Asian Affairs

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A Setback for Thai Democracy: The Rise, Rule and

Overthrow of Thaksin Shinawatra

Amy Kazmin

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Overthrow of Thaksin Shinawatra, Asian Affairs, 38:2, 211-224, DOI: 10.1080/03068370701349284

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 Asian Affairs, vol. XXXVIII, no. II, July 2007

A SETBACK FOR THAI DEMOCRACY: THE RISE,

RULE AND OVERTHROW OF THAKSIN
SHINAWATRA
AMY KAZMIN

Amy Kazmin has a BA in history from UC Berkeley and an MSc in Economic

History from the London School of Economics. Since 2000 she has been the
Bangkok-based South East Asia correspondent for the Financial Times. She
previously spent five years in New Delhi, writing for both the FT and Business
Week.

Clash of the Titans

As befits a monarch styled as a demi-god, Thailand’s King Bhumibol Adulyadej
often communicates through parables, stories and signs, from which his subjects
are expected to infer his message. But there was no mistaking the meaning of
his December 2001 birthday speech.
It was just a year after Thaksin Shinawatra, a billionaire telecommunica-
tions tycoon, had swept to power with an unprecedented electoral mandate.
He had persuaded Thai voters that he was nothing short of a national saviour
ready to lead the country – then still reeling from the humiliations of the
1997 Asian financial crisis – into a glorious future. And indeed, the country
was already showing signs of a nascent economic recovery.
Yet in his nationally televised birthday address, King Bhumibol, with the
cabinet and other prominent Thai figures arrayed before him, warned that
Thailand was stepping backwards to “disaster”, as a result of arrogance,
egotism, conflict and double standards. Lest there be any doubt where this dres-
sing-down was directed, the king added: “I can see the prime minister has a long
face ... He might have no idea what to do because there seems to be no progress
with anything. So many people have noticed the country is in a state of disaster
instead of prosperity. Everything is getting worse and worse.”1
The highly public royal reproach of a popular, elected prime minister was an
early indication of the tensions then already building between the palace and
Mr Thaksin, who had used modern marketing techniques to build a mass
rural support base unrivalled by any elected politician in Thai history. It was
a conflict that simmered below the surface of much of Mr Thaksin’s tenure –
discussed only in whispers, due to Thailand’s strict lese-majeste laws which
make any perceived slight to the monarch a crime potentially punishable by
15 years imprisonment. But, significantly, when the army ousted Mr Thaksin
last September, one of the several reasons they cited – along with corruption

ISSN 0306-8374 print/ISSN 1477-1500 online/07/020211-14 # 2007 The Royal Society for Asian Affairs
http://www.tandf.co.uk/journals DOI: 10.1080/03068370701349284
212 A SETBACK FOR THAI DEMOCRACY

and deep social divisions over Mr Thaksin’s leadership – was the premier’s
allegedly intolerable, unspecified, affront to the king.
Back in his youth – particularly during the Cold War, King Bhumibol
himself had served as the primary beacon of hope for Thailand’s rural poor,
travelling hectically to remote rural areas, distributing relief and largesse –
thus solidifying the image of the monarchy as the primary benefactor of the
common man. Mr Thaksin’s own aggressive wooing of rural voters was seen
as a brazen attempt to overshadow the monarchy – and capture the hearts of
its key constituency. For example, many royalists were aghast at a published
photo of Mr Thaksin clutching the hands of a respectful rural villager in a
pose that mirrored an iconic image of a then young King Bhumibol with an
elderly village woman. “Thailand has room for only one populist leader”, a
keen student of Thai politics noted.
However, it was not just Mr Thaksin’s aggressive courtship of the rural
masses that put the premier and the palace on a collision course. It was also
palace concern at Mr Thaksin’s ideas for rural development, which royalists con-
sidered antithetical to the “sufficiency economy philosophy” promoted by King
Bhumibol, especially after the Asian financial crisis. In the face of glaring social
inequalities – including one of the most unequal distributions of income in the
world, King Bhumibol had long promoted Buddhist moderation and self-
reliance, urging farmers to live contentedly within their means. He reiterated
these ideas after the crisis, reassuring his demoralised people that they had the
inner resilience to withstand hard times. In contrast, Mr Thaksin, a wildly suc-
cessful entrepreneur with a taste for fine wines and fast cars, sought to inspire
Thais to follow in his footsteps – suggesting they too could grow rich by borrow-
ing money, tapping their skills, and building their own successful businesses.
This multi-layered conflict – over prestige, power and ideas – ultimately
contributed in September to the bloodless military coup against Mr Thaksin,
while he was in New York to address the United Nations General Assembly.
The military’s action culminated the months of protests against Mr Thaksin’s
leadership by Bangkok residents, but also came in the run-up to an election
that the premier and his ruling Thai Rak Thai (Thais love Thais) party were
widely expected to win, due to the staunch, unwavering support among rural
Thais, who make up the majority of the Thai population.
In the coup’s aftermath, King Bhumibol, a constitutional monarch who is
supposed to be above politics, kept silent – not surprising given the rarity of
his public appearance in recent years, when he has suffered ill health. Yet
rightly or wrongly, many Thais saw the hand of their revered king in the
military’s dramatic intervention. The man who led the coup, General Sonthi
Boonyaratkalin, the first Muslim army chief in Buddhist majority Thailand, is
known as a devoted royalist, close to retired Gen Prem Tinsulanonda, president
of the Privy Council. Although Gen Sonthi insisted the coup was his own idea,
many Thais found it hard to believe he would have acted without at least tacit
blessing from the palace.
Coups are certainly nothing new to Thai politics. King Bhumibol’s six-
decade reign had seen 17 coups prior to Mr Thaksin’s overthrow. In recent
 A SETBACK FOR THAI DEMOCRACY 213

decades, the traditional script has called for ousted leaders to flee into a foreign
exile for a few years’ “cooling off period”,’ before they are permitted to return
to Thailand or at the very least for them to live out their lives in quiet, comfor-
table obscurity.
But much to the chagrin of the current coup leaders, Mr Thaksin has
declined to follow the example of his predecessors. They were creatures of
the army, with little or no mass support, and they had few paths back to
power once they had fallen from grace. So they generally accepted the game
was up. In contrast, Mr Thaksin still commands tremendous loyalty among
the rural poor, who see him as the first elected politician to ever pay serious
attention to their needs. Besides genuine popularity, Mr Thaksin also has a
vast fortune from the sale of Shin Corp, the telecommunications-to-aviation
empire he founded before entering politics. And most Thais believe that
Mr Thaksin – famed for his tenacity – is keen to re-claim the mantle that he
considers was unjustly seized from him.
Little wonder then that the military, its government, and other supporters of
the coup seem so visibly rattled each time Mr Thaksin gives an interview or
makes a speech. His avid courting of the public spotlight suggests that
despite his claim to the contrary, he is far from resigned to a future playing
golf, shopping and enjoying a life of luxury in foreign lands. Even after
his ouster, Mr Thaksin is casting a long shadow, a shadow that will hang
over Thailand, and keep its politics unsettled, for quite some time to come.

From the Wreckage of the Financial Crisis . . . A New Force

Mr Thaksin’s political rise came out of the Asian financial crisis, a deeply trau-
matic event for a country that was previously lauded for sustaining average
growth rates of 7.8 percent for nearly three decades. The July 1997 devaluation
of the Thai baht – after the central bank had exhausted its foreign currency
reserves in a failed attempt to defend its long-standing fixed exchange rate
regime – marked the start of a swift and savage fall from grace. The collapse
of the baht was followed by a painful 12 percent economic contraction. Thai
businesses, which pre-crisis had been indulging in cheap foreign currency bor-
rowings, found themselves groaning under the burden of massive loans that
had doubled in local currency terms. Heavily-indebted businessmen set up
“former rich” markets to offload some of their unnecessary luxury items,
while a once wealthy stock broker took to selling sandwiches on the streets to
survive. Thais began a soul-searching debate over what had gone wrong, and
what was the right path to restore Thailand’s prosperity – and its battered pride.
The Democrat Party-led coalition, which took the reins of government four
months after the currency devaluation, blamed Thailand’s woes on excesses and
lack of prudence by Thai banks and companies – a misallocation of resources
exacerbated by inept economic policymaking and weak financial sector regu-
lation. With pressure from the International Monetary Fund (IMF) – which
had provided Bangkok with a $17bn bailout, the World Bank and international
214 A SETBACK FOR THAI DEMOCRACY

investors, the Democrats began painful structural reforms to strengthen corpor-

ate accountability and governance, and to open Thailand’s protected domestic
economy to greater foreign participation. It implemented these policies with
the dour approach of a school headmaster disciplining an unruly class
But Thailand’s influential business families resented being held responsible
for the country’s misfortunes. They blamed Thailand’s crisis on foreign hot
money that had rushed in when times were good, then fled at the first signs
of trouble – and it angered them that foreigners were strengthening their foot-
hold in the Thai economy just when they were least able to compete. For their
part, left-leaning social activists and the rural poor saw the crisis as a conse-
quence of years of urban-centric growth that failed to improve conditions in
the countryside, which is home to 70 percent of the population.
Mr Thaksin – whose telecommunications empire was one of the few Thai
companies to emerge from the crisis relatively unscathed – tapped these two
disparate disgruntled constituencies to create his Thai Rak Thai party. From
this seemingly strange alliance, Mr Thaksin and his closest advisors created
the most potent electoral force Thailand had ever seen. The key to his
amazing success was to effectively portray himself and his party as the cham-
pions of the rural poor – whose votes held the key to capturing political power
in affluent Bangkok.
Mr Thaksin seemed an unlikely choice of hero for those left behind by the
economic development process of previous decades, which mainly benefited
urban elites. The scion of a prominent merchant family from Chiang Mai, Mr
Thaksin was a consummate political “insider”, who had built his own business
and vast fortune by using his personal connections with influential power-
brokers to obtain monopoly telecommunications concessions, then pricing
those telecom services so profitably high that they remained out of reach for
many common people.
Despite Mr Thaksin’s campaign claims that he had come from a humble
background, his businessman father was active in local politics and served as a
member of the Thai Parliament for three years in Mr Thaksin’s youth and
young adulthood. For most of his early education, Mr Thaksin attended Chiang
Mai’s most exclusive private school, before moving on to the prestigious
Police Cadet Academy. He joined the police force in 1973, and after less than a
year he received a government scholarship to study in the US, where he eventually
obtained a PhD in criminal justice from Sam Houston State University in Texas.
His career as an entrepreneur was launched in 1982, after his return to Thai-
land. Capitalising on his strong government contacts, he and his wife Potjaman,
the daughter of a high ranking police officer, established Shinawatra Computer
and Communications to sell IBM mainframe computers to the government and
public sector enterprises. His uncle, who had assumed his father’s parliamentary
seat, served as deputy minister for transport and communications between 1986
and 1988. By 1990, Shinawatra Co. had a 90 percent market share of the public
sector computer market.
Mr Thaksin’s Shin Group, and its affiliated companies, then secured a series
of lucrative telecom and broadcasting concessions, including a 15-year licence
 A SETBACK FOR THAI DEMOCRACY 215

to run a paging service, a 20-year cable TV concession, a licence to operate a

mobile phone system with the state-owned Telephone Organisation of
Thailand, and a 30-year concession to operate Thailand’s first domestic tele-
communications satellites. As a businessman, Mr Thaksin was considered a
tough player, who used his network and influence to freeze out competition
and rewarded friendly bureaucrats with lucrative jobs in his companies after
they stepped down from their government posts.
He first began dabbling in politics in the early 1990s, as a member of the
reformist Palang Tham or “Moral Force” party, serving for around 100 days
as foreign minister in a weak coalition government. He was then deputy
prime minister in the coalition that was in power when the Asian financial
crisis hit. While most Thai companies’ debt burden doubled in baht terms
virtually overnight, Mr Thaksin’s corporate empire appeared largely unaffected
by the fall of the currency, which provoked persistent rumours he had been
given advance warning – allowing him to take measures to adjust his
empire’s debt portfolio.
In 1998 – with Thailand’s economy in recession, Mr Thaksin founded Thai
Rak Thai, backed by academics and businessmen unhappy with the IMF-
imposed austerity programme. Despite his intimate links with Thailand’s old
power brokers – whose poor economic stewardship had contributed to the
crisis, Mr Thaksin also managed to win the support of social reformers and
long-standing leftists, convincing them that he was committed to cleaning up
Thailand’s notorious ‘money politics’ and offering a ‘new deal’ for long-
neglected rural areas.
Campaigning in the months before the January 2001 elections, Mr Thaksin
capitalised on the pervasive ‘feel-bad’ factor then weighing on Thailand. He
attacked the Democrats’ economic management and insisted that he, and his
Thai Rak Thai party, represented the best hope for the future prosperity of
the rural masses, the urban middle classes and struggling, crisis-hit businesses.
In his dramatic election rallies and catchy advertisements, Mr Thaksin por-
trayed himself as a “white knight”, ready to dedicate himself to his suffering
nation. His vast wealth was touted as evidence of the business acumen and
skills he was ready to devote to the service of Thailand and its people. His
fortune was also cited as a guarantee that he – unlike many of Thailand’s
past leaders – could and would govern without any thought for his own personal
enrichment. He insisted that his only aim was to “give back” to a country that
had bestowed so much upon him. His sunny optimism and his self-
assurance were powerfully appealing to a demoralised population looking for
deliverance from their economic woes.
Ultimately, Mr Thaksin succeeded in selling voters on the dream that he
could make the country, and them, rich and prosperous – just as he had done
for himself. But Thai Rak Thai’s success was not merely based on the force
of Mr Thaksin’s indisputably charismatic personality. It also offered voters a
concrete policy platform, tailored deliberately to solve what rural people per-
ceived to be their biggest problems. Many of Mr Thaksin’s closest advisors
had come from marketing backgrounds and they had already conducted
216 A SETBACK FOR THAI DEMOCRACY

extensive surveys of poor rural voters to understand their hardships and identify
potential solutions. From this extensive research came Thai Rak Thai’s winning
formula.
To help ease farmers’ heavy debt burden – one of their biggest worries,
Mr Thaksin promised a three-year suspension of repayment of farmers’ debts
to the state-owned Bank for Agriculture and Agricultural Co-operatives
(BAAC). He also pledged to give one million baht to each of Thailand’s
70,000 villages, money that was to be used as revolving credit to help individual
villagers to set up their own new micro-enterprises. He also pledged to give all
Thais the right to visit a government doctor or a hospital for 30 baht per visit.
For urban dwellers, he vowed to take bad loans off the books of struggling
banks, offer more credit to small and medium enterprises, and more aggres-
sively protect Thai businesses from foreign competition.
Mr Thaksin’s political rivals, and some independent critics, argued that the
Thai Rak Thai’s populist platform – which seemed to offer something for
everyone – was little more than a modernised version of Thailand’s old
fashioned money politics, though now the patronage and largesse was to be
dressed up as official policies, and funded through government coffers. But
voters did not care. Convinced that the charismatic businessman was the
answer to their woes, on 6 January 2001 Thais handed Thai Rak Thai the stron-
gest showing by any party since the abolition of absolute monarchy in 1932.

“Thaksinomics”
In his first three years in power, Mr Thaksin presided over a return to good
times, just as he had promised. Some of this economic rebound was pure
good luck. He took the reigns of government just as a global pick-up in
growth was fuelling rising demand for Thai exports, particularly in agricultural
commodities, which had a big impact on the economy. Consumers fed up with
three years of austerity went on a spending spree, reassured by their optimistic
new leader that the worst of the country’s problems were behind them and it was
safe to spend again. This consumer binge was also facilitated in part by new
multinational consumer finance companies that had entered the market in the
wake of the crash, and were rolling out their credit programmes. Mr Thaksin
also moved quickly to fulfil his promises to the rural poor, and those pro-
grammes pushed cash out into the countryside.
But with a cabinet list reading like a “Who’s Who” of Thai industrialists,
Mr Thaksin had bigger ideas. According to Pasuk Phongpaichit and Chris
Baker, the authors of a biography of Mr Thaksin, his aim was to transform Thai-
land into a fully-fledged “developmentalist state” that would actively promote
and protect domestic companies – especially those linked to his government –
all in the name of catch-up economic growth and a national leap to first-world
status.2 The aim was to “reposition” the country to find a new place in an
increasingly competitive world by nurturing entrepreneurs with cheap credit
from state banks, which were directed by the government to lend aggressively.
 A SETBACK FOR THAI DEMOCRACY 217

With great fanfare, Mr Thaksin unveiled plans to wean the economy from
dependence on low-value manufacturing exports, towards what officials
claimed would eventually result in globally known Thai luxury equivalents to
Louis Vuitton. It sought to identify and support winning sectors – such as
agri-business, fashion, jewellery, tourism, automobiles, while Thai handicrafts
and rural traditions, such as fruit-wine making, were talked up as potential
micro-enterprises that could capitalise on traditional rural skills, lift incomes,
and spur greater domestic consumption.
To kick-start new ventures, support existing businesses and fuel growth, the
administration aggressively pushed out new credit, goading state banks to ramp
up their lending. The administration also gave generous debt write-offs to influ-
ential defaulting, crisis-hit borrowers through a state company that bought up
bad loans, mainly from state banks. Thailand’s Board of Investment (Bol),
set up decades earlier to encourage inward foreign investment, was ordered
to help Thailand’s small and medium-sized enterprises (SMEs) and the fledg-
ling village industries to secure technology and markets.
Mr Thaksin’s critics claimed that the talk of nurturing village industries, and
the money spent on it, was little more than a political sop to rural voters – deeply
old-fashioned patronage dressed up in fancy terms, and that his economic pro-
gramme was more hype than substance. Certainly, the economic initiatives
were all accompanied by heavy television advertising to reinforce the govern-
ment’s image as the protector of the nation’s economic interest, and the nurturer
of its business sector. And on the day he later described to friends as the happiest
of his tenure, when Mr Thaksin expelled the IMF from Thailand after pre-paying
what was left of Bangkok’s outstanding debt from the humiliating bailout, he
appeared on television to announce his triumph, urging Thais to celebrate
what he proclaimed as Thailand’s “independence day”.3
Yet even while banging the nationalist drum for the domestic audience, Mr
Thaksin’s government remained receptive to foreign investment – as long as it
did not upset any important domestic constituency or threaten established
players in the long-protected service sector, a stance similar to most previous
Thai governments. Rather than retreating from the forces of globalisation,
Mr Thaksin sought to more actively manage the forces of change to the best
advantage of private Thai businesses, and to the advantage of his own political
position. In 2004 – when global oil prices hit a record high a few months before
national elections due in 2005, Mr Thaksin’s government began subsidising
diesel prices – to cushion Thai consumers from the impact, and keep them
feeling good ahead of the crucial vote.

CEO-style leader or Tao Kae

Mr Thaksin may have delivered what he promised in terms of an economic

rebound. But Bangkok’s middle-classes, powerful elites and many of his
more left-leaning, reformist supporters grew deeply uneasy about Mr Thaksin’s
leadership, especially his authoritarian tendencies. Between 1938 and 1992
218 A SETBACK FOR THAI DEMOCRACY

Thailand had endured a series of military dictatorships and short-lived elected

governments. While the economy had flourished, decades of dictatorial rule left
a legacy of deference to authority, abuse of unchecked power and acceptance of
the use of political influence for personal enrichment.
When the Asian financial crisis hit, shock at the sudden economic collapse
increased aspirations for stable democracy and greater official accountability.
Convinced that poor governance and lack of scrutiny of leaders had played a
major role in the crash, the country adopted a new constitution that was intended
to boost political stability, decentralise power, entrench the rule of law and
protect individual and civil liberties. Among the constitution’s most important
innovations was an elaborate system of checks and balances, intended to act as
restraints on politicians’ unfettered use of their power.
As a first-time prime ministerial candidate vowing to restore Thailand’s
wounded pride and get the sputtering economy back into high gear, Mr
Thaksin, an avid reader of books on management theory and futurology, had
talked little of democracy but had promised what he called “CEO-style” gov-
ernment – fast, efficient, flexible and responsive. But for all his professed
enthusiasm for modern management tools, Mr Thaksin in power displayed
many traits of the traditional Thai-Chinese tao kae, or business owner, ruling
his dominion with an iron fist, making most key decisions himself, installing
loyal relatives as subordinates and tolerating little dissent.
Once when a cabinet meeting was broadcast live on television, many Thais
were aghast to see the premier lecturing his ministers, as they submissively took
notes in January 2004. Civil servants complained bitterly that he actively inter-
fered with the bureaucracy and the army, polarising the institutions. His public
style offended many too, especially in Bangkok’s intellectual circles, and other
influential elites. A gifted politician, Mr Thaksin was charming and engaging
when he wanted to be, visibly revelling in the adoration of his supporters.
But in a Buddhist culture where polite manners, humility and calm tempera-
ments are highly valued among “good society”, Mr Thaksin, famously hot-tem-
pered, appeared brash and domineering, frequently using coarse language to
attack and insult his critics and political rivals.
He declared democracy was merely a “means” to the more important end of
creating wealth and prosperity for the poor, and displayed a deep contempt for
the rule of law, treating his electoral victory as something of a blank cheque.4
As national chief executive, Mr Thaksin showed few qualms about the use of
state power to intimidate, harass or even eliminate those he deemed trouble-
makers. Early in his tenure, the Anti-Money Laundering Office, set up to inves-
tigate large-scale crimes, began probing the accounts of journalists and other
government critics. In 2002, police raided a polling agency that reported a
drop in Mr Thaksin’s popularity. During an official three-month “war on
drugs”, around 2500 people suspected of peddling narcotics were gunned
down after Mr Thaksin urged police to be ruthless in battling the drug scourge.
Mr Thaksin’s disrespect for democratic norms and institutions was initially
revealed to the public in 2001, after the Constitutional Court acquitted him of
charges that he had intentionally concealed his assets on a mandatory asset
 A SETBACK FOR THAI DEMOCRACY 219

declaration form during his earlier stint in public office. The case – with its
potential punishment of a five-year ban from politics – had overshadowed
his first months in the premiership. In its verdict, the court apparently
weighed Mr Thaksin’s immense popularity, rather than just the mere legal tech-
nicalities, though judges also complained of coming under intense pressure to
clear him. After his acquittal, Mr Thaksin expressed utter contempt for the
court, questioning why unelected judges and anti-graft commissioners should
have any authority at all over a popularly elected leader.
Subsequently, Mr Thaksin was accused of subverting Thailand’s fledgling
system of checks and balances. The watchdog agencies set up under the 1997
Constitution that were supposed to be fully independent – like the Consti-
tutional Court, the National Counter-Corruption Commission, and the Election
Commission – were packed with Thaksin loyalists. Members of the ostensibly
non-partisan elected senate, which was responsible for choosing appointees for
these independent commissions, were said to have received regular retainers
from the Thai Rak Thai party, enticements to heed the party’s wishes.
Media also came under pressure. State-controlled but privately managed tele-
vision and radio stations, which through the 1990s had grown increasingly vocal
in current affairs reporting, were reined in, while unofficial voices – and gov-
ernment critics – struggled for airtime. The government, and companies
affiliated to cabinet members, used their large advertising budgets to reward
sympathetic newspapers and punish those deemed too critical. These develop-
ments were distressing to reformers who had struggled for years against
Thailand’s military dictatorships, and who had thrown their support behind
Thaksin in the belief that he would be the harbinger of a new, more democratic
era in Thai politics. Members of the armed forces, bureaucracy, and other
crucial institutions were not happy either.
Even hopes that he would usher in a period of clean government proved
misplaced. Mr Thaksin may not have had his hands directly in the state till
like many past Thai politicians, but he appeared to tolerate pervasive graft by
others in his cabinet. Businesspeople complained that all of the many lucrative
government contracts awarded in his administration went to those with links to
Mr Thaksin or members of his cabinet, while firms deemed ‘unfriendly’ to the
government were utterly shut out.
His administration was also dogged by accusations that it had taken
decisions that specifically benefited Shin Corporation, the telecommunications
empire he had established before entering politics. Before taking office,
Mr Thaksin and his wife had transferred their shareholdings to his children –
to comply with constitutional rules intended to prevent conflicts of interest.
But this legal separation – which Pasuk and Baker described in their biography
of Thaksin as “no more than the width of the dining table” – failed to squash
talk of “policy corruption”, a term Thai academics coined to describe decisions
that promoted or protected the corporate interests of the Shinawatra family, and
other families with Mr Thaksin’s business-dominated cabinet.5
Controversial decisions abound. In January 2004, an arbitration panel
reduced by nearly three-quarters the concession fees charged to iTV, a
220 A SETBACK FOR THAI DEMOCRACY

current affairs channel in which Shin Corp had bought a substantial stake in late
2000. The prime minister’s office, which had granted iTV’s licence, also
released the channel from its original requirement to devote 70 percent of its
primetime programming to news and current affairs, provoking howls from
media campaigners. Others objected when the Board of Investment awarded
to Shin Corp’s satellite subsidiary an eight-year, 16.5 billion baht corporate
tax holiday on profits from foreign sales of its satellite. Airline operators com-
plained that Thai AirAsia, a low cost carrier owned by Shin, received preferen-
tial treatment by aviation officials.
Mr Thaksin’s management of a renewed upsurge of violence in Thailand’s
troubled Muslim south also raised many alarms in other corridors of power,
including the army and the palace. Thailand’s southernmost provinces are
home to a deeply disgruntled ethnic Malay Muslim population that has long
complained of being treated like second-class citizens by the Buddhist-
dominated, Thai-speaking establishment. The area has a long history of
insurgency, which had apparently flickered out, but resurfaced in 2004.
Mr Thaksin’s tough, hard-line response, and high profile human rights abuses
during his tenure, were blamed for fanning the unrest and helping the insurgents
to increase their recruitment of disaffected youth.
Shortly before the elections scheduled for February 2005, many analysts
were anticipating that Bangkok voters would register their discontent at the
polls, though there was little question that Thai Rak Thai would return to
power, given the strength of its rural support, and the weakness of the opposi-
tion. But the devastating Boxing Day tsunami – which killed thousands in
Thailand and elsewhere – gave Mr Thaksin a fresh chance to play the hero,
and to remind even wavering urban voters of what they had originally
admired in him. He moved quickly into the disaster area, and for two weeks
he repeatedly returned to supervise relief and clean-up efforts, goad bureaucrats
into action and lay plans for rehabilitation. Thai TV channels slavishly recorded
and broadcast his energetic efforts, which reaffirmed many Thais’ shaken faith
in their prime minister.
Thus, in the general elections held just a few weeks later, Thais handed
his Thai Rak Thai party three-quarters of all the parliamentary seats – an
unprecedented result in a country where no elected leader had ever even com-
pleted a single term. But the simmering urban discontent with Mr Thaksin’s
leadership and his dominance, resurfaced in January 2006, just a year later,
after the prime minister’s family sold their telecommunications empire to
Temasek Holdings, the Singapore government’s investment arm, for a huge
tax-free sum.

The Shin Corp sale, and its aftermath

For a man with such strong political instincts, Mr Thaksin spectacularly mis-
judged the Shin Corp deal and the strength of resentment that it had unleashed
– errors that ultimately cost him his premiership. At several pivotal moments as
 A SETBACK FOR THAI DEMOCRACY 221

the long drama unfolded, Mr Thaksin – who had seemed politically invincible
after the election just a year earlier – overplayed his hand, rejecting compro-
mises that might have eased tensions. These miscalculations fuelled the crisis
and ultimately paved the way for the military – which had itself been bitterly
divided over Mr Thaksin’s style of rule – to intervene, on the domestically
plausible – and internationally palatable – grounds that their action was necess-
ary to prevent imminent violent conflict.
Mr Thaksin and his family clearly did not anticipate the furore that the sale
of their 49 percent stake in Shin Corp would unleash. For them, the deal must
have just seemed smart business. After several years’ expansion, buoyant econ-
omic growth and favourable policies during Mr Thaksin’s regime, Shin Corp
was at the peak of its value – worth far more than it had been when he took
power. But major further investment would be needed to fund the move into
next generation technology. Faced with the prospect of ploughing in lots
more money, the family decided it was time to cash in. In January 2006, the
Shinawatras sold their shares at a historic high price of 49 baht per share –
for a total profit of $1.9 billion.
But what might have made good business sense was far from politically
astute. The man who had once vowed to safeguard Thailand’s national interest,
and protect it from foreign encroachment, was accused of effectively turning
over valuable national assets to a foreign government, Singapore, and of
using his power to help his family evade taxes. News that the transaction –
which was executed through the stock market – would be tax-free, thanks to
rules aimed at promoting stock market investment, provoked a massive
public outcry among middle-class Bangkok residents, who had increasingly
felt like the minority shareholders in an administration oriented mainly to the
rural poor or the very rich. The tax-free profits particularly infuriated Bangkok’s
Thai-Chinese community, small and medium size businesspeople who had
themselves come under increased surveillance from tax authorities as the gov-
ernment sought to bolster its revenues to pay for its expensive populist pro-
grammes. In the weeks after the sale, tens of thousands of protestors turned
out for weekly demonstrations to demand Mr Thaksin’s resignation, claiming
he had lost his “moral authority” to rule.
Mr Thaksin’s handling of the issue was clumsy from the start. Initially, he
scoffed at critics of the deal, calling them merely “jealous” of his family’s
wealth. Then he rejected a suggestion from his former political mentor
that he donate a substantial portion of his family’s tax-free windfall profits
to charity, a gesture that analysts say could have quickly deflated public
wrath. Even as the weekly mass protests grew in size, Mr Thaksin seemed
not to recognise their seriousness, dismissing the protestors as merely a hired
crowd, serving some unspecified political enemy. Yet the demonstrators’
well-coiffed hair, diamonds and pearls, high heels, Burberry shirts, expensive
handbags, and digital video cameras told a different story: a story of influential
and affluent Bangkok residents – businesspeople, bureaucrats, academics and
others – who strongly believed that their prime minister had lost all legitimacy
to govern and were determined to see him ousted.
222 A SETBACK FOR THAI DEMOCRACY

Confronted with such a direct challenge to his authority, Mr Thaksin

gambled. A month after the sale – and just a year after his previous election
triumph, he impetuously dissolved Parliament and called fresh elections for
April 2006, betting that his rural supporters would deliver him another strong
electoral victory, a firm rebuke to silence urban critics. But he over-played
his hand again and failed to take seriously opposition demands for talks on con-
stitutional reforms as a precondition for their participation in the elections. As a
result, Thailand’s main opposition parties, weak and short of cash, declined to
play ball – opting instead to boycott an election that they described as an
attempt to “launder” the tarnished leader. As the tensions and protests escalated,
demonstrators and opposition parties urged King Bhumibol to use his prestige
and unquestioned moral authority to remove Mr Thaksin as head of the govern-
ment. The protestors’ demand that reflected public memories of 1973 and 1992,
when popular uprisings – followed by royal intervention – drove military dic-
tators from power.
But Mr Thaksin, despite being badly damaged and accused of authoritarian-
ism, was not a military dictator but rather an elected leader who remained gen-
uinely popular with a majority of the Thai population, and who was looking to a
general election to renew his mandate. Mr Thaksin, as if implicitly daring the
palace to act against him, said that he would immediately step down if the
king “whispered” to him. But the palace remained silent.
The bizarre 2 April election – which was a kind of referendum on Mr Thaksin’s
leadership – resolved nothing. Thai Rak Thai ran effectively uncontested.
Mr Thaksin had cast the elections as nothing less than a test of Thai democracy
itself. But protest leaders and opposition politicians insisted that no election
result could alter their conviction that the biggest threat to Thailand’s fragile democ-
racy was Mr Thaksin himself, and his disregard for all other institutions and prin-
ciples of democracy other than the popular vote. With his critics urging Thais to
cast a “no” vote – or a blank ballot – to register their opposition to his leadership,
Mr Thaksin vowed to step down if he received less than 50 percent of the vote,
though he was clearly hoping for a landslide showing.
While the result of the election remains uncertain, the prime minister
quickly declared victory. Then on 4 April, Mr Thaksin called on the
monarch. What took place in that meeting remains a matter of intense specu-
lation, as Mr Thaksin himself has given very different accounts of the
meeting to different people, while the palace has kept silence. But immediately
afterwards, Mr Thaksin, visibly shaken, appeared on national television and
declared he would not serve as prime minister in the next government, a sacri-
fice he said he was making for the sake of national unity ahead of celebrations
for the 60th anniversary of King Bhumibol’s accession to the throne. The fol-
lowing day, he packed up the contents of his office, deputised a trusted aide
to act for him, and seemed to disappear.
Only then did King Bhumibol step forward. In a speech to Thai judges in
mid-April, the monarch rebuked those who had called for him to intervene in
the political crisis, saying it would be “undemocratic”. But he also said the situ-
ation after the 2 April election, was “a mess” and he called Thai judges to find a
 A SETBACK FOR THAI DEMOCRACY 223

way to sort it out within the framework of the Constitution. Heeding the call of
the king, Thai courts moved swiftly to annul the 2 April elections, citing legal
technicalities. Within weeks, Mr Thaksin had returned from his political “rest
period” to re-take the reins of power as head of an interim government in the
run-up to yet further elections expected towards the end of the year, which
this time the opposition had agreed to contest.
Thailand appeared to have come full circle. Mr Thaksin and his party were
gearing up for an election that they were widely expected to win – albeit with
reduced parliamentary strength. Mr Thaksin’s vociferous critics, who had taken
a hiatus from their demonstrations after the premier went behind the scenes in
April, were vowing to return to the streets with their campaign to force him out.
Within the military, many officers were deeply concerned at the potential for
a split if tensions re-escalated, as Mr Thaksin had assiduously courted a group
of army officers to ensure their loyalty to him. With the annual army reshuffle
imminent, there were widespread rumours that Mr Thaksin intended to place
these officers personally loyal to him in key positions, taking control of one
of the last institutions that he had not yet been able to fully co-opt into his
service. In the power vacuum of the pre-election period, and with Thaksin
away, General Sonthi decided to act. The army chief – who called himself as
a “a soldier of His Majesty” and had vowed that “the army will adhere to what-
ever advice he gives us” – dispatched tanks into the Bangkok streets, bringing a
quick, bloodless end to the rule of a man who just a year earlier had seemed pol-
itically invincible.

Prospects for Thai democracy

The moment when the tanks rolled into Bangkok and General Sonthi announced
he was seizing power marked an unfortunate end to the hope and promise embo-
died in the 1997 reformist constitution for a maturing of Thailand’s fragile
democracy. Many of Mr Thaksin’s opponents, who supported the coup,
argued that the premier had already effectively “torn up the constitution”,
and the army’s revocation of the charter was thus a mere formality. Yet
others were deeply disappointed that the charter – the product of an elaborate
drafting process with full public consultation – had been unceremoniously cast
aside.
General Sonthi and the civilian government installed soon after the military
takeover have sought to justify the coup as necessary to save and protect Thai
democracy, which they said had gone off the rails. The coup-makers set about
writing a new charter that they quietly hoped would prevent the future emer-
gence of any leader as strong as Mr Thaksin. The objective is to bolster the pos-
ition of other institutions in Thai society to act as a safeguard against
excessively powerful elected leaders, and also to weaken political parties to
prevent any one group from becoming so dominant.
Yet it seems questionable that any new charter – no matter how well drafted
– will be able to address what remains the fundamental weakness in Thailand’s
224 A SETBACK FOR THAI DEMOCRACY

polity: a deep-rooted deference to authority, and the lack of respect for the rule
of law. Mr Thaksin may have subverted the intentions of the constitution, yet he
could not have done so alone. He found many willing accomplices only too
happy to do his bidding either in exchange for enticements, or merely to
appease and satisfy a powerful ruler.
While the constitutional drafters are now trying to craft a more foolproof
system of checks and balances, no system can ultimately be stronger than the
integrity of the individuals involved – and the intolerance of the general popu-
lation for abuse of power. As long as Thais continue to respect power and
money more than they respect the law, efforts to clean up and strengthen
Thai democracy are bound to disappoint. When Thaksin questioned the consti-
tutional court judges’ authority over him, he was merely expressing a sentiment
common among Thais – both rich and poor – that power, and wealth brings
with it a privileged immunity from prosecution. Changing these deep-rooted
attitudes will be a long social transformation.
Mr Thaksin undoubtedly posed a major challenge to Thai society: a popular
elected leader with fundamentally undemocratic impulses and tendencies. Yet
the use of force to remove him has proved an unfortunate remedy. While
Mr Thaksin indeed eroded fledgling democratic institutions, the use of military
force to overthrow him, and toss aside a widely admired constitution, is cer-
tainly no way to strengthen democracy. Mr Thaksin’s critics and rivals
should have battled him in the law courts, in the court of public opinion and
at the ballot box. Even if the struggle was long, hard, and – for the short-
term – unsuccessful, the effort would have helped Thai democracy to mature
and deepen its roots.

NOTES

1. Quoted in Bangkok Post, 5 December 2001.

2. Pasuk Phongpaichit and Chris Baker, Thaksin: The Business of Politics in Thailand. Chiang
Mai: Silkworm Books, 2004.
3. Author interview.
4. Pasuk and Baker, Thaksin, p. 171.
5. Ibid., p. 198.