many plots of land established at good locations and commercial centres.”

Often the PPB would buy a plot of land to build houses, and then demand that the government build a road nearby to increase the prices of land and properties.

“The linking of Bangkok's administrative structure with royal interests produced both a physical and economic stamp on Bangkok which has had an enduring effect on the city's development,” Porphant wrote.

Absolute Monarchy Ends

Image

Some people are just born luckyAlthough in 1932 a coup ended the absolute monarchy, the putsch leaders wanted to keep the monarch in a symbolic position to help control the masses. In bargaining over his diminished role, King Prajadhipok, or Rama VII, at one point threatened to sell many royal possessions, including palaces, shrines and even the Emerald Buddha, which sits in the Grand Palace to this day.

The new government passed laws transferring control of the Privy Purse Bureau to the government, and subjecting the king to an inheritance tax. Unsurprisingly, King Prajadhipok failed to sign the legislation.

After the king abdicated in 1935, the Privy Purse was divided into Prajadhipok’s personal property and the Crown Property Bureau, which fell under the Ministry of Finance.  That year, a New York Times story said the king’s property yielded 500,000 pounds sterling annually, or about 6.5 million baht at the time. An unskilled laborer in Bangkok at the time would make about one baht for a day’s work, meaning he would have to work for 17,808 years to amass as much as the palace made in 12 months.

In 1936, the Royal Assets Structuring Act declared that all Crown Property Bureau income was tax exempt, although the king must still pay taxes on his personal fortune. “National assets are exempted from tax, so therefore the king’s assets are exempted, because they are the same as national assets,” section eight of the law says.

Thawiwong Thawalyasak, educated in Cambridge and a page to Rama VI, persuaded the government to recognize the palace’s ownership of property that fell into private hands after Prajadhipok was gone, according to Paul Handley’s book, “The King Never Smiles.” Thawalyasak made tens of thousands of residents on this land start paying rent to the Crown Property Bureau, and began evicting those who wouldn’t pay. He even tried to evict the parliament, but the lawmakers refused.

The consolidation of property under the CPB allowed the monarchy to slowly rebuild its fortune. By the 1960s, Siam Cement, the majority palace-owned industrial conglomerate, as well as Siam Commercial Bank (SCB), were growing with the strong economy.

The palace became the ideal joint venture partner. Its land was used to build major hotels like the Siam Intercontinental, the Erawan and the Dusit Thani. It held investments in insurance, agribusiness, tires, and textiles. By the late 1960s, Handley writes, the CPB had 500 staff members to oversee its investments and property holdings.

In 1970, Thawiwong died, and the ensuing decade saw failed investments like Air Siam, an airline meant to rival Thai Airways, and other challenges to the CPB empire.

In one case noted by Handley, the bureau ordered slum dwellers at Mu Ban Thaepprathan to vacate the premises so it could be commercially developed. “The very public fight against eviction generated comparisons between the CPB and officials who evicted poor farmers from degraded state forests,” he wrote. “When student activists got involved and likened the palace to a landowning feudalist, the embarrassed palace halted the project.”

In the late 1970s, the Communist Party of Thailand had launched an offensive against the monarchy, criticizing its extravagance. At one point, the communists broadcast comments saying: “The more powerful the monarch becomes, the poorer the people become, and the more the monarch’s income from land rental, his shares in commercial companies and his bank savings increase.”

Prem brings stability

By the early 1980s, the communists had suffered a series of setbacks, and many took up an amnesty offered by former army chief Prime Minister Prem Tinsulanonda, who now heads Bhumibol’s 19-member privy council. Under Prem’s watchful eye, royal projects funded by CPB revenues greatly expanded, along with the enforcement of lese-majeste laws, ensuring that criticism of the palace came to a halt.

In 1988, the CPB held stakes in about 40 companies, and the stock exchange was booming. Its holdings in Siam Cement and SCB alone were worth more than $600 million, not to mention the value of its 40,000 acres of land, including 13,300 in Bangkok.

The bureau’s burgeoning wealth put it on the radar screen of the foreign press, and the Far Eastern Economic Review wrote a cover story on the CPB in June 1988 called “The King’s Conglomerate.” In it, Chirayu Isarangkun Na Ayuthaya, the longstanding CPB director who had only been on the job a few months, said the bureau is neither public nor private.

“We are a little of both,” he told the magazine. “Our charter appears to highlight the image of a public entity. But we also enjoy flexibility similar to [but not totally on a par with] a private enterprise.”

The article added that the CPB’s operations are “supervised” by a five-man committee headed by the finance minister. The king is supposed to be consulted on important matters, the article says, “but actual royal involvement is rare.”

The story made no mention of the hybrid company’s unfair advantages, and didn’t question the legal gray area the CPB operates in. For instance, if the CPB gets so many state privileges and operates under the Ministry of Finance, why is its annual report only for the eyes of the king?

A former Finance Ministry official familiar with budgets says that although the government technically runs the CPB, in reality the decisions are made by the monarchy.

“Actually the king is supposed to play a symbolic role,” he told Asia Sentinel. “But this is Thailand.”

The king’s personal fortune sits with the Privy Purse. Although the palace gets a stipend from CPB revenues, the rest of the money goes to support the institution of the monarchy, including the many royal projects and propaganda activities. But the details of who gets what are not for public consumption.

Handley argues that the royal projects, along with low rents and media campaigns, were an orchestrated effort by the palace to win political support for the throne. This could be seen from the many villagers who petitioned the king directly to help them.

“Details about these petition cases remain a closely held secret of the palace, with the secrecy enhancing the very mystery of the king’s wisdom and ability to improve the lives of his subjects,” he writes. “The cases divulged a greater truth, though: the more the king’s works were advertised by Prem at the expense of the government’s, the more the people looked beyond the government to their king for escape from misery.” Without funds from the CPB, this would be impossible.

Rapid expansion

Things only got better for the palace business conglomerate in the early 1990s. Chirayu aggressively sought deals with developers that would give the CPB a return of share rentals and equity. It put more money into small restaurants, luxury condominiums, shopping complexes, hotels and office space. The new leases substantially increased CPB income and the king’s personal wealth. In 1990, Handley writes, dividends to the Mahidol family (Bhumibol was the son of Prince Mahidol of Songkhla and the grandson of King Chulalongkorn) reached US$30 to $40 million per year tax-free, and the holdings of the royal family were worth more than $1 billion. Estimates now put Bhumibol’s personal wealth at between $2 billion and $8 billion.

The crown also had big plans. Its media arm sought to buy Thai-language dailies and a television station, as well as build a film production studio and tourist attraction to rival Universal Studios. The CPB had subsidiaries involved in advertising, cable television, financial services, construction, cinemas, insurance, hospitals, and petrochemicals, among many others.

During this time, a few questionable deals surfaced. In 1996, the government investigated when Siam TV & Commercial, a joint venture between the CPB and SCB, won a concession to run a commercial television station, iTV. The company won the 30-year contract with an offer of 120 billion baht in royalties, even though a rival company offered royalties of 625 billion baht. The results of the investigation were never reported.

Also in 1996, the CPB sought to acquire a 15 percent stake in rehabilitated First Bangkok City Bank from the central bank for 8.50 baht a share, even though the market valued them at 22.50 baht per share. The deal was arranged by Finance Minister Surakiart Sathirathai, who is married to Suthawan Sathirathai, a niece of Queen Sirikit. The successor for Surakiart, who also served in Thaksin’s administration, canceled the order, saying “the fund stands to lose too much.”

Crash

When the government floated the baht on July 2, 1997, the Crown Property Bureau was devastated. Its media arm, already struggling before the crash, quickly went bankrupt. Siam Cement and SCB were also shaken, and Chirayu took over as board chairman of both companies. Siam Cement had not hedged US$4.2 billion in foreign debts, resulting in a $1.2 billion foreign exchange loss in 1997. Siam Commercial Bank was worse off, as loan collateral didn’t even cover half of the loans given out. The bureau’s total liabilities hit six billion baht.

By 1998, Chirayu said it was time to “bite the bullet.” The CPB announced that it was cutting 143 billion baht worth of new projects and adopting the king’s “sufficiency economy” approach. It would now focus on its core investments in Siam Cement and SCB, as well as try to extract more money from its leases.

“We're told not to be greedy,” Chirayu told reporters. “Our problem in the past when the economy was in good shape was that we received many investment invitations and we agreed. From now on, we need to be careful and our investment policy will hinge on the macroeconomic prospects. We must not invest in risky projects.”

Getting a “fair return”

The bureau received a large amount of help post-crisis, although its earnings reportedly dropped 80 percent in 1998. Honda Motor raised capital in its struggling local unit partially owned by the CPB and offered to sell the stake back to the bureau at book value in 10 years. At the same time, Chirayu insisted that the government help bail out SCB, even though it was strictly a commercial enterprise.

The government proceeded to inject $1 billion to bail out SCB and agreed to sell back its stake to the bureau in the coming years. The CPB did so in 2004 when it traded a piece of land near Victory Monument to the Finance Ministry, which technically oversees the bureau, for a 13 percent stake in SCB.

After the financial crisis, Thaksin also helped the palace out when he paid $60 million for SCB’s stake in iTV, which for a brief period was the only independent television station in Thailand. “With little likelihood of ever recovering the investment, Thaksin was effectively bailing out the bank and the palace,” Handley wrote.

The CPB also set a goal in 2000 to increase revenue from rents from 300 million baht per year to one billion baht by 2005. It would raise rents across the board, including for the cash-strapped government agencies that supposedly controlled the bureau.

“We will focus on both areas and try to maximize benefits from our assets,” Chirayu said. “We also have no plan to invest in any new projects.”

Having learned its lesson, the CPB restructured in 2001. Chirayu announced that the CPB would shed its “antiquated” way of doing business to get a “fair return” on its holdings. The bureau created CPB Equity to look after its equity investments and joint ventures, and CPB Property to look after its land holdings.

Things suddenly got much better the following year, and the halt on investments was lifted. Helped by a team that prominently featured American business consultant Michael David Selby, the Crown Property Bureau announced that it repaid its debts from the financial crisis and was “now financially strong,” according to executive Yos Euarchukiati.

In fact, its plans, as the ensuing years have shown, were bigger than ever.

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2/16/2007

Thailand's new economic logic

Thailand's new economic logic

by Shawn W Crispin

BANGKOK - Thai Prime Minister Surayud Chulanont says his interim government has launched a "year of great reforms", with changes aimed at putting the economy on a more sustainable long-term track. Many foreign investors, on the other hand, are howling that recent government policies are woefully out of step with market mechanisms and, if not reversed, could eventually cause Thailand's economic demise.

So who's right? In an effort to erase ousted prime minister Thaksin Shinawatra's legacy, Thailand's new military-appointed government is indeed leading the country in a fundamentally different economic direction. Foreign investors and the market-fundamentalist Western media have roundly blasted Bangkok's recent decisions to impose capital controls, limit foreign ownership for certain service-sector investments, and broadly implement King Bhumibol Adulyadej's untested "sufficiency economy" concept.

Many investors voted with their feet when the capital controls were first imposed in mid-December, driving down the Thai bourse 18% in a single day. But after equity investors were exempted from the controls, the stock market has recovered most of those losses, and now big foreign hedge funds have flocked to Bangkok to seek out potential opportunities amid the policy confusion.

Meanwhile, the Thai currency, the baht, has continued to appreciate against the US dollar, trading at a recent high of about 33 to the greenback in offshore markets despite the capital controls on currency transactions. After introducing widely perceived nationalistic amendments to the Foreign Business Act in early January, major export-oriented multinationals, including China's Huawei, Japan's Panasonic and the United States' Ford, have since made major new commitments to their Thailand-based operations.

If Thailand is headed for economic doom, it's not yet apparent. Rather, a grudging consensus is emerging among more seasoned Thai observers that there is a technocratic logic to the government's thinking. Although not admitted publicly, the capital controls policy was likely designed as preemptive action against an anticipated major global economic shift: the steep and long-term decline of the US dollar and economy.

The Bank of Thailand is not the region's only central bank grappling with the financial wisdom of accumulating ever more US-dollar-denominated assets. For China, which has accumulated more than US$1 trillion in foreign denominated reserves, or nearly 42% of its gross domestic product (GDP), through years of runaway trade surpluses is actively pursuing new ways to hedge its massive stock of depreciating dollars.

Albeit on a smaller scale, it's an equally important issue for the region's other export-geared, dollar-earning economies, including Malaysia, Singapore and Thailand, where respectively exports account for 108%, 197% and 70% of GDP. That Thailand is now partially turning away from the openness that previously fueled its economic boom, bust, and recent strong recovery is particularly significant. And it could yet herald a broad regional move away from reliance on Western capital and export markets and toward more inward-looking and even protectionist economic strategies.

Historical vanguard
If so, it wouldn't mark the first time that Thailand was on the vanguard of a sweeping regional economic trend. Throughout the 1980s and 1990s, Thailand was at the front edge of Asia's export-driven economic emergence. Then, Japanese multinational corporations rapidly transformed Thailand's backwater economy into an export-fueled global powerhouse. Thailand also famously led the region into financial crisis in 1997, when foreign investors perceived cracks in the debt-driven facade and underscored the economic risks to developing economies of unregulated short-term capital flows.

Thailand's new direction is partially a nationalistic reaction to that bitter experience, driven a decade later by traditional elites now represented in government. The prevailing confusion surrounding the sudden implementation of capital controls and anti-foreign amendments to the Foreign Business Act, followed by earnest assurances by senior officials that Thailand will continue to engage with the global economy, has purposefully obfuscated the government's inward-looking intentions.

The Bank of Thailand has somewhat disingenuously maintained that the motivation for imposing capital controls was to protect Thai exporters from an appreciating baht. Yet Thai exports surged 17% last year, higher than consensus projections and in spite of a 15% appreciation of the baht against the dollar. The more complicated explanation for the central bank's move is precisely the opposite: that Thailand is now exporting too much, not too little.

Respected Thai economist Supavud Saicheua - on all accounts a dedicated free marketeer - makes that contrarian argument in an exceptional new research report, in which he argues that Thailand can no longer find efficient ways to allocate all of the US dollars it is earning through record levels of exports. He argues that with exports now accounting for 70% of GDP - more than double China's 34% ratio, and well over the world 24% average - Thailand is long overdue for a structural economic adjustment.

To be sure, buoyant exports sparked economic growth and helped to restore the national accounts after the 1997 financial crisis, allowing Thailand to pay back the International Monetary Fund two years ahead of schedule, and shave external debt down from a crisis high ratio of 90% of GDP to its current level of about 34%.

With those external bills now paid, and the previous government's various import-intensive infrastructure spending plans put on ice, exports are now arguably generating more dollars than the Thai economy can efficiently absorb - similar to the inrush of foreign capital that inflated Thailand's 1997 bubble, yet different in that the foreign-denominated flows are being earned rather than borrowed.

Equitable economics
Enter King Bhumibol's "sufficiency economy" concept into Thailand's new policy mix. The government's precise ideas for implementing the revered monarch's widely misunderstood philosophy are now starting to come into sharper focus. And they appear to jibe with the wider academic literature dedicated to sustainable economic development, which contrary to Western capitalism's drive for short-term maximum profits, strive for the long-term optimal use of resources.

It's literature that's just now beginning to get a serious second reading, with the emerging global consensus surrounding the risks of greenhouse-gas-driven global warming, and related realizations that multinational manufacturers' operations often recklessly degrade the natural environment of less litigious and lightly regulated developing countries. [1]

"The sufficiency-economy philosophy is a Thai model for sustainability, the importance of which is only now becoming recognized around the world," Surayud said last week to a meeting of the Joint Foreign Chambers of Commerce. "As an early adopter of a sustainable approach to development, Thailand should, I believe, be praised, for it is on a path down which every country or company will have to travel sooner rather than later."

This week, Surayud called on Thai industrialists to begin implementing the monarch's concept, namely through risk-management tools that allow for greater flexibility and minimize debts, greater investment in human resources and research and development, and setting business targets focused more on long-term rather than short-term returns. The royalist premier also suggested that - contrary to the global capitalist order - Thai factory owners should refrain from taking advantage of consumers, labor, or material suppliers.

Significantly, Surayud's government is re-exerting sovereignty over Thailand's future economic direction from a position of economic and financial strength - providing crucial insulation to a market backlash against its contrarian philosophy. While imposing capital controls on certain types of foreign inflows, the Bank of Thailand in January more quietly eased longtime restrictions on Thai nationals investing abroad, allowing mutual funds and securities companies to invest as much as $50 million offshore without central-bank permission. Depending on the eventual implementation, Thailand could soon emerge as a net exporter, rather than net importer, of capital.

At the same time, the combination of capital controls, amendments to the Foreign Business Act, and the rescinding of government concessions to Thaksin's publicly listed companies will all inevitably spook certain investors and lead to less short-term capital inflow. It's clearly a risk a more discerning Thailand is willing to take in the pursuit of more sustainable growth and protection against foreigners exporting future economic volatility from Western to Thai shores.

For better or worse, Thailand's emerging economic model is one many regional governments will likely give a long, hard look in the months and years to come.

Note 1. Thailand's predominantly foreign-invested electronics sector contributes a substantial 35% to total national exports, but independent studies have found that few properly dispose of their toxic waste. As of 2001, less than 10% of the hazardous industrial waste produced in Thailand was properly stabilized, processed and disposed of.

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Thaksin's loss, US's gain

Thaksin's loss, US's gain

by Shawn W Crispin

BANGKOK - Thailand's unfolding political drama pitting exiled former prime minister Thaksin Shinawatra against the military-run Council for National Security (CNS) that ousted him has cast the United States in an awkward but familiar position, where realpolitik imperatives now, as historically, have trumped Washington's stated public position of non-support to governments that seize power through anti-democratic means.

When coup makers ousted Thaksin last September 19, Washington was legally bound to suspend about US$14 million in military-to-military aid earmarked for Thailand. The US State Department on cue publicly admonished the CNS for seizing power through undemocratic means and urged a quick return to democracy, which the junta has promised for this year.

That's still the State Department's public line, but President George W Bush and senior US envoys in Bangkok have signaled clearly to the junta that Washington has scant intention of downgrading bilateral relations because of the coup.

In many ways, Thailand's coup has served US regional interests well. Thailand is historically Washington's most trusted strategic ally in Southeast Asia, and US officials are leveraging their senior military contacts now in government in a bid to counterbalance China's expanding regional influence. While the US maintained strong ties with Thaksin's authoritarian administration, particularly through cooperation on counter-terrorism issues, there were concurrent concerns in Washington that the ethnically Chinese Thaksin [1] was gradually moving Thailand closer to Beijing at the United States' strategic expense.

Those concerns would help to explain why Bush received coolly last April Thaksin's pleading personal letter, where the then-embattled premier claimed "anti-democratic" forces were attempting to knock him from power through "extra-constitutional" means. Of course those anti-democratic forces - the royalist military officials who spearheaded the coup - were and remain some of the United States' best in-country contacts. And since Thaksin's ouster, to the deposed premier's apparent chagrin, the US has kept close working tabs with the junta and its interim civilian administration.

Importantly, the suspension of military aid has so far been more symbolic then substantive. As required by law, the US has suspended its International Education and Training Program for Thai military officials, but the US Defense Department has conspicuously tarried on decisions whether to scrap a joint memorandum on military-to-military logistics, an arms-procurement program that provides cheap loans to the Thai military when purchasing US hardware, the United States' continued use of U-Tapao Air Force Base, and the annual Cobra Gold joint military exercises.

"The official US policy is mandatory, but we sense the [US] Defense Department is trying to work its way around the measures," said an adviser to the Thai prime minister. "Washington understands fully well that the military is in the driver's seat and China is waiting in the wings." To underscore that point, he said, coup leader and army commander General Sonthi Boonyaratklin made a recent trip to Beijing for undisclosed reasons.

Moreover, the sanctions notably did not require the US to sever funding for the secretive Counter-Terrorism Intelligence Center (CTIC), established jointly in 2001 between the US Central Intelligence Agency (CIA) and select Thai intelligence officials. As of 2002, the US was providing annually between $10 million and $15 million as well as advanced surveillance equipment to the CTIC, which is tasked with tracking and hunting down regional Muslim terror suspects.

According to the Washington Post, Thailand also hosted one of the CIA's now-notorious secret prisons, where Muslim terror suspects were held without trial and at times administered interrogation techniques that rights groups say are tantamount to torture. Thaksin had publicly denied the existence of any CIA prison on Thai soil, but because the US ally is not a signatory to either the United Nations Convention Against Torture or the International Criminal Court, which hypothetically could attempt to try US soldiers and CIA agents for war crimes, European diplomats contend that Thailand would be a legally logical and secure location for such a facility. (US officials in Bangkok have consistently declined comment on the secret-prison allegations.)

That said, senior Thai police counter-terrorism officials have openly carped that US Federal Bureau of Investigation terror-related sting operations have frequently impinged on Thai sovereignty. Despite these official complaints, and Thaksin's push for a highly unpopular free-trade agreement with the US, the anti-government demonstrations that paved the way for his military ouster notably never took on an anti-US bent - as did, for instance, the popular uprising of 1973 that led to the downfall of the corrupt and heavy-handed regime of then-US-backed Field Marshals Thanom Kittikachorn and Praphat Charusathien.

Xenophobic energies
The anti-Thaksin movement concentrated its xenophobic energies instead on Singapore, which through its state-run investment vehicle Temasek purchased Thaksin's family-held Shin Corporation in a controversial $1.9 billion transaction only months before his ouster. The CNS has since inflamed still-simmering popular resentments against Singapore, accusing the island state of using the satellite it purchased from Thaksin to tap the mobile-telephone conversations of senior military officials.

That the CNS has played its foreign-bogey card against Singapore rather than the US underscores the strong personal connections top coup makers have with senior US political and military officials. While Thaksin pays US lobbyists to plead his case on Capitol Hill, in Bangkok US officials are leveraging their military contacts to score diplomatic points over China, which has pursued its diplomacy toward Thailand more through political and economic rather than military channels.

The US military jump-started Thailand's move toward capitalism, pumping more than $2.5 billion between 1951 and 1975 in military-related aid into the country to develop a regional bulwark against the spread of communism. During those decades of authoritarian military rule, the US often assisted in suppressing government opponents, including pro-democracy activists, and the CIA frequently meddled in Thailand's domestic politics. [2]

Fast-forward to the present, and it's no surprise when a Bangkok-based US diplomat confirms that US-Thai military-to-military relations have remained firmly "on track" despite the suspension in aid. Noted one longtime Thai observer: "The US is saying to itself: they may be generals, but they're our generals."

Indeed, current premier and former army commander General Surayud Chulanont received military-college training in the US and his presence in senior military leadership positions was, according to one US diplomat, a factor in Washington's 2003 decision to elevate Thailand to the status of a major non-North Atlantic Treaty Organization ally, a distinction that paved the way for the country to purchase state-of-the-art US military equipment, including, presumably, the helicopters now circling Bangkok on national-security patrols.

Former intelligence chief, new constitution-drafting chairman and pivotal behind-the-scenes coup maker Prasong Soonsiri was trained and some say retained for a stint in the 1980s by the CIA, and is now known to have close personal relations with US Ambassador to Thailand Ralph "Skip" Boyce. The two developed their friendship during the Thai-speaking Boyce's previous two postings to Thailand.

Most significant, perhaps, former prime minister and current Chief Privy Councilor Prem Tinsulanonda, seen by many as the mastermind behind last year's coup, has strong Cold War ties to several senior US Republican Party operators. During a private dinner in 2000 sponsored by the Johns Hopkins University School of Advanced International Studies, in a speech Prem voiced his "heartfelt" appreciation to Paul Wolfowitz, then the school's dean, for his role in assisting Thailand after Vietnamese communist troops invaded neighboring Cambodia in 1979 and threatened to continue their march into Thailand.

While publicly condemning the Khmer Rouge for their atrocities, the US simultaneously and clandestinely commenced funneling so-called "non-lethal" supplies, including radio equipment, to the murderous Maoist group to help it hold the line against Vietnam on Thailand's eastern border. It was a controversial decision that re-cemented bilateral ties after a rocky period when the US abruptly pulled out of Thailand after the Vietnam War - lasting ties that have influenced Washington's decision concerning which side to take during Thailand's current political standoff.

Repeating history
To some, the US has today made a similarly controversial policy position in supporting the coup makers who ousted a twice democratically elected leader. While publicly lamenting Thailand's retreat from democracy, and more recently criticizing protectionist economic policies that threaten certain US business interests, in private US officials have persistently reaffirmed to Thailand's ruling generals Washington's long-term commitment to keeping bilateral ties on track.

During last November's Asia-Pacific Economic Cooperation meeting in Hanoi, Bush met with Surayud on the sidelines and conveyed that Washington "understood" Thailand's political situation. The following month, his father, former president George H W Bush, paid a personal private visit to His Majesty King Bhumibol Adulyadej - widely viewed in Thailand as a symbolic endorsement of the royalist coup.

For Washington, last year's military takeover has presented a unique opportunity to steal a march from China, which through soft economic power has seen Beijing consolidate strong alliances in neighboring Myanmar, Cambodia and Laos. It is therefore no coincidence that Thaksin, spurned by what he perceived to be his former US ally, has chosen to launch his anti-junta propaganda campaign, in attempted divide-and-rule fashion, from China and Singapore.

In recent interviews with the mainstream Western media, Thaksin has endeavored - doubtless at the advice of his Washington-based private lobbyists and public relations consultants who arranged the appointments - to portray himself poignantly as a popularly elected leader who has been ousted through illegal means.

International publications, including those previously sharply critical of Thaksin's style of governance, have dutifully played up those themes - though at the time of the coup Thaksin was no longer legally Thailand's elected leader after annulled democratic elections in April, and in spite of his illiberal record of promoting extrajudicial killings of drug suspects and disappearances of Muslim militant suspects, and his systematic and punitive suppression of press freedom.

More seasoned observers draw parallels between Thaksin's current propaganda pitch with former Thai fascist leader Field Marshal Phibun Songkhram, who from exile in the 1940s criticized the monarchy and portrayed himself as a man of the people, and who on retaking power years later presided over a hard-knuckled, illiberal and corrupt military-led regime that at times ran counter to Washington's wishes. [3] Washington, it appears, has come to a similar conclusion about Thaksin's usefulness to the United States' future interests.

One well-placed source close to Ambassador Boyce says that the US no longer views Thaksin as a "political factor" and that to date Washington believes the junta is doing a "satisfactory" job of administering the country. Should Boyce be proved wrong and one day Thaksin return to political prominence - perhaps hypothetically after the passing of King Bhumibol - the US can probably count on a piqued Thaksin avenging the perceived snub by moving Thailand closer into China's regional orbit.

It's a calculated risk Washington is clearly willing to take and, at least for now, Thaksin's loss is the United States' gain.

Notes
1. Although Thaksin pledged allegiance to his US roots during a visit to his alma mater Sam Houston State University, where he joked that Texas was his second home, many perceived his pilgrimage to the grave markers of his ancestors in China's Fujian province as the more meaningful personal connection.

2. See Daniel Fineman's excellent A Special Relationship: The United States and Military Government in Thailand, 1947-1958, University of Hawaii Press, 1997.

3. When Phibun was subsequently ousted in an internal 1957 putsch led by Field Marshal Sarit Thanarat, who more than Phibun favored the United State's foreign-investment-led development model, the US State Department issued a statement three days later affirming the military coup would not alter bilateral relations.

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1/09/2007

Lighten up on govt

Lighten up on govt

email:postbag@bangkokpost.co.th

The last two public opinion polls and several of your editorials would seem to indicate that people are increasingly unhappy with the interim government because it is too slow in producing results.

After many years of listening to Mr Thaksin, I really distrust grandiose promises of instant results and I am content to watch this government work at a more calm, steady, thoughtful, legalistic and moderate pace as it methodically and systematically investigates and gathers evidence to present and prosecute corruption cases (among other things). Just the fact that this government is seriously engaged in building numerous corruption cases is a huge improvement over the lip-service Mr Thaksin used to give this subject.

I think we owe it to the members of this government to show a little more patience, understanding and yes, gratitude, for taking on what appears to be a dangerous and pretty much thankless task, instead of constantly criticising them for moving too slowly and trying to pressure them into taking some precipitous action that we may all come to regret. Solid accomplishments and meaningful change take time and I think we at least owe them that.

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Junta faces charges they are too gentlemanly for their own good

Analysis: Junta faces charges they are too gentlemanly for their own good

Are the CNS and the government tough enough to ensure stability in their administration?

by Nattaya Chetchotiros

The Surayud government and Council for National Security (CNS) are caught between a rock and a hard place. The New Year's Eve bombings have highlighted this fact. The dilemma for the coup-makers and the interim government is how tough they should be with the so-called "old power" network. If they are ruthless and uproot elements associated with former prime minister Thaksin Shinawatra, they risk being labelled as power-hungry and unfair.

Should they do this in a more compromising, gentlemanly fashion - which apparently is the path both the Surayud government and CNS have been pursuing - then there is the greater risk that their stability will be rocked, which is the case at present.

It has been almost four months since the Sept 19 military coup. So far, the interim government and CNS have not effectively touched the "old power" network which they allege was corrupt. The "clique" connotes not only Mr Thaksin and his family but a whole network of militarymen, policemen, bureaucrats, business and grassroots people who benefited from the Thaksin administration's populist policies.

Somjai Phagaphasvivat, from Thammasat University's Faculty of Political Science, says that unless the CNS and the government get tough with these remnants of old power, they are unlikely to get their job done.

He says there are people who gained some form of benefit from the past administration who have managed to stay on in the current one, as well as in the CNS. Their presence makes it difficult for the coup-makers or the government to come up with evidence against the Thaksin government or any effective clean-up measures, as they are afraid they would be dragged into the net too.

Besides, both the government and CNS are under pressure to be fair to the old power. They have chosen to stick to the law and follow a lawful and transparent - albeit slow - process of investigating corruption allegations instead of seizing the assets first, which was what every coup-maker did in the past. The lenient approach, however, has given room for the old power to do some manipulative work to destabilise the government, Mr Somjai said.

To cope with the problem at hand, he suggests that the CNS and government toughen themselves. They must be goal-oriented. They must be decisive. If that means they must change their personnel, so be it.

"Although [CNS chairman] Gen Sonthi insists that all the eight leading members of the CNS are united, I believe this will remain so for no more than two months. They will face increasing pressure from the international community. They will face a crisis of confidence. They will be forced to make some kind of change," Mr Somjai said.

As for the government, the political scientist suggests that it rethink and, if possible, immediately overhaul its communications strategy, especially its use of the mass media. Unlike the media-savvy Thaksin government, the Surayud team has no edge in this area. Even the government's spokesman is not well-versed in politics or capable of explaining anything of meaning to the public.

Mr Somjai added that the government does not seem to have any long-term plan or strategy when it comes to politics, either. At present, it seems to be dealing with each problem as it arrives. The cabinet may be able to boast of their overall qualities as good, decent people, but it suffers terribly from being collectively dull as well.

In short, when it comes to political and communications strategy, the Surayud government is outclassed by its predecessor, he says. "It may be the case that the situation at present is too vile for a good person like Gen Surayud. By their nature, the government and CNS may not be suitable for the situation and that is why they have not succeeded in managing the administrative power they have seized," Mr Somjai said.

Chaiyan Chaiyaporn, a political science lecturer at Chulalongkorn University, however, does not believe the government or CNS can get tough and rough things out the way coup-makers of the past might have done. Considering the coup's lack of legitimacy in the eyes of the international community, and the fact that the CNS and government would not want to turn 16 million people who voted for Mr Thaksin in the past into their enemy, the reconciliatory approach they have taken was their only option.

He agreed with Mr Somjai that this choice has its setbacks in the bureaucratic foot-dragging, thus causing delays in exposing alleged irregularities of the past government. The slowness may upset the public, which is keenly waiting for results of the investigations.

Mr Chaiyan believes that the New Year's Eve bombs in Bangkok has diverted the public's attention from the important matter at hand, which is the ongoing corruption investigation. To regain their footing, the lecturer suggests that the government and CNS take everyone who has any connections with Mr Thaksin off the Bangkok bomb investigation team - be they deputy national police chief Pol Gen Achiravit Supanpesat, assistant national police chief Pol Lt-Gen Jongrak Chuthanont or Pol Lt-Gen Panupong Singhara na Ayudhya who has been assigned to head the investigation.

"These officers are known to be close to Thaksin but the government has kept them in their jobs. The result is we haven't seen any solid evidence or much progress in the case, which further discredits the government," said Mr Chaiyan.

Gen Winai Phattiyakul, defence permanent secretary and secretary-general of the CNS, said that Prime Minister Surayud's interviews suggest that he has given a deadline for the national police chief Kowit Wattana to come up with answers regarding the eight blasts in Bangkok. If the deadline lapses and nothing comes up, the CNS will miss one member, but that wouldn't be a problem.

"Our friendship remains the same. The question of professional efficiency is not related to that," Gen Winai said. He admitted that both the government and CNS are not yet on top of the country's political developments. He also conceded that they will need to adjust their planning and communications.

A source close to PM Surayud revealed that the government is perceived as being weak because it can't put its own people in key offices, especially in the national police force, which is seen as a seat of power of the ousted prime minister who was a former policeman.

According to the source, calls were made to PM Surayud to fire the police chief. But then again, the government has its hands tied in its attempt to do things properly and not give the impression that it was unfairly bent on firing Mr Thaksin's people.

The problem is the "old power" clique has at their disposal an almost limitless amount of money. From now until June, when the case against the Thai Rak Thai party will be heard, the money and old power network can cause a lot of chaos. The government and CNS will need to make a quick decision - whether they want to get tough, or continue to act the gentleman.

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