US embassy cable - 05BANGKOK3208

C O N F I D E N T I A L SECTION 01 OF 04 BANGKOK 003208 
 
SIPDIS 
 
E.O. 12958: DECL: 05/13/2015 
TAGS: PGOV, PREL, PTER, BU, TH, IZ, Southern Thailand, BURMA, ASEAN 
SUBJECT: MY DINNER WITH THAKSIN 
 
Classified By: AMBASSADOR RALPH L. BOYCE.  REASON: 1.4 (D) 
 
 1.  (C)  Summary:  I had dinner on May 12 with Prime 
Minister Thaksin.  He was in a receptive mode.  On trade 
issues, Thaksin indicated that he was ready to push his 
ministers to reengage on all FTA issues and said there was 
"no problem" in lifting Thailand's ban on U.S. beef.  He 
accepted constructive criticism of his previous hard-line 
policy in Thailand's troubled south and acknowledged the need 
for new approaches.  Thaksin also acknowledged the damage his 
constructive engagement policy on Burma had done to 
Thailand's international image and indicated that the RTG may 
lower its profile on Burma and align itself more with an 
ASEAN consensus.  The Prime Minister welcomed the news of 
Lockheed Martin's willingness to discuss a barter arrangement 
in its F-16 package.  The only less than positive note was 
Thaksin's contention that his need to manage Thai Muslim 
sentiments in the south made a new Thai ground commitment to 
Iraq difficult.  End summary. 
 
GE INVISION ON HIS MIND 
 
2.  (C)  Thaksin had invited me to dinner last week, but the 
eruption of the GE Invision issue had intervened in the 
meantime.  This issue occupied much of the early part of our 
meal and is reported septel.  The strains of dealing with the 
GE Invision controversy showed on Thaksin's face as he sat 
down.  He appeared haggard and tense, but gradually relaxed 
as dinner progressed.  Early on, we reprised some of our 
earlier meetings, before he was Prime Minister and I was 
Ambassador.  I recounted a conversation that I had with him 
about ten years ago in which I predicted that as soon as he 
entered politics he would be subject to accusations that he 
would enrich himself through his office.  Thaksin noted this 
and then surprisingly said that he was considering shedding 
his telecommunications businesses, possibly selling it in its 
entirety to Singapore Telecom this year. 
 
WHERE'S THE BEEF? 
 
3.  (C)  Because we were dining at Hamilton's Steak House at 
the Dusit Thani Hotel, I took the opportunity to raise 
Thailand's continuing ban on U.S. beef imports due to 
BSE-related fears.  Thaksin claimed that he was unaware of 
the ban and in a humorous vein, he compared U.S. beef 
favorably with its Australian (too tough) and Argentinean 
(smells like grass) rivals.  Following the banter, I asked 
Thaksin if I could so inform the Agriculture Minister that 
her boss believed that there was no necessity in continuing 
the ban.  "No problem," Thaksin replied.  (Note: I saw the 
Agriculture Minister the next morning on a previously 
scheduled courtesy call and conveyed this news.  End note.) 
 
FTA 
 
4.  (C)  Using the beef issue as an example, I commented to 
Thaksin that major decision-making obviously centered on him. 
 Even his most trusted ministers appeared unwilling to embark 
in new directions without his specific instruction.  The FTA 
was a good example.  Despite the Prime Minister's oft-stated 
commitment to a comprehensive FTA with the U.S., it was clear 
that certain of his advisors and ministers (I didn't name 
names) were unwilling to engage during negotiations on issues 
such as financial services, IPR, labor and environment. 
Thaksin replied that he clearly understood the need for a 
comprehensive agreement that included these issues, and also 
was aware that key aides such as Deputy Prime Minister and 
Finance Minister Somkid Jatusripitak were lukewarm on the 
issue of financial services.  Thaksin added that he himself 
was not apprehensive over the effect of an FTA on Thailand's 
financial services sector.  The Thai banking system needed 
"shaking up," Thaksin said.  I welcomed his stance and urged 
him to give his ministers a firm kick in this direction.  I 
noted that the Thai team that was to discuss financial 
services at the recent Pattaya round of FTA talks had not 
even shown up - this was not acceptable.  I also told Thaksin 
that at a meeting earlier with Commerce Minister Thanong 
(another minister less than enthused on FTA issues) I had 
reiterated this point - rather than not attend, it was in 
Thailand's interest to go, engage and discuss. 
 
5.  (C)  Thaksin agreed that the conversations must be 
two-way and comprehensive.  There could not be an FTA unless 
the interests of both parties were addressed.  I described to 
Thaksin Deputy Secretary Zoellick's success during his recent 
visit in discussions on FTA with a Thai parliamentary group 
(septel), in which he addressed each of their concerns head 
on.  Most parliamentarians came away with a better 
understanding of the issues.  Both sides needed to explain 
clearly their FTA issues and concerns.  Thaksin agreed, 
adding that Deputy Secretary Zoellick's suggestion that in 
certain areas the FTA could be phased in over a number of 
years had been very useful. 
 
THE SOUTH 
6.  (C)  I told Thaksin that if we had met about three months 
ago, I would have expressed grave concerns over his policies 
of the last year plus in the troubled Muslim majority deep 
southern provinces.  However, with formation of the National 
Reconciliation Commission (NRC), headed by former Prime 
Minister Anand Panyarachun, and his own admissions in 
Parliament that it was time to look at new approaches, I 
sensed that he was on the right track.  It was possible, I 
added, that Thaksin's new stance was costing the separatists 
their best recruiting tool - his previous hard line stance. 
The Prime Minister did not contest this point.  I pointed out 
that the overwhelming majority of Muslims had no truck with 
violence or radical beliefs but, at the same time, were 
highly resentful of being lumped in with radicals - something 
that leaders should avoid in their statements. 
 
7.  (C)  Continuing in this vein, I suggested to Thaksin that 
on the next occasion that he wanted Malaysia to return to 
Thailand an accused Thai separatist or investigate alleged 
separatist camps in Malaysia or Indonesia, he should call 
Prime Minister Badawi or President Yudhoyono privately before 
resorting to issuing public statements.  While both Malaysia 
and Indonesia were quick to defend themselves against public 
accusations that they were harboring terrorists, they also 
had a deep understanding of the dangers and if approached 
quietly and off-line could be very helpful.  Thaksin took 
this on board, but vented his resentment of what he 
considered Malaysia's unhelpfulness when Thai Muslim 
separatists retreated into Kelantan state.  Thaksin added 
that he understood that Malaysia had its own problems in 
Kelantan, but said that Kuala Lumpur must sympathize with 
Thailand's situation on its porous border. 
 
BURMA 
 
8.  (C)  Thaksin recalled his conversation with Deputy 
Secretary Zoellick (septel) and repeated his comment at that 
 
SIPDIS 
time that neither constructive engagement nor sanctions had 
worked.  What should we do?  I replied by telling Thaksin 
that Thailand's international image was suffering from its 
engagement policy with the SPDC - rather than being part of 
the solution, Thailand was viewed by many as being part of 
the problem.  For example, I said, last December in a radio 
address Thaksin had reported Than Shwe's argument that Aung 
San Suu Kyi's continuing imprisonment was necessary to 
prevent Burma's disintegration.  Thaksin then went on to say 
that it was "reasonable" to be concerned about the country 
coming apart.  However, reportage of his remarks described 
Thaksin as saying he found it reasonable to keep Aung San Suu 
Kyi locked up.  Thaksin gave an exasperated sigh, referred to 
his often tense relations with both international and 
domestic media, but took the point that Thailand must be wary 
of its image on Burma. 
 
SURPRISING COMMENT ON REGIME CHANGE 
 
9.  (C)  I noted to Thaksin that a number of ASEAN nations 
were beginning to view Burma as a serious impediment to the 
organization, particularly its upcoming chairmanship.  Rather 
than issue unilateral statements regarding (and seemingly 
supporting) Burma, Thailand would be better served by letting 
ASEAN take the lead and become part of a consensus.  Burma 
had shown indications that it might skip its turn at the 
ASEAN chair.  Thailand should back away and let ASEAN's will 
prevail, I emphasized.  In response, Thaksin said that 
Rangoon's relinquishing of the chair would be "not enough." 
Thaksin added that this would only indicate that the regime 
was so unwilling to loosen its grip on power that it would 
sacrifice the prestige of holding ASEAN's chair.  Then, 
surprisingly, he said that the only solution was "regime 
change" in Rangoon.  The generals were "impenetrable," 
Thaksin complained. They were suspicious of the outside and 
suspicious of each other. Their only concern was their own 
protection and they feared that any opening to the NLD would 
lead ultimately to their destruction. 
 
10.  (C)  I replied by saying that in future meetings with 
the SPDC leaders Thaksin might remind them that Aung San Suu 
Kyi had stated that she was not interested in retribution, 
only in the building of a democratic future in Burma. 
Turning to the recent bombings in Rangoon, Thaksin said that 
he agreed with theories that Khin Nyunt supporters were 
likely responsible and suggested that these incidents could 
signal the beginning of the unraveling of the SPDC.  He noted 
that Burmese Prime Minister Soe Win had abruptly canceled a 
recently scheduled visit to Thailand - probably, Thaksin 
speculated, from fear of being out of the country at a 
sensitive time. 
 
CHANGE OF POLICY ON THE BORDER? 
 
11.  (C)  Thaksin said that if Soe Win had come, he would 
have expressed to his Burmese counterpart his increasing 
irritation with the situation on Thailand's border with 
Burma.  Rangoon's use of the Wa to attack Shan formations had 
pushed some Shan across the border into Thailand - as much as 
two kilometers in places.  Thaksin said that Thailand was 
currently allowing the fleeing Shan to cross the border.  He 
added that he was considering turning the tables and using 
the Shan to deploy against the Wa in Burma.  He asked for my 
views.  I pointed out that four years ago Thaksin had 
reversed a very similar strategy that had been implemented by 
his predecessor, Chuan Leekpai.  I added that it was his 
right, of course, to return to the previous policy and if he 
did so it would send a strong message to the SPDC. 
 
IRAQ 
 
12.  (C)  We turned the discussion to Iraq.  In earlier 
meetings with Admiral Fallon and Deputy Secretary Zoellick 
Thaksin had said that he would consider some "humanitarian" 
presence in Iraq.  At this private dinner, Thaksin seemed 
extremely sensitive to the issue, particularly the symbolism 
that a Thai presence in Iraq would have in the south. 
Thaksin stressed that as an ally Thailand supported the U.S. 
on Iraq, but asked us to be sensitive to his own efforts to 
manage the situation in Thailand's south.  I responded that 
we were sensitive to his situation but had to emphasize that 
to be an active member of the coalition, presence on the 
ground was the proof.  We left it at that. 
 
ADVOCACY 
 
13.  (C)  On the pending combat aircraft purchase in 
Thailand, I noted that Thaksin's current account concerns had 
led him to decide not to go with either counter trade or 
offset arrangements, but to seek a strict barter agreement. 
I told him that earlier that day I had met Commerce Minister 
Thanong and informed him that Lockheed Martin was ready to 
discuss with his Ministry a 100 percent barter arrangement 
for the purchase of the F-16, but added that Commerce was 
apparently still under the impression that the Prime 
Minister's previous stipulation that only Gripen and Sukhoi 
could bid still applied.  Thaksin welcomed the news of 
Lockheed Martin's readiness to discuss a barter arrangement 
and added that the Thai Air Force would be "very happy." 
 
14.  (C)  I also raised the issue of General Electric's bid 
(together with Pratt and Whitney in the Engine Alliance)  to 
provide engines for Royal Thai Airlines Airbuses.  Thaksin 
laughed and said that we should first get the GE Invision 
issue resolved - otherwise he would have to go with Rolls 
Royce. 
 
SURIKIART CANDIDACY 
 
15.  (C)  I asked the Prime Minister about Deputy Prime 
Minister and former Foreign Minister Surikiart's bid to be 
the next UN Secretary General.  Thaksin replied that if it 
was Asia's turn to take over, then Surikiart had a good 
chance of succeeding Kofi Annan.  I asked what effect Sri 
Lanka's interest in its own candidate, Jayantha Dhanapala, 
would have on the race.  Where was China going with its 
support?  Thaksin replied that even if Sri Lanka were 
serious, Thailand had more support among Asian countries.  I 
decided to leave the question of Dr. Surikiarts's quest at 
that. 
 
THAI POLITICS 
 
16.  (C)  Turning to Thaksin's overwhelming electoral victory 
last February, I told Thaksin that I had followed Thai 
politics for close to two decades and, in my view, he had 
clearly revolutionized the Thai political landscape.  I asked 
him what he intended to do with his massive mandate.  Thaksin 
said that he expected his second term would be easier, though 
he agreed with my assertion that running a faction-loaded 377 
seat party was no easier than running a five party coalition. 
 At one point in the dinner Thaksin asked if I could imagine 
a worse beginning to a political year, ticking off the 
tsunami, high world oil prices, continuing avian flu concerns 
 
SIPDIS 
and the drought in Thailand.  His most difficult political 
task now, Thaksin said, was satisfying the "professional 
politicians" in the factions.  They expected influential 
ministerial and administrative positions, but were incapable 
of being effective in these jobs.  He had tried to appoint 
them to less significant slots to try to minimize their 
potential to damage.  Thaksin said that he expected to run 
for a third term to ensure that the next generation of party 
leaders would be sufficiently groomed before he finally 
retired. 
 
SLIGHTS THE OPPOSITION 
 
17.  (C)  Thaksin did not have much good to say about his 
current opposition counterpart, Democrat Party (DP) leader 
Abhisit Vejjajiva.  Thaksin described the younger politician 
as too "cool" a personality for Thai politics.  Without a 
hint of irony Thaksin said that Abhisit's arrogance would get 
him in trouble as would his lack of respect towards elder 
politicians.  Noting that the DP had reverted to essentially 
being a regional party based in the south, I recalled a trip 
to their stronghold in the mid-nineties in which it had 
appeared that the party seemed clapped-out ideologically, 
bound in tradition, happy to be a local power and unwilling 
to address the increasingly complex issues facing Thailand. 
They seemed to be undergoing a similar cycle now.  Thaksin 
agreed, and noted that when former Prime Minister and Chart 
Pattana (CP) Party leader Chatichai Choonhaven was on his 
deathbed, Thaksin had been approached to take over as head of 
the CP.  Thaksin said that he made the better decision to 
form the Thai Rak Thai Party rather than take over an 
old-line, later discredited party.  (Note: CP has now become 
part of the Thai Rak Thai. End note) 
 
COMMENT 
 
18.  (C)  This dinner was an opportunity to cover a wide 
range of issues with Thaksin in a relatively direct and open 
setting.  Thaksin was in general very forthcoming and his 
comments on his political problems and the possible sale of 
his telecommunications companies were surprising and 
refreshingly candid.  Overall, the outcome of dinner with 
Thaksin looks encouraging.  Thaksin took on board our 
constructive criticisms over his Burma policy and his earlier 
stance towards Thailand's southern problems.  He appears 
ready to reenergize Thai engagement on FTA.  He also appears 
ready to open the combat aircraft competition to Lockheed 
Martin and to lift restrictions on U.S. beef imports.  The 
Prime Minister was in an acceptance mode and looks ready to 
move in the right direction on a number of our issues.  End 
comment. 
 
BOYCE