Sunday, January 28, 2007

Caught in the Middle

HUA HIN, Thailand – It seems only a matter of time before Thailand’s deposed prime minister Thaksin Shinawatra tries to entangle the United States in his battle with the generals who seized power in a coup d’etat September 19.

Thaksin was in New York preparing to address the UN General Assembly when the generals ousted him. He flew to London, where he has a home, and of late has been shuttling between Asian cities. He has not returned to his homeland.

The former premier recently hired two well-connected American PR firms, Barbour, Griffith and Rogers (BGR) and the Chicago-based Edelman. BGR is tasked with “providing counsel for Mr. Thaksin’s interests in Washington.” Washington?

This would not be the first time that Thaksin has tried to drag President Bush into his political troubles. Last June, while still in office, he wrote a curiously whining letter to Bush “to explain the current political situation in Thailand” and what he termed the “various extra-Constitutional tactics trying to bring down my government”

At the time the situation was this: The country’s constitutional court had just annulled the April 2 general election that the opposition parties had boycotted. The election commission and Thaksin’s own party were being investigated for electoral fraud.

Bush responded with a polite, two-paragraph diplomatic brush off letter, writing he believed Thai democracy was strong and the Thai people resilient.

Thaksin’s new professional media handlers certainly have some powerful messages to communicate – democracy under threat, global capitalism under threat, even a potential free-trade agreement under threat.

Presumably they would play down Thaksin’s undermining of Thailand’s 1997 Constitution, his human rights abuses, his intimidating the press and corruption, issues that sent tens of thousands of protestors into the streets of Bangkok a year ago.

With or without professional help, though, Thaksin has been running rings around the bumbling generals in Bangkok. He has been making his case in interviews with the international media, including the CNN, CNBC, The Wall Street Journal and Asahi Shimbun from Singapore and Tokyo.

His visit to Singapore sparked a row between the two countries after he was officially received by the deputy prime minister, S Jayakumar. China and Japan, two other countries that Thaksin has visited of late, have been more circumspect.

The junta’s efforts to block the broadcasting or publication of these interviews in Thailand were not only unsuccessful but just handed Thaksin more ammunition to portray himself as a martyr to democracy.

The ruling junta could use a little professional PR help too. In the four months since the coup, the general have, through series of missteps, more or less squandered much of the good will that initially greeted them.

One was a clumsy imposition of capital controls to slow the rise of the local currency that caused the Thai stock market to crash. Another was an attempt to tighten laws regarding foreign ownership of domestic companies.

These actions left the impression that the government was being run by a bunch of clueless anti-capitalists. Wrote the Wall Street Journal: “A growing number of business executives in Bangkok now believe that Thaksin . . . had a steadier hand on guiding the Thai economy than does the new administration.”

Meanwhile, the various investigations into corruption of Thaksin and his family are moving slowly, providing the former with another talking point with the international media, that he has not been formally charged with anything.

Commented The Nation: “Somehow this popular line in foreign news reports has overshadowed the fact that any probe into the graft that triggered the middle-class discontent leading to the downfall wouldn’t have been possible had he remained in power.”

The bombs that went off in Bangkok on New Years eve that killed three and injured a score were a kind of shot-across-the-bow from the depths of the army and the police.

The message: the junta had better clean up its act – and get tougher on Thaksin and his cronies - or there could be worse. The US must take care that it is not dragged into the troubles of a longtime friend and ally.

Tuesday, January 23, 2007

Vietnam as the Next China

Communist Vietnam has had its own version of China’s market economy, called doi moi (renewal) for more than 20 years, almost as long as its big neighbor to the north, but it seemed as if its economy began to catch fire only this year.

Or, perhaps this was just the year that everybody began to take notice of a trend that has been building for some time. Obviously, several key events late last year focused the mind on Vietnam and its accomplishments.

Vietnam joined the World Trade Organization, then Congress approved Permanent Normal Trading Relations with the communist country. In November Vietnam hosted the annual meeting of the Asia-Pacific Economic Cooperation forum in Hanoi.

The successful summit, attended by President George W Bush, was a kind of coming out party for Vietnam years after the end of the war, sort of like the 1964 Olympic Games were for Japan, or what the 2008 Games are for China.

In addition to all of these institutional decisions, came the announcement that Intel planned to invest about $1 billion in building a semiconductor assembly plant and testing facility in Ho Chi Minh City, tripling its initial investment.

This was sort of like receiving the Good Housekeeping Seal of approval from the international business community for its reforms. People suddenly awakened to the fact that Vietnam has the second-fastest growing economy in Asia, after China.

It wasn’t always like that of course. Do moi languished in its early years, given lip service by the collective leadership but in fact held back by resistance from Communist Party dinosaurs.

Vietnam had no equivalent of China’s paramount leader Deng Xiaoping, who had the personal charisma and authority to push reforms past recalcitrant party elders – and to reignite reform after it stalled in the wake of the 1989 Tiananmen Square crackdown.

Gradually momentum began to swing toward the reformers, and it was certainly given a strong boost by former prime minister Phan Van Khai, who took office in 1997 and retired last year. He was also the first Vietnamese leader to visit the White House.

The US has been slow to appreciate the changes in Vietnam or to take advantage of its dynamics. Washington did not lift its embargo on trade with Vietnam until 1994 or establish full trading relations until 2001. It still retains restrictions on certain dual-use technologies, as it does with China.

Still, some American firms have already has some success. Prudential reportedly has garnered for itself a large share of the country’s insurance business. Banks are likely to want to enter Vietnam’s market when restrictions are lifted under WTO guidelines in April.

Of course, it is easy to be taken in by all of the hype and excitement surrounding Vietnam. Writes my old Asiaweek colleague Roger Mitton, now Hanoi bureau chief for the Straits Times:

“Potential investors fired up by the post-APEC raves should note that while the workforce is cheap and energetic, labor relations and quality control remain headaches for many foreign companies here.

“Much of the blame is put on the former communist command economy, effectively scrapped 20 years ago but still reflected in the attitude of many Vietnamese toward their work.

“A month ago, a tea grower told me that Vietnam was allowing its tea industry to go the same way as rice, with its reputation battered by lack of quality control. Now, buried in all the hype about APEC, came news that the coffee industry is suffering the same fate.”

Many of the businessmen who have actually lived and worked in Vietnam for many years now remind me of the veterans who slogged in the trenches in the early days of China’s opening.

Like their counterparts in China, they have plenty of “war stories” to tell about f creaky infrastructure, difficulties in repatriating profits, red tape, corruption and the sheer weight of petty bureaucratic irritations.

Yet those that stuck it out are now in good position to profit from Vietnam’s amazing transformation.

Tuesday, January 09, 2007

Behind the Bombings

HUA HIN, Thailand – I passed quickly through the crowded market next to the Victory Monument in downtown Bangkok, seeking the questionable safety of the elevated train next to it.

This capital landmark – though not one Thai in a thousand could tell you what victory it commemorates* – is a crossroads, the terminus of the shuttle van from Hua Hin and other places in Thailand.

It was here that one of the eight bombs that exploded in the capital on New Year’s eve went off. This is the first time I’ve ventured there since the bombings. The news papers said that the bombers avoided places where Western tourists and foreign expats congregate, but they were places where this expat frequents.

The bombs were deadly enough – three people were killed, a score or more injured – but they were not exactly in the Baghdad market buster league. Indeed, they seemed perfectly calibrated to instill fear without creating mass casualties. It was kind of a shot across the bow.

But whose shot? And whose bow? More than a week after the bombings that is still the unanswered question. So far no one has claimed responsibility for the attacks.

Everyone in Thailand understands in his gut that the bombings were in some way connected with the September 19 coup d’etat that overthrew the five-year government of former Prime Minister Thaksin Shinawatra, installed a new administration and scrapped the 1997 constitution.

The coup was enthusiastically welcomed by the Bangkok elite and middle classes, who had grown thoroughly tired of Thaksin. It was seemingly tolerated in the rural areas where the former premier drew most of his political strength.

The new premier, Surayud Chulanont, enjoys the trust of Thailand’s revered King Bhumibol and for a time basked in high personal popularity. It seemed as if things had settled down. Then came the bombings.

There are basically two theories about the culprits and motivation for the attacks. A third, that it was an extension to the capital of the insurgency in the far south, is mainly discounted. No one believes they were connected to global jihadism.

One obvious explanation is that the bombs were the calling card of pro-Thaksin dead-enders, even though the ex-premier personally disavowed the bombings in a letter he wrote from Beijing.

This theory is somewhat bolstered by a string of mysterious arson attacks aimed at public schools in the country’s north and northeast, where Thaksin still has many supporters.

The second theory is that the bombings could be traced to elements in the army or police dissatisfied with the junta’s performance to date. In this respect, it might be seen as a kind of coup within a coup.

To their credit, the coup-makers have governed with a light hand and have worked hard to project an aura of normality. They lifted martial law in most places of the country. Until the bombings, soldiers were mostly invisible.

Small anti-coup, pro-democracy rallies, though technically illegal under the new regime, were tolerated. No supporters of the old regime have been jailed. The new PM, a retired general, goes out of his way to project the image of an avuncular uncle.

Nevertheless, the bloom has gone off the coup even among many who had welcomed it. In its first 100 days in power it seems that the junta hasn’t accomplished much. It has dragged its feet on investigating corruption in the Thaksin regime and bringing charges – supposedly the main justification for the coup.

The insurgency in the south still rages. A badly handled move to slow the rise of the local currency by imposing capital controls sent the stock market crashing. People are beginning to ask of the takeover: what was the point? If nothing else, one expects a military-led government to move decisively.

So the bombings could be seen as a warning – to the generals to get their act together or face the possibility of yet another coup, led by even more conservative factions in the governing elite who might want to rule more harshly.

Although it has become something of a cliché, there is considerable truth to the proposition that 2007 will be Thailand’s year of living dangerously.