Thai Rak Thai!

It means Thai loves Thai. I met another Thai last week and one thing that we really agreed is that the rule of law has weakened, a culture of street protest has taken hold and social divisions have deepened. It is really sad, but I am optimistic about Thai’s medium to long term outlook, given the strong entrepreneurial spirit in it.

I have seen how the economy rebounded faster than its SEA peers in the 1997/98 crisis and its couple political spirals in the 1990s.

Let me make it clear that I am not a big fan of Democrats and I doubt its policy of national reconciliation based on generous social programmes and amnesty for Thaksin associates banned from politics will work, until and unless it makes peace with Thaksin himself, but it could be too big a risk for Abhisit Vejjajiva to take. Also, it could trigger some kind of reactions from anti-Thaksin People’s Alliance for Democracy (PAD).

Social spending by the Democrats may be seen to be auspicious to campaign for the hearts and minds of the rural poor in the Northeast – the heartland of Thakin’s support base may work to some extent, but it will be a serious violation for one of the key reasons why military coup taken place then. It is not the direct spending that provoke but rather the consequence of the spending and it would not be surprise if members of the Bangkok elite to be part of the reasons as well.

The regional divide between North and South and the struggle between the poor-and-rich will further complicate the matter. In the North, and Northeast, Thaksin’s associated People Power Party (PPP) won 50% and 56% of the votes compared to Democrats while in the Central and South, Democrats took 47% and 80% of the votes. If that geographical extremities are not addressed by the current government, it will aggravates regional tensions further as the social spending program intensifies. Bangkokians are in general perceived northern politicians as being corrupt.

Political risks remain significant and likely to remain above peer levels for the foreseeable future.