US embassy cable - 05BANGKOK2219

C O N F I D E N T I A L SECTION 01 OF 05 BANGKOK 002219 
 
SIPDIS 
 
DEPARTMENT FOR EAP, EAP/BCLTV. HQ USPACOM FOR FPA (HUSO). 
NSC FOR GREEN 
 
E.O. 12958: DECL: 03/29/2015 
TAGS: PREL, PGOV, ECON, TH, Corruption, Cabinet Reshuffle, US-Thai FTA, Southern Thailand 
SUBJECT: THE THAKSINIZATION OF THAILAND -- IMPRESSIONS 
AFTER THREE MONTHS 
 
Classified By: Ambassador Ralph L. Boyce.  Reason:  1.4 (d) 
 
1. (C) After six and a half years away and three months back, 
this seems as good a time as any to review the landscape in 
Thaksin Shinawatra,s Thailand.  For starters, there is the 
towering figure of the Prime Minister himself.  Dominating 
the scene as no previous civilian leader has ever done, 
Thaksin,s influence is everywhere.  The Bangkok elite, which 
embraced him as the next new thing four years ago, has grown 
scornful of him, but he actually revels in thumbing his nose 
at the capital's chattering classes.  Himself a self-made man 
from the provinces (according to his myth makers), he has 
successfully tapped into the aspirations of Thailand's 
millions.  And unlike previous regimes that rode into power 
by buying the loyalties of the rural areas, Thaksin has also 
won over the millions of Bangkok residents who are not from 
the traditional elite ) the mom and pop shopkeepers, the 
taxi drivers, the food stall vendors, department store 
salespeople and the day laborers.  In 2001, for the first 
time in history, Bangkok voted along with the north, the 
northeast and the central plains.  In 2005, this phenomenon 
actually grew stronger, as Thaksin,s machine swept 32 of 
Bangkok's 35 seats.  (The south -- as noted below -- was a 
significant and problematic exception.)  In the country as a 
whole, Thai Rak Thai's (TRT) grip on 377 of Parliament's 500 
seats is an unprecedented feat for a single party. 
 
ONE-PARTY RULE? 
 
2. (C) But is this really &one-party rule,8 as the 
newspapers love to shriek?  A look at the 377 seats shows 
that Thaksin is actually atop what amounts to a four- or 
five-party coalition, i.e., more in line with recent Thai 
political experience.  Leaving aside the 67 party list 
members who were elected on a national slate, a break out of 
the 310 constituency seats reveals the following:  165 
previous TRT members, 46 from three defunct parties 
(Seritham-12, New Aspiration Party-17, and Chart Pattana-17) 
that merged with TRT, 21 defectors from other parties (Chart 
Thai-12, Rassadorn-1, and Democrat Party-5), 11 pre-2001 MPs 
and more than 40 &inheritances,8 i.e., sons and daughters 
of MPs from feudal-like constituencies.  In putting together 
his cabinet this time around, Thaksin had to juggle and 
placate the various factions just as Prem Tinsulanonda or 
Chatchai Choonhavan used to have to do repeatedly with their 
unwieldy coalitions. 
 
3. (C) That said, Thaksin has significantly altered the Thai 
political scene, possibly forever (or at least as long as he 
is around).  In the 2001 and 2005 elections, he and his party 
campaigned on issues and promises (affordable health care, 
village loans), and then essentially delivered the goods. 
Today Thailand basically has a two-party system, with Thaksin 
having run the most recent campaign as a referendum on him, a 
referendum that he most definitely won.  The opposition is in 
disarray, with the Democrats having been reduced to a weak, 
regional party and the rest of the rabble having almost 
disappeared (or been absorbed by Thaksin's juggernaut). 
Thaksin accomplished this by mastering the reforms of the 
liberal 1997 constitution, which altered the electoral 
mechanics from three-member constituencies to the party 
list/single member format.  In power, he took full advantage 
of the new charter's creation of a strong executive, while 
distorting, dismantling or delaying the new "watchdog" 
institutions that were supposed to check and balance that new 
executive power. 
 
"CEO" MANAGEMENT AND THE CABINET 
 
4. (C) Now Thaksin has a second term and a new cabinet with 
29 of the 35 ministers reshuffled from the previous slate. 
This is probably a good place to note that Thaksin,s vaunted 
&CEO style of management8 differs markedly from the model 
which would have the company listed on the stock exchange, 
shares traded on the market, stockholders to placate and a 
board of directors to be responsive to.  No, Thaksin,s style 
is much more like the family-owned private company where the 
CEO speaks and the lieutenants carry out his will ) much 
like, say, Shinawatra Corporation used to be while Thaksin 
was making his billions, or dozens of other Thai 
conglomerates. 
 
5. (C) And now he runs his cabinet just like that.  Among the 
35 ministers are Thanong Bidaya, Thaksin,s former banker 
(and widely rumored to have tipped Thaksin off about the 
coming baht devaluation when Thanong was Finance Minister in 
1997), four former aides, six business friends, one police 
classmate, one family doctor and only eight MPs.  Thaksin 
today has ably positioned himself to be the only star in the 
political constellation and could thus well be around for the 
next eight years or more. 
 
6. (C) That is, unless he stumbles.  Analysts have been 
predicting another debt-driven economic crisis since the day 
he put his rural lending scheme into effect and everyone 
upcountry suddenly had a cell phone and a pickup truck.  Or 
the south could erupt (see below).  Or, simply, the Thai 
people could exercise their penchant to tire of the same old 
thing and go for the next new thing.  For the moment, 
however, there is no other thing than the Thaksin thing. 
 
TENSIONS WITH THE PALACE 
 
7. (C) Except maybe the King.  In the age of Thaksin, the 
King has on several occasions made public his differences 
with Thaksin,s style and more importantly, his philosophy. 
As respected former Prime Minister Anand Panyarachun puts it, 
Thaksinomics teaches that it is OK to be greedy and that 
money fixes everything.  The King's idea is somewhat 
different and has been neatly summarized in a short pamphlet 
called, "What is  Sufficiency, Economy?8  This pamphlet 
draws on royal utterances over the past 25 years and 
essentially calls for a rural-based model of sustainable 
development.  Of late, the pamphlet is being flogged by Privy 
Councillors, the head of the Crown Property Bureau, and 
noteworthy columnists as the antidote to Thaksinomics. 
 
8. (C) In addition, Bangkok observers have been aghast at 
what they perceive as Thaksin,s unwillingness to be 
appropriately obeisant to His Majesty.  In the recent 
campaign, they claim, he swanned about upcountry as though he 
were the sovereign of the country.  He is visibly impatient 
with the many royal ceremonies he has to sit through where he 
is not the center of attention.  In this year's Mahidol 
Awards, he fussed and fretted in his seat while the King 
spoke softly to the American and German doctors who were 
being honored. 
 
9. (C) But the King will not be around forever, and Thaksin 
long ago invested in Crown Prince futures.  Nevertheless, the 
debate over Thailand's direction has been joined, with the 
outcome still in question. 
 
CORRUPTION 
 
10. (C) Thaksin is very rich.  According to Forbes, after 
distributing some of his assets to his children, the PM is 
the third richest man in Thailand (after Charoen 
Sirivadhanabhakdi, Chairman, TCC Group, who owns Chang beer 
and has extensive real estate and hotel holdings, and Chalieo 
Yuwittaya, who produces and sells the "Red Bull" energy 
drink).  Does Thaksin really need to make more money?  Or do 
people just unfairly and lazily ascribe every thing he does 
to an ulterior profit-making motive?  Every indicator seems 
to suggest the adage that power corrupts and absolute power 
corrupts absolutely.  Thaksin, his family and his business 
and political allies have made immense profits in the past 
four years and seem on track to continue doing so.  Is it 
something in the entrepreneur's gene pool that cannot switch 
off the quest for more, better, greater, now, now, now? 
There are nuances to understand, but in all aspects of public 
life (Burma policy and the current follow-on jet fighter 
acquisition deal come to mind), a good case can be made that 
business or political considerations are uber alles. 
 
11. (C)  Recall that Thaksin was driven out of the Foreign 
Ministerial portfolio in 1994 because he refused to make 
public his assets.  Recall that he entered his Prime Ministry 
in 2001 under a cloud when he finally grudgingly gave up 
control of his wealth -) and even then only to his wife, 
children and, in one memorable instance, his servants.  In 
any event, if corruption has indeed reached historic 
proportions, as many claim, the people seem willing to 
tolerate it as long as the rising tide lifts all boats. 
 
FREE TRADE AGREEMENT PROSPECTS 
 
12. (C) If business considerations are indeed primus inter 
pares, shouldn't that bode well for our FTA negotiations? 
The answer is a guarded yes -- Thaksin has made it clear this 
is his initiative and that he understands a U.S. FTA will 
have to be comprehensive.  This will be our single most 
important weapon, to be deployed when the bureaucrats and 
single-issue players create stumbling blocks.  But that 
assumes we will be able to get his attention.  As long as his 
laser beam is focused on an issue, he dominates that issue. 
But the minute the beam moves on to another area, the carpet 
mice run back out.  And in the Free Trade area in general, 
the current feeling in many pivotal sectors like financial 
services, indeed, in the country as a whole, is that FTAs are 
not in Thailand's interest. 
 
13. (C) When Thaksin is not engaged in the process -) and 
that will be most of the time -) his two most senior 
economic aides and loyalists, Pansak Vinyaratn and Somkid 
Jatusipitak, will call the shots.  Pansak seems to understand 
his boss's desires, and while he can always be counted on to 
come up with nutty, flaky ideas, he essentially will be an 
ally in the negotiations.  Somkid is another matter.  He 
talks a good game, and parrots Thaksin,s free trade 
rhetoric, but we have our doubts about his true commitment to 
the cause.  We need to mount an aggressive public relations 
campaign to the effect that &both sides give8 so &both 
sides get8 in a successful FTA.  We can also point out the 
high opportunity costs entailed in passing up the FTA.  This 
will be an uphill battle, in the aftermath of Chinese and 
Australian FTAs widely perceived to have been in Thailand's 
disfavor. 
 
A NEW FOREIGN POLICY PARADIGM 
 
14. (C) Thai traditional foreign policy style has been 
understated, subtle, even graceful, and widely lauded within 
ASEAN as among the most professional.  Together with 
Malaysia, Singapore and Indonesia, Thailand has helped define 
the &ASEAN way8 over the years.  Eschewing conflict, always 
seeking that elusive &consensus,8 keeping problems behind 
closed doors -- this was the formula within ASEAN for 
decades.  But notably, under Thaksin, Thai foreign policy 
style has been most un-ASEAN, and even un-Thai.  Today, with 
Thaksin often in the lead, Thailand is much more 
unilateralist and often prone to practice megaphone diplomacy 
in place of quiet persuasion. 
 
15. (C)  The recent tsunami conference in Phuket was a 
perfect example.  Even as conferences were being organized in 
Japan, Indonesia and elsewhere, Thaksin,s then-Foreign 
Minister Surakiart suddenly announced that Thailand would 
host a conference with a view towards establishing an early 
warning system for the Indian Ocean region as a while. 
(Admittedly, much of this had to do with Surakiart's 
bombastic style, and his own naked ambitions.)  The Thai made 
little secret of the fact that they expected the center to be 
established in Thailand.  Surakiart browbeat key countries 
unceasingly to send ministerial-level attendees.  In the U.S. 
case, he was nothing short of delusional, seriously proposing 
that Secretary Rice attend as her first official act after 
being confirmed.  (He even promised to &personally8 escort 
her to the devastated Khao Lak area.) 
 
16. (C) In the event, the conference was largely attended by 
technical ministers or resident Ambassadors, and the Thai 
dream of achieving consensus on establishing the center here 
fell apart when the hosts forgot the cardinal tenet of ASEAN 
diplomacy ) always pre-cook the deal in the hallways. 
Instead, they crudely tried to ram their preferred outcome 
down the throats of the 40-odd attendees.  When several 
significant countries objected )- including India, 
Australia, and most notably fellow ASEAN member Indonesia -) 
the conference ended with Surakiart suggesting that those 
countries not happy with the Thai proposal should take a 
hike.  It was not a pretty sight. 
 
17. (C) The tsunami conference was a recent example, but in 
general Thailand's relations with Malaysia and Indonesia over 
the south have taken on a shrillness not frequently seen 
among these founding members of ASEAN.  In Burma policy, the 
Thai effort to come up with a &Bangkok Process8 to give 
them cover to pursue largely their own narrow interests in 
Burma has collapsed.  It is telling that the lead efforts in 
recent weeks on the problem of Burma rotating into the 2006 
ASEAN Chair have come from Singapore, Malaysia and Indonesia 
rather than from the Thai. 
 
18. (C) And then there is China.  Some are concerned about 
Chinese inroads into Thailand and indeed the region as a 
whole.  The Thaksin government seems to be embracing the 
Chinese wholeheartedly.  Thailand is being portrayed as the 
gateway to China.  Is this a concern for the U.S.?  With the 
benefit of three months, reflection, it seems to be less of 
a zero-sum game than might appear.  The Chinese are 
indisputably very active.  Yes, they have better tailors and 
speak better English.  Yes, they are very close with the 
largely Sino-Thai crowd that dominates the Thaksin 
government.  But is every Chinese gain necessarily at our 
expense?  It seems to be more a return to traditional 
patterns in the region over hundreds if not thousands of 
years.  This is China's neighborhood, and while they were out 
of the picture for fifty years after the end of World War II 
(precisely the period when U.S. presence was paramount), they 
are back, and they are bringing the A team.  For reasons of 
geography, we cannot realistically match the Chinese 
visit-for-visit.  But we are capable of directing more 
high-level attention to the region, and we should. 
 
THE SOUTH - A YEAR OF MISSTEPS 
 
19. (C) The past twelve months have brought a series of 
increasingly serious developments in the three southernmost 
Muslim-majority provinces.  In January 2004 the armory was 
raided.  In April the Krue Se mosque incident raised the 
level of violence and government response to new proportions. 
 Increasingly violent protest was met with more and more 
force.  Last October, the horrific Tak Bai event saw 78 
prisoners suffocate while in police custody, after which the 
Prime Minister most unhelpfully suggested that the prisoners 
had died because they were &weak from fasting8 in the holy 
month of Ramadan!  The February election was a debacle for 
TRT in the three provinces, as the party lost all but one 
seat.  Still the hard-line approach continued, with Thaksin 
unveiling his plan to withhold all government funds for 
districts judged to be problematic.  Indeed, Thaksin and many 
of his hard-line supporters around the country view the 
election outcome in the South as vindication of the 
government's policies. 
 
20. (C) Fortunately, of late there are signs the PM may be 
willing to consider a new approach.  His appointment of the 
Anand commission would seem to be a no-lose proposition -) 
provided he is really willing to consider whatever 
recommendations the panel ultimately makes -- and, more 
importantly, conveys that impression to skeptics in the 
south.  Some cynics have suggested the Anand appointment is 
simply a cynical sop to mollify the Bangkok elite Thaksin so 
despises.  If it is (and we don't think it is), Thaksin will 
have made a mistake, because Anand will not let himself be 
used by anyone and he won't be shy to speak his mind. 
 
21. (C) The south is not a new problem.  Some point to 
Thaksin,s 2001 disbanding of a joint 
military-police-civilian task force (at the urging of his 
fellow policemen) as the root of the problem, but in fact its 
origins go back a hundred years, to the very incorporation of 
these ethnically and religiously different areas into the 
Siamese Kingdom.  The Thai have yet to make a concerted 
effort to understand the culture and values of the Muslim 
south, a fact which has only compounded Muslim sensitivities 
in general since the onset of the global war on terror.  It 
is high time that this neglectful, superior attitude changed. 
 
 
THAILAND STANDS UP 
 
22. (C) There are plenty of areas where Thaksin deserves 
credit.  The tsunami disaster was generally well handled, 
turning a national calamity into an opportunity to 
demonstrate that Thailand can take care of itself.  Moreover, 
the fact that the relief effort was centered out of Thailand 
was greeted in the region without dissent.  The image was of 
an emerging leader helping weaker states in the neighborhood 
like Indonesia and Sri Lanka. 
 
23. (C)  And however Thailand's quixotic campaign to put 
now-former Foreign Minister Surakiart in the UN Secretary 
General's job ends up, if nothing else it is further 
demonstration the Thailand desires to play more of a global 
role.  Bangkok is a much more livable city today than it was 
twenty years ago, traffic is manageable, the air is cleaner, 
the airport is first-class, the Thai smile is still charming 
and as a result the country is legitimately challenging 
Singapore and Hong Kong as a regional business hub.  That is 
a good thing, it started before Thaksin rose to power, and it 
is a trend we should encourage. 
 
THE BILATERAL RELATIONSHIP 
 
24. (C) In Indonesia, everything we do charts new territory 
and defines our relationship with a country that is literally 
reinventing itself from soup to nuts.  In Thailand, we have a 
mature, deep-seated, historic friendship with a stable, 
sophisticated partner.  The scars of the 1997 financial 
crisis (when the U.S. was widely perceived as having failed 
Thailand in its hour of need) linger, but not with Thaksin. 
He very much sees the past as past, and is focused much more 
on the here and now, and prospects for the future.  He 
studied in the U.S., and likes our business model.  All of 
this is very good for us. 
 
25. (C) The U.S. response to the tsunami was a huge public 
relations plus for us, but we do have to confront a general 
sense of unhappiness with elements of U.S. policy that have 
nothing to do with Thailand -) the war in Iraq is not 
popular here, despite the Thai having sent forces. 
 
26. (C) In general, though, we continue to enjoy huge 
advantages in Thailand that few other countries can rival. 
The fact that the Embassy is among our largest in the world, 
and growing, is testament to this.  The real challenge for 
us, and increasingly for the Thai, is to resist relying too 
much on the mantra of the "historic relationship."  Instead, 
we need to bring this important partnership into the 21st 
Century, and channel our long-standing influence in positive 
directions, including the further consolidation of democratic 
institutions in Thailand.  Despite the unprecedented 
concentration of political power recently under Thaksin, 
civil society continues to develop in a healthy, Thai way. 
Thaksin's style is to push the envelope, but democracy in 
Thailand is more resilient than his critics, Thai and 
foreign, are willing to acknowledge.  Here in Thailand, we 
can have our cake and eat it too -- by mixing classic 
"realpolitik" (which Thaksin understands and responds well 
to) with principled interventions when the need arises. 
BOYCE