Though the calm returns to Bangkok, don’t be deceived. The Thailand crisis is about to escalate into a full-blown economic fallout. Reuters‘ Tara Joseph interviews Breakingviews’ Andy Mukherjee about this standoff between farmers and Thailand’s elite…
Tara Joseph: “Oh, Thailand, Andy. Land of tourism, agriculture and absolutely fabulous food. However, it is a political mess, and it doesn’t look like it’s getting any better.”
Andy Mukherjee: “Yes, Tara. I think you’re thinking of lemongrass and feeling hungry…”
Tara Joseph: “That’s right…”
Political Struggles Breed Economic Hardships
Andy Mukherjee: “But yes, you’re – the political crisis in Thailand is indeed deepening. This last week, the constitutional court there annulled the February second election. Now, the political uncertainty that has therefore crept up is now going to be bad for both private consumption and investment. It’s not that things were not bad enough already, but then things are going to be probably a lot worse.
Now, public spending as we know on large infrastructure projects is already in the cold storage where keeping it company is a huge stockpile of rice that has been bought by the government at exorbitant prices from farmers; prices that it can no longer afford to pay. So all in all, it is a gigantic crisis – political as well as economic.”
The Calm Before the Storm
Tara Joseph: “Absolutely. And even though we’re not seeing so much violence on the streets in Bangkok anymore, we do have anti-graft investigations into the prime minister. And the longer that drags on, the worse it seems to be getting for the economy.”
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Andy Mukherjee: “Yes, Tara, you are right, I’m afraid to say. And there are indeed no quick fixes because if it does come to the point where the anti-corruption agency asks for the prime minister’s impeachment, and the senate obliges, then you have some sort of an appointed leader. You will have some sort of an appointed leader with no legitimacy, no political legitimacy, that is.
“Now right now, you have the opposite situation because you have someone who can demonstrate popular support very easily at the ballot box tomorrow if needed, but the elite, the Bangkok elite, just wouldn’t let her.
An Underlying Injustice
“Now it’s a tricky situation. Now at the heart of this problem lies a very delicate balance of power between the rice farmers in the northeast – which is the Shinawatra’s family’s power base – and the urban middle class Bangkok elite. Now it’s also a fiscal conflict because Bangkok gets a disproportionately large share of public resources.
“Now if you ask me, that’s not fair and will need to change even if the elite manages to drive the Shinawatra family out of Thai politics as they have vowed to do.”
Tara Joseph: “The woes are stacking up for Thailand. We’ve got economic woes, we’ve got fiscal woes, and also a political crisis that rolls on.”
So, for now… Thailand may be appear to be calming down, but things are just about to reach a boiling point pretty shortly.