Sunday, May 2, 2010

Red Tide: Thailand’s Continued Turmoil Could Have Far-Reaching Ramifications

The protests by tens of thousands in the red-shirted movement have paralyzed Bangkok for nearly two months. The economic cost of the prolonged protest and violence has been estimated at about $3.1 billion. If there is no peaceful solution, the Thai turmoil will not only batter its immediate neighbors, but also trade partners around the globe with far-reaching political consequences for the Association of Southeast Asian Nations as well as authoritarian regimes in the region.

The deadly clashes between the Red Shirts, led by the National United Front of Democracy against Dictatorship, and the security forces have so far left 26 people dead and more than 1,000 injured. The Thai media have been reluctant to depict the conflict as some sort of civil war, but clearly society is deeply polarized and moving closer to the brink.

Unless the parties reach a political compromise, the rising political violence could have serious and lasting consequences for the Thai economy and the political landscape of the region. Although the Red Shirts are generally not from the rice-growing part of Thailand, they are from rural areas. The economic dislocation brought by the turmoil could seriously affect agriculture — a main source of Thai exports. Thailand is among the world’s leading exporters of key agricultural products, including rice, sugar and rubber, and any disruption could result in higher prices worldwide. Rising rice prices in 2008 triggered violent protests in dozens of countries.

Thailand is the world’s largest exporter of rice, supplying 27 percent of world exports and sending more than six million tons of the grain around the globe. Its largest export markets are Indonesia, Nigeria, Iran, the United States and Singapore. As only a relatively small amount of world food production is traded internationally, disruption of supply from key exporters, such as Thailand, due to weather or war, can cause ripples across the world, especially among the one-in-six who live in poverty.

Other exporters, however, may benefit from higher prices, expand production and increase their market share with benefits for their farmers and rural communities. Vietnam, India and the emerging Cambodia would perhaps gain the most from a Thai civil war.

Second, looming civil war will devastate foreign direct investment, which has yet to recover from the devaluation of the baht and the depression of the late 1990s. Thailand’s central bank has expressed concern that the unrest could discourage new investment. The Board of Investment has seen a few signs of foreign investors seeking to relocate; thus investment pledges this year could fall 15 percent to $9.2 billion. Meanwhile, the baht has strengthened despite the troubles, tending to move in line with other Asian currencies. But the currency could weaken if the government falls or violence escalates.

Third, conflict will slow the tourism industry. Since the demonstrators took to Bangkok’s streets, several countries have issued travel warnings and advised their citizens not to visit Thailand unless necessary. The country’s hotel and tourist industry, providing 22 percent of Thailand’s foreign exchange earnings, is already suffering. The prolonged crisis has already benefited other travel destinations in the region as profits have been diverted away from Thailand.

Thailand usually welcomes up to 15 million visitors a year and tourism contributes about 7 percent of the country’s gross domestic product. But the political strife will likely reduce that number. Thailand is surrounded by competitors looking to grab a piece of the tourism pie, with Vietnam, Laos and Cambodia all experiencing double-digit growth in arrivals.

Fourth, civil war in Thailand could generate political and security consequences both for immediate neighbors and distant foreign partners. Although the protest began with a demand for fresh elections and the return of a favorite politician, former Prime Minister Thaksin Shinawatra, the movement has broadened into demands for elimination of the gap between rich and poor and genuine grassroots democracy. The call to end elitist politics and the military’s dominance of politics has already encouraged Burmese opposition members to persevere in their fight against military dictatorship. If it continues, the democratic movement could be felt by other authoritarian neighbors like Laos.

The government of Prime Minister Abhisit Vejjajiva has tried to shut down the opposition’s television and radio stations and Web sites, and labeled some red-shirted members “terrorists” to deflect Western criticism. The term “terrorists” can also be used to legitimize the government’s harsh measures. Pro-government royalist Yellow Shirts, known as the People’s Alliance for Democracy, employ similar tactics, describing red-shirted rivals as “insurgents.” Recall that PAD, lauded by current Foreign Minister Kasit Piromya, seized Bangkok’s Suvarnabhumi Airport in November 2008. Yet Abhisit’s government has done nothing to prosecute PAD members, an example of what the Red Shirts see as a double standard of a “dictatorial” government.

But these tactics do not obscure the fact that the state is willing to use force against the protesters. Because of their dislike for the autocratic and allegedly corrupt Thaksin and a desire not to rock Thai political stability, the US government and other Western democratic countries so far have given tacit support to the current government. But if the violence against the protesters was to escalate, they may be forced to withdraw their support and even call for sanctions against Thailand.

On the other hand, countries in the region, like China and Asean members, will likely continue to support any regime in Bangkok, no matter what it might do to the people. Neighbors seem to endorse the idea of Thailand maintaining the elitist status quo, which prioritizes political stability and business opportunities above people’s rights. Thailand becoming a representative state might not be in their best interest.

The expected responses from Thailand’s close neighbors remind the global community that the notion of democracy remains a fragile commodity. Should the Red Shirts win this class war, Thailand could re-emerge as a model for democracy based on a more just society. This would probably frighten political leaders of less democratic regimes in Asean and even drive them to be more firm in protecting their own power position. This may explain why Asean and China have remained largely silent about Thailand’s political violence.

Since the world has become increasingly globalized, keeping politics strictly within the national border is becoming more elusive. Thailand’s position in the world economy is built on extensive links, all transmitting the consequences of instability in Thailand faster and further than ever before. By Pavin Chachavalpongpun fellow, Singapore’s Institute of Southeast Asian Studies.

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