US embassy cable - 05BANGKOK2838

C O N F I D E N T I A L SECTION 01 OF 05 BANGKOK 002838 
 
SIPDIS 
 
DEPARTMENT FOR DEPUTY SECRETARY ZOELLICK, EAP, EAP/BCLTV 
 
E.O. 12958: DECL: 04/22/2015 
TAGS: ETRD, PGOV, PREL, PTER, TH, OVIP (ZOELLICK ROBERT J.), Scenesetter 
SUBJECT: THAILAND: SCENESETTER FOR VISIT OF DEPUTY 
SECRETARY ZOELLICK 
 
 
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Classified By: Ambassador Ralph L. Boyce.  Reason:  1.4 (b,d) 
 
1.  (C)   Mr. Deputy Secretary, on behalf of the entire 
Embassy community, I welcome you to Bangkok.  You are 
visiting at an opportune point in our negotiations with the 
Thai on a Free Trade Agreement (FTA).  With Prime Minister 
Thaksin Shinawatra no longer distracted by elections and 
firmly back in power for four more years, your meeting with 
him offers the best opportunity to move forward on an 
agreement that will benefit both countries, and could stand 
as one of his finest legacies to Thailand.  Thailand and the 
U.S. have deep historical ties of friendship and currently 
cooperate in the War on Terrorism and generally in ensuring 
international stability.  Thailand has in recent years 
provided access that allowed the U.S. to prosecute the war in 
Afghanistan, sent non-combat troops there and to Iraq, and 
helped us capture the Jemaah Islamiyah (JI) leader Hambali. 
The Thai share many of our views on free markets, the free 
movement of goods and people, and democratic principles.  You 
will encounter a Thai leadership that is confident, enjoying 
an expanding economy, a relatively stable emerging democracy 
and a growing political profile in the region.  After an 
overview of bilateral relations (paras 2-5), and an overview 
of the domestic political and economic landscape (paras 
6-10), our views on key issues you should raise begin at para 
11. 
 
THE BILATERAL RELATIONSHIP:  COOPERATION ON TERRORISM, TRADE, 
TSUNAMI 
 
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2.  (SBU)  Bilateral relations with Thailand are generally 
quite good.  Thailand is a security treaty ally and has been 
supportive of the Global War on Terror.  The capture of the 
JI leader Hambali in Thailand in 2003 highlighted the 
willingness of the Thaksin government to cooperate fruitfully 
against international terrorism.  We are Thailand's largest 
export market.  American businesses have over $20 billion in 
direct investment in Thailand, and we are the second largest 
investor after Japan.  Recent decisions to remove Thailand 
from the President's list of major narcotics transit or 
producing countries and to impose less stringent tariffs on 
Thai shrimp exports to the United States than we impose on 
Thailand's competitors were favorably received.  Our quick, 
massive, and unprecedented response to the tsunami disaster 
last December reminded the Thai that the United States has 
unique capacities to address crises and pursue humanitarian 
goals.  The U.S. military response to the tsunami validated 
decades of close U.S.-Thai security cooperation and our 
extensive bilateral exercise program.  Your visit here will 
help reassure Thai officials and the Thai public that the 
United States is politically committed to remain engaged in 
Southeast Asia and determined to work closely with Thailand 
and other ASEAN and APEC members. 
 
MILITARY COOPERATION 
 
3.  (C)  The U.S. military conducts a wide range of major 
exercises and training programs with Thailand each year, 
including Cobra Gold, the annual exercise which in 2004 
involved approximately 13,500 U.S. service members and 6,000 
Thais.  Cobra Gold 2005 -- which will be underway during your 
visit -- will be smaller than last year, primarily due to 
U.S. commitments elsewhere and the large number of U.S. 
forces sent to the region for tsunami relief.  In addition to 
field training involving thousands of U.S. and Thai troops, 
Cobra Gold this year will consist of a one-week Disaster 
Seminar in Chiang Mai to capture lessons learned from the 
tsunami response and a one week staff exercise during a 
 
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disaster will be gamed out.  Significantly, Singapore and 
Japan will both participate in the Seminar and staff exercise. 
 
AREAS OF DIFFERENCE -- HUMAN RIGHTS, BURMA 
 
4.  (U)  There are also points of friction in our relations. 
Human rights remain a key concern.  On October 25, 2004, 
poorly trained military and civilian security forces in 
southern Thailand loaded 1,300 Thai Muslim protesters into 
trucks to be transported to a military base nearly three 
hours away.  78 of the protesters died, apparently 
suffocating en route. The State Department's 
Congressionally-mandated annual Human Rights Report (HRR) 
also criticized the approximately 1,300 extrajudicial 
killings that took place in early 2003 as part of PM 
Thaksin's war on drugs.  The RTG has complained this year 
about the 2004 Thailand chapter of the HRR, as it has 
previously. 
 
5.  (C)  Thailand's policy of "constructive engagement" with 
the military junta in Burma and provision of economic 
assistance to Rangoon is a source of continuing frustration 
for us.  The Thai government supports democracy in Burma but 
maintains, not altogether convincingly, that engagement with 
the SPDC is the only realistic approach it has to make 
progress on the major cross-border flows of refugees, illegal 
economic migrants, and methamphetamines it faces from Burma. 
While ASEAN members such as Singapore, the Philippines, 
Indonesia and Malaysia are clearly uncomfortable with Burma's 
assumption of the organization's chair next year, the RTG has 
clung to the position that engagement with the regime offers 
the best hope of promoting gradual change.  We obviously 
disagree and have told the Thai that they are increasingly 
viewed in the U.S. and elsewhere as "part of the problem" 
when it comes to Burma. 
 
THE DOMESTIC SCENE -- PM THAKSIN'S DOMINATION OF THAI POLITICS 
 
6.  (SBU)  Prime Minister Thaksin was returned to power with 
a strong majority in early February, winning more than 375 of 
the 500 seats in Parliament.  His Thai Rak Thai (Thais Love 
Thais) political party dominates domestic politics.  This 
election was the first time in Thai history that an elected 
civilian Parliamentary government filled out its entire term 
and was reelected.  The Prime Minister's populist policies, 
public relations savvy and a booming economy resonated well 
with the Thai electorate.  Thaksin comes from a prosperous 
Sino-Thai family in Thailand's second largest city, Chiang 
Mai, and placed first in his class at the National Police 
Academy.  He spent several years studying in the United 
States -- earning a master's degree in Criminal Justice from 
Eastern Kentucky University and a Doctorate in Criminology 
from Sam Houston State University.  (Thaksin likes to 
jokingly refer to himself as an "honorary Texan.")  After a 
few years with the police, he left government service to run 
the family business (Shinawatra Corporation or Shin Corp), 
which he turned into Thailand's largest telecommunications 
company, making himself a multi-billionaire in the process. 
Thaksin characterizes himself as a "CEO Prime Minister" and 
portrays himself as a decisive leader.  Critics, with some 
justification, accuse him of stifling dissent within his 
government and filling key government positions with family 
members or classmates.  Following several meetings in 
Washington and the very successful October 2003 Bangkok APEC 
Summit, Thaksin believes that he enjoys a special 
relationship with the President. 
 
THE THAI ECONOMY 
 
7. (U) The Thai economy grew 6.1 percent in 2004, continuing 
its strong recovery from the 1997 financial crisis.  The 
recovery has been led by strong export growth to the 
traditional Thai markets of the U.S., Japan and EU as well as 
increased exports to ASEAN and China.  To complement the 
export sector, the Thaksin government promoted a "dual track" 
strategy of increasing Thai consumption. By making credit 
more easily available, especially in rural areas, an easy 
monetary policy and the introduction of new consumer finance 
products, consumer demand has been a key factor in the Thai 
economy's recent growth.  Thaksin recognizes that consumer 
demand has pretty well run its course, however, as consumer 
debt levels have almost tripled in the past four years. 
Going forward, the RTG expects investment to become the new 
second track to exports in the economy and the government is 
promoting a massive program of infrastructure investment over 
the next four years.  There is concern that in 2005, the 
effects of high oil prices and a slowdown in the economies of 
Thai export markets will reduce GDP growth.  The December 26 
tsunami also will affect the rate of growth this year, with 
 
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the falloff in tourism (which contributes six percent of 
total GDP) expected to shave 0.5 percent off of this year's 
economic growth rate.  Most economists anticipate growth 
slowing to 4-6 percent for the year while the official RTG 
estimate is for 5.5-6.5 percent GDP increase. 
 
AFTERMATH OF THE TSUNAMI 
 
8. (U)  The December 26 tsunami claimed about 5,400 lives, 
including two dozen Americans confirmed or presumed dead.  In 
addition to large-scale provision of food, potable water and 
clothing through the regional relief logistical base 
established at Utapao airfield, the USG also dispatched a 
team of forensic experts to the affected areas in the 
vicinity of Phuket to assist in victim identification. 
Longer-term assistance is being provided by USAID in the form 
of replacement of small fishing boats and the provision of 
start-up loans for the recovery of small-scale aquaculture 
and tourism-related businesses.  Thailand is also eligible 
for a USD $150 million soft loan facility OPIC is making 
available to tsunami-affected areas. 
 
SOUTH REMAINS A TROUBLE SPOT 
 
9.  (U)  Thaksin's biggest domestic challenge is the 
unsettled security situation in the southern part of the 
country.  Southern Thailand, and in particular the three 
southernmost Muslim majority provinces of Pattani, Yala, and 
Narathiwat, has experienced episodic violence since it was 
incorporated into the Siamese Kingdom in 1902.  However, 2004 
witnessed a dramatic increase in the level of violence, with 
over 500 people killed either by militants or by security 
forces.  Local Muslim separatist militants have attacked 
symbols of Thai and Buddhist authority, and there continue to 
be almost daily incidents of violence, notably even after the 
tsunami disaster of December 26.  Attacks most often involve 
 
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isolated shootings of local officials, although increasingly 
sophisticated bombing attacks have become more common.  On 
April 3, bombs apparently set by separatists exploded at Hat 
Yai International Airport, a French-owned supermarket in Hat 
Yai and a hotel in Songkhla.  Two Americans were injured in 
the incidents, though there is no indication that they were 
specifically targeted. 
 
10.  (SBU)  Stepping back publicly from the strictly 
hard-line approach he has taken since the upsurge of 
violence, Thaksin approved in March a 48-member "National 
Reconciliation Commission" (NRC) to examine long-term 
solutions to the crisis in the south.  Thaksin named former 
Prime Minister Anand to lead the commission.  (Note: Anand is 
one of the most respected public figures in Thailand.  He was 
twice appointed interim prime minister in 1991-92 during the 
political crisis stemming from the 1991 coup.  He recently 
chaired a UN High-level Commission on Reform.  End Note.) 
Thaksin said he wanted a diverse group of participants on the 
commission, even naming several of the most vocal critics of 
his southern policy as possible members.  The NRC expects to 
complete its work and to make recommendations within a year. 
 
FTA:  AGREEMENT ON COVERAGE, PUBLIC SUPPORT ARE PRIORITIES 
 
11.  (C)  The third round of FTA negotiations with the RTG, 
held only after the U.S. agreed to exclude discussion of 
financial services, concluded on April 9 with modest progress 
in most chapters of the FTA text.  While Prime Minister 
Thaksin remains publicly supportive of the FTA, there is 
little indication that he has authorized his ministers to 
make commitments on coverage, concessions, and possible trade 
offs, that is, to actually negotiate the FTA.  Agreement on 
FTA coverage is Priority #1: still to be resolved is 
inclusion of financial services and (to varying degrees) 
chapters on IPR, labor, and environment.  With the Thai 
elections behind us and the reconstitution of the RTG's FTA 
Oversight Committee, prospects for development of a 
comprehensive negotiating mandate appear to have improved 
somewhat.  Your meetings with the Prime Minister, Foreign 
Minister, and the outreach events present opportunities to 
obtain a clearer Thai commitment to move these issues forward 
in the FTA.  The Thai press has been almost uniformly 
negative in its FTA coverage.  In your comments to the media 
it will be important to emphasize not only the considerable 
benefits the FTA will afford Thailand, but also the high 
opportunity costs entailed in opting out. 
 
THAILAND AND IRAQ 
 
12.  (C)  Thailand dispatched two deployments to Iraq as part 
of Operation Iraqi Freedom (OIF).  In December 2003, two Thai 
soldiers were killed by a car bomb while on duty in Karbala. 
Thailand's second six-month deployment of 443 medics and 
engineers to Iraq ended on September 30, 2004.  While 
participation in OIF did not cause the domestic furor in 
Thailand that it has in other countries, Thaksin's critics 
have used participation in the U.S.-led coalition against 
him.  Several RTG officials have told us that Thailand's 
deployments have been used by separatist militants to fan 
resentment in the Muslim majority southern border provinces. 
The democratic political opposition has questioned his 
judgment on the deployments as well, also claiming that they 
contributed to tensions in the volatile South.  Nevertheless, 
Thaksin has shown the capacity to make a tough decision and 
we want Thailand's renewed support for Iraq operations. 
During your meetings with Thaksin and Foreign Minister 
Kantathi you could express appreciation for Thailand's 
previous deployments to Afghanistan and Iraq, and explain 
that the Administration hopes Thailand will send a follow-on 
deployment in support of OIF.  Specifically, CJCS General 
Myers recently sent a letter to his Thai counterpart asking 
Thailand to consider sending staff officers to man the OIF 
Multinational Headquarters, with an eye to future 
deployments.  It would be appropriate for you to press your 
interlocutors on a positive Thai response to General Myers' 
request. 
 
LOCKHEED MARTIN F-16 SALE 
 
13.  (C)  Thailand recently announced its plans to purchase 
18 fighter aircraft to replace aging F-5s in the Thai Air 
Force.  (The RTAF presently has 59 F-16s in its inventory.) 
The RTG is leaning towards purchasing Swedish or Russian 
planes because of a belief,  which we have worked hard to 
overcome, that Saab or Sukhoi can offer a better business 
deal to Thailand.  Recently, Lockheed Martin executives have 
made it clear to Thai decision makers that their company will 
put together a countertrade package equal to up to 100 
percent of the purchase price of any aircraft.  This promise 
has allowed RTAF officers -- who generally support the F-16 
-- to put together a package more favorable to Lockheed 
Martin.  Rumors are rife that some senior Thai Air Force 
officers may be receiving compensation from one of the other 
two competitors to support their bids, but we believe that 
pressure from senior U.S. officials like yourself can improve 
Lockheed Martin's prospects.  A genuinely transparent 
competition that takes into consideration capability of the 
aircraft, interoperability with U.S. forces, and cost would 
result almost certainly in F-16 winning the contract.  It 
would be extremely helpful to this effort if you would point 
out the interoperability advantages F-16 has over SU-30 or 
Gripen, and how the F-16 is the best choice to defend 
Thailand.  Lockheed Martin is prepared to offer a 100 percent 
countertrade package as part of the purchase agreement. 
 
ENDORSING THE PROLIFERATION SECURITY INITIATIVE (PSI) 
PRINCIPLES 
 
14.  (C)  The RTG continues to move towards formal 
endorsement of the Proliferation Security Initiative (PSI) 
Statement of Principles (SOP).  The RTG has indicated that it 
supports the PSI but has been dragging its feet, largely 
because of bureaucratic misunderstanding, over final 
endorsement of the SOP.  Given Thailand's strategic location 
and our emphasis on practical nonproliferation steps, we are 
very interested in gaining Thailand's participation in this 
key nonproliferation initiative.  It would be very helpful if 
you could underscore the great importance we attach to 
Thailand's endorsement of the PSI Statement of Interdiction 
Principles.  If your interlocutors question what that obliges 
Thailand to do, you may note that endorsing the Principles is 
a first step and does not obligate a country legally or 
operationally, but is a significant statement of political 
support. 
 
REFUGEES 
 
15.  (U)  Over 140,000 Burmese refugees live in camps along 
the Thai-Burma border, some for more than a decade.  Apart 
from the camp population, there is a separate group of 
so-called "urban" Burmese.  Thailand agreed to a resettlement 
program for this second, much smaller group and we are 
currently working with UNHCR to process about 1,400 of them 
(1,500 individuals have already re-settled in the U.S.).  The 
RTG recently implemented -- after twice agreeing to our 
request for delays -- a decree that urban Burmese refugees 
relocate to the border camps.  Those who did volunteer to 
relocate are likely to be resettled within months, many to 
the U.S.  You should be aware that NGOs and Congress have 
expressed concerns that urban Burmese refugees who do not 
report to the camps might be forcibly deported back to Burma, 
but RTG officials have credibly assured us there are no plans 
for either deportations or to actively hunt persons who did 
not register for relocation to the camps.  In a major 
breakthrough, the Thai Government also approved last week our 
project to begin resettlement of Burmese camp refugees -- a 
development which could lead to the U.S. resettlement of tens 
of thousands from this group over a multi-year period.  You 
could say that the U.S. welcomes the Thai government's 
agreement to Burmese resettlement from the border camps and 
looks forward to working with Thai officials to ensure that 
the new program runs smoothly. 
BOYCE