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That $1.4 billion is ours! Corruption and Democracy in Thailand

February 26, 2010

Former Thai PM Thaksin Shinawatra is at the centre of what is undoubtedly one of the biggest and most important cases of political corruption that the world has ever seen. He and his family have been accused of becoming suspiciously rich during his tenure as PM.

The straw that broke the camel’s back was when he sold his 49.6% stake in  Shin Corp. (the country’s telecom giant) to the Singapore government’s investment arm (Temasek Holdings). So a foreign entity now has a very large stake in a the crown jewel of Thai companies. Then, to top it all off, Thaksin and his family did not pay a penny in capital gains taxes on this $1.87 billion deal. Not illegal, just unethical. And not setting a very good standard as leader. (This is the pot calling the kettle black considering our  poor regulation of banking bonuses.) Here is an interesting discussion of the issue on the Time Magazine site.

Well, today was judgment day. Out of Thaksin’s US$2.3 billion of frozen assets, $1.4 billion was confiscated by the Thai Supreme Court. Here is The Guardian’s summary of the court’s decision:

The court ruled that Thaksin illegally concealed his ownership of stock in Shin Corp, the family’s telecommunications empire, and abused his authority by crafting government policies to benefit Shin Corp’s businesses.

The court addressed five cases of alleged “policy corruption” and ruled that in four of the five Thaksin was guilty of abusing his authority during his 2001-2006 tenure as prime minister.

One of the most prominent cases involved a $127m low-interest government loan to Burma in 2004, which the court ruled Thaksin had endorsed with the intention of securing its purchase of satellite services from Shin Satellite, then controlled by Thaksin’s family.

Thaksin’s government billed the loan as a way to help the impoverished military-run country finance telecommunications projects.

The court ruled that Thaksin’s government set domestic satellite policies that benefited his businesses.

It also ruled that a policy to convert part of a telecommunications concession fee into an excise tax favoured Shin Corp at the expense of the state.

Now you would think that Thaksin’s efforts to escape the courts would earn him the wrath of his people, but no! He has a massive following and remains hugely popular in rural areas (mostly the North). His supporters are still extremely loyal to him because of the successful and popular policies that he put in place to reduce poverty. These included “the country’s first universal healthcare program, the 30-baht scheme [a health insurance program], as well as a controversial but highly popular drug suppression campaign.”

His supporters are crying after today’s announcement. Can you imagine weeping openly in public if this had happened to Stephen Harper or Gordon Brown or Barack Obama? Ok, maybe Barack Obama.

The man is invincible. And it’s easy to see why…. he is the rare politician who has given voice to the poor and then implemented real policy changes to make their lives better. From their perspective, he was actually able to make a substantive difference to their quality of life– that makes him worth fighting for.

Still, what does all of this mean for the state of Thai democracy? Here is a quick summary of the mess that the country is in:

Mr. Thaksin sold Shin to the Singaporean holding company Temasek in January 2006, a transaction that evaded taxes and aroused anger and prompted street demonstrations that set the stage for the coup nine months later.

When the generals relinquished power in a new election a little more than a year later, a party backing Mr. Thaksin was overwhelmingly elected.

Protests resumed, and in August 2008, thousands of anti-Thaksin demonstrators, known as yellow shirts, barricaded the prime minister’s compound, setting up a tent city and demanding that the government be dissolved. In late November they took over Bangkok’s two airports for a week, stranding thousands of passengers.

They ended their protests in December when a court found the pro-Thaksin governing party guilty of electoral fraud, forcing its dissolution. The current government, led by Prime Minister Abhisit Vejjajiva, took office in a parliamentary vote.

Since then, it has been the pro- Thaksin protesters who have been demanding the dissolution of what they call an unelected government.

I guess this is what they mean when they say that new democracies experience some pretty substantial growing pains. This is a polarizing divide, largely along class lines– and it’s only going to get worse. The demonstrations have gotten violent before and this judgment is only going to add fuel to the fire. Thaksin’s red shirt movement is expanding and restructuring.

It seems like Thai democracy has been able to withstand these destabilizing moments in the past because of the military and the monarchy– these two institutions have provided the necessary anchor to prevent things from getting out of hand.

This makes me look at both of these institutions in a new light– particularly the military– as a stabilizing force rather than a destabilizing force as has often been the case in Africa (for example, see the post on Guinea). It also makes me wonder if the Queen (and the monarchy) might be worth keeping for that reason… as a form of destabilization insurance.

All in all, it looks like it’s been a good day in the fight against corruption.

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7 Comments leave one →
  1. February 27, 2010 12:06 pm

    Sorry, Christine, but you are wrong about the army and the monarchy providing an “anchor to prevent things getting out of hand”. The army has launched something like 18 coups over the last eighty years, mostly to protect the rich and to feather their own nests. The king was deeply involved in campaigns in the 1970s to smash the Thai left. The army recruited militias who were ordered to beat and kill students, trade unionists and others, and eventually military units massacred students at Thammasat University in 1976 then launched a coup which saw a crypto-fascist government installed in Bangkok. The army and the king are not “above politics”. They are part of the struggles for power which determine how Thai politics works. The difference today is that the army knows that although it can overthrow governments, it cannot rule in the long term – it has to restore power to civilians. The highly polarised state of Thai politics today is such that the army cannot end the country’s crisis by simply deposing the government – as soon as democracy is restored, the same conflicts will quickly re-emerge. The only thing that will resolve the crisis is the defeat of one side.

    On Thaksin and corruption, name one Thai politician who isn’t corrupt and one wealthy businessman who didn’t make his money by manipulating state contracts, licences, etc. Banharn Silpa-archa, who was PM in the mid-1990s, was nicknamed “Mr ATM” for his habit of dispensing bribes in the gents toilets of the national parliament. Thaksin is simply an egregious example who has been singled out. The current Democrat-led government is far from squeaky clean.

  2. February 27, 2010 2:22 pm

    Thanks for responding Lee! I still owe you and Anna a response on the Oxford post… but here’s a stab at this one:

    Perhaps I made the remark about the Thai military and monarchy too flippantly– what I was wondering about was why the country has managed to survive its various coup attempts and instabilities with democracy (or some recognizable version of it) intact… I take your point that in the past 80 years, the military has been destabilizing, but what about in the past 20-30 years? My sense is that the role of the military and the king have been more neutral in the recent past (though obviously not completely so). Consider the counterfactual: in the recent past, would Thai democracy have survived without the institutions of the military and the monarchy. Would Thailand have been better off or worse off without them?

    I recognize that it’s impossible to just truncate institutions so cleanly, and the future follows from the past, etc. etc. but I am wondering more generally if there are examples from Southeast Asia where the military (or the monarchy) can be stabilizing influences. For example, in spite of all of its problems of corruption and political power plays, is the Pakistani military keeping it the country from greater violence? Is the key a professional army? Why is the Thai military willing to hand power back to civilians while African military coups lead to these commanders staying in power? Is it systematic or idiosyncratic– if it’s all about the individual leaders setting the tone for the country then that has different policy implications. When the US is training all of these armies around the world, is the goal of professionalization also having a side benefit of stabilizing countries? I’d be curious to know.

    As for corrupt politicians– well, my hopeful take on this is that maybe attitudes towards corruption are changing and that this kind of ruling will make future Thai leaders and other leaders think twice before trying to pull a stunt like this. Brian Mulroney has already been raked over the coals in Canada for the Airbus scandal (and deservedly so!) Now take down Berlusconi in Italy, and prosecute a few more of these types of cases and maybe, just maybe, there will be trickle down benefits to wee folks like you and me.

    I believe in the socialization of corruption norms– maybe they should make Thaksin and Berlusconi and Mulroney wear a Hello Kitty armband like those wayward Thai police officers.

  3. February 27, 2010 6:17 pm

    I’ll likewise have a stab at some of your questions:

    “why [has] the country has managed to survive its various coup attempts and instabilities with democracy (or some recognizable version of it) intact”?

    It’s due to social struggle, pure and simple. Democracy has been made safe for elites by the vicious repression of workers, peasants and leftists in the 1970s and 1980s. During the 1980s, state-led development created a powerful business class which gradually displaced the military – democracy was restored in 1988, essentially handing power over to cartels of tycoons. The military still got a share of the pie. They tried to grab a bigger bit back in a coup in 1991. They were beaten back to their barracks in 1992 by lower- and middle-class street protests. So I would say the main contrast to Africa is that there are larger and more developed social forces with political consciousness in Thailand willing to contest state power.

    “My sense is that the role of the military and the king have been more neutral in the recent past”

    Not in the slightest. The military in Thailand is not professional at all. Generals are virtually all involved in various business practices and many enter politics to further feather their own nests. Top generals are linked into the network monarchy through people like the former military dictator, General Prem, who is the head of the privy council, and is widely suspected of triggering the 2006 coup. The army has itself been a site of political struggle. Thaksin tried (and to some extent was successful) to purge the military and install his own cronies. When he went too far, and threatened to remove some bigwigs from their sinecures, they moved against him, in alliance with the network monarchy and the middle-class opposition party.

    “Consider the counterfactual: in the recent past, would Thai democracy have survived without the institutions of the military and the monarchy. Would Thailand have been better off or worse off without them?”

    Probably better off. Without the monarchy and the military, the old establishment and the Bangkok middle classes would have nobody to appeal to when they can’t take power democratically – which is what their situation was under Thaksin, given Thaksin’s huge popularity (and to a large extent still is). They would therefore either have to resign themselves to permanent opposition, or work to cultivate a wider mass base by developing pro-poor policies to rival Thaksin. Instead, they stick to their narrow, elitist, self-serving platforms and just call on generals and the king to take power for them. The presence of forces willing to act as a deus ex machina creates a highly irresponsible form of politics.

    “Why is the Thai military willing to hand power back to civilians while African military coups lead to these commanders staying in power?… When the US is training all of these armies around the world, is the goal of professionalization also having a side benefit of stabilizing countries?”

    Largely because ruling a complex and large country like Thailand is very difficult, and the generals are too fat, corrupt, stupid and lazy to do the job. They prefer sitting in their clubs and tending to their businesses to actually running the state. Also, as I said earlier, Thai society is highly politicised and engaged, which makes it difficult for the military to stay in power indefinitely. It’s not because the Thai military are “professional”. As for US military training, I would expect that any balanced study could only ascribe a negative effect to this. How did the School of the Americas work out for Latin American democracy?

    “I believe in the socialization of corruption norms”

    I don’t. I think what stops people being corrupt is where their enemies are highly engaged and constantly vigilant and willing to rise up and depose them. This is the case hardly anywhere, and so corruption is absolutely rife, virtually everywhere. Western states are deeply corrupt – it just doesn’t work by people handing out bribes in the lavatory. It works by people awarding contracts to their mates, by transferring public assets into private hands, by the systematic favouring of corporate interests, by the revolving door between state apparatuses and board rooms, and so on. It’s much more sophisticated but it’s no less corrupt. Plus, it’s not always even more sophisticated – look at the recent BAe scandals. I’m with Zizek on Berlusconi – he is not going to be prosecuted – he’s the image of what Western European leaders will all tend to look like in 20yrs time. The decline of mass politics means clowns like this can basically do whatever they like.

  4. Anna permalink
    February 27, 2010 9:35 pm

    Don’t have the time to read the comments too, just wanted to add this: we should be careful not to conflate stability with democracy.

    It is a no-brainer that military rule can be more stable (by some definitions of stability) than multiparty democracy; one of the few things that the econometric branch of conflict studies can really be said to have shown is the superiority of autocratic regimes in that regard. Does this mean that the involvement of the military in politics is desirable? Only if we value stability above democracy. (A debate that can certainly be had.)

    ‘Impartial’ institutions can certainly improve stability – I’d rather have that within the democratic framework, however. I am thinking of courts, the judiciary, the rule of law, that sort of thing. Call me an idealist 🙂

    Completely with you on the growing pains of new democracies though. (And perhaps we should resist the temptation to think that democratisation is a one-way street.)

  5. February 27, 2010 11:30 pm

    Lee, Anna,

    Wow. Thanks for incredibly thoughtful comments. Lots of food for thought. I’m going to pick and choose what to respond to because I must get to bed.

    Lee, I’m still not wholly convinced by your argument about the professionalization of the army– they can be corrupt, but still professional– but I absolutely do agree with you on the West being just as corrupt in our own slick way. The US & UK political system have corruption ingrained into their very fabric (e.g., financing of political parties). But I do think that there is more room to fight corruption (in all its forms) — and win– in the West than there is developing countries (broadly speaking). And there is always the Scandinavians to set the standard for the rest of us corrupt schmucks.

    I generally think that having the US train armies in the name of fighting terrorism is not just a smart idea– for a whole variety of reasons– but I am still hoping to see a silver lining in this mission. That was the reason for the tangent on professional armies.

    And yes Anna, agreed that stability and democracy are not to be conflated. Who can argue with rule of law?? (Courts and judiciary may be another matter.) But I wonder if it’s possible to build an impartial military or to to encourage an impartial monarchy. Do the conditions need to be ripe for this? What are these conditions…?

  6. February 28, 2010 12:34 am

    I suppose in an abstract sense it is possible to be both corrupt and “professional”, e.g., be a British general who would never dream of overthrowing the elected govt and yet be in bed with arms firms. But therefore it really depends on the overall social relations in which you are embedded as to what “corruption” really means. This begs the question as to whether “corruption” is a very useful analytical term or target of political intervention.

  7. Paul permalink
    March 6, 2010 5:56 pm

    I’ve been in Thailand for more than two decades, here is my 2 cents.

    It’s impossible for outsiders, especially those wearing acedamic hats, to understand Thai culture and its politics.

    Not that it’s complicated or anything, think about Thai Food.
    You won’t be able to explain the flavor unless you’ve tasted it.

    There is no way to understand Thai monarchy unless you live here.

    Politicians come and go, and they are the same all over the world.
    They corrupt, one way or another, that’s what they do, business as usual.

    but Thai King is different, he is the only one and he is everything.
    Thailand has today because of the King and Buddhism.

    Military is just a force, depends who is using it.
    Taksin thought that he could buy out all the generals, but he’s wrong.

    as the saying goes ‘old soldier never die’

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