Thai Coup Risks Clashes as Thaksin Camp Better Organized

Thai pro-government ''Red shirts'' protesters sit next to portraits of ousted Thai Prime Minister Yingluck and Thaksin Shinawatra during a rally on the outskirts of Bangkok on May 21, 2014. Photograph: Pornchan Kittiwongsakul via AFP/Getty Images Close

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Thai pro-government ''Red shirts'' protesters sit next to portraits of ousted Thai Prime Minister Yingluck and Thaksin Shinawatra during a rally on the outskirts of Bangkok on May 21, 2014. Photograph: Pornchan Kittiwongsakul via AFP/Getty Images

When Thailand’s army last ousted a government linked to Thaksin Shinawatra in 2006, his rural-based supporters lacked the organization to mount a resistance. They’re better prepared this time around.

The Red Shirts, who coalesced in 2008 to fight Thaksin’s opponents, have built networks in northern Thailand that mobilized supporters across the nation and helped secure a majority for his allies in a 2011 vote. Their leaders were arrested yesterday when six months of instability came to a head with the televised announcement by army chief Prayuth Chan-Ocha that he was suspending the constitution, in the 12th coup in eight decades.

“The opposition and resistance to the coup will likely be strong,” Thitinan Pongsudhirak, director of the Institute of Security and International Studies at Bangkok’s Chulalongkorn University, said by phone. “This time the looming confrontation and clashes are going to be severe and violent.”

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The coup exacerbates divisions between a rural majority that has propelled Thaksin-backed parties to power in the past five elections and their royalist opponents who have used the military and the courts to oust the government. While Prayuth said the army aimed to restore peace in a “short time,” the seizing of power threatens to further undermine an economy that will probably have the slowest growth among its major Southeast Asian peers this year.

Photographer: Rufus Cox/Getty Images

Thai army soldiers secure the grounds of the venue for peace talks between pro- and anti-government groups on May 22, 2014 in Bangkok. Close

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Photographer: Rufus Cox/Getty Images

Thai army soldiers secure the grounds of the venue for peace talks between pro- and anti-government groups on May 22, 2014 in Bangkok.

Fueling Fire

“The last coup in 2006 was, I think, regarded by some in the military as a bit of a mistake because it widened political division and it only added fuel to the fire,” Jon Grevatt, an industry analyst for Asia-Pacific at IHS Jane’s in Bangkok said in an interview with Bloomberg television.

“This time the anti-government protesters will be appeased and placated by the coup, because it has pushed their move to put an unelected administration in power. But the pro-government protesters will be very aggrieved by this decision especially as the army has said that they will look to reform politics in the country.”

Two days after declaring martial law and saying there was no coup, Prayuth announced alongside senior military officials that he was seizing control to restore peace. He said there would be a daily nationwide curfew from 10 p.m. until 5 a.m. and banned political protests.

Baht Declines

Thailand's Troubled Democracy

The baht gained 0.3 percent against the dollar at 11:00 a.m. in Bangkok, after sliding 0.4 percent yesterday after news of the coup broke.

The coup could provide short-term certainty to markets after months of protests and upheaval that led to the removal on May 7 of then-caretaker premier Yingluck Shinawatra -- Thaksin’s sister -- by the Constitutional Court, according to Alan Richardson, whose Samsung equity fund beat 96 percent of peers tracked by Bloomberg in the past five years.

Still, the coup comes days after the state planning agency reported gross domestic product shrank 0.6 percent in the three months through March from a year earlier.

“It’s one thing for markets to shrug off a military coup when there’s fairly buoyant growth, but quite another to be so insouciant when the economy’s contracting,”said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. “Investors are underpricing what brought about the coup in the first place: debilitating political dysfunctionality and its corrosive effects on Thailand’s economy.”

Thaksin in Exile

The intervention by the army to oust Thaksin in September 2006 and install General Surayud Chulanont as interim prime minister saw the military enmeshed in the political sphere for more than a year. It wasn’t until December 2007 that an election was held, where a Thaksin-allied party won the most parliamentary seats.

Since the 2006 coup, courts have disbanded two parties tied to Thaksin and disqualified three prime ministers backed by his allies. Thaksin has lived overseas since fleeing a jail sentence in 2008 on corruption charges stemming from a military-appointed panel after the coup.

The military will want to seek to avoid being caught up in governing for such a long period again, according to Michael Connors, an associate professor at the Malaysia campus of the University of Nottingham.

“We can expect this to be a highly repressive coup with a promise of return to normality in a year perhaps,” he said by e-mail. “A coup like this has never happened before. No Thai coup has occurred under conditions of potential mass and armed resistance. And no coup has had to be so cautious in the making, and with the possibility of a split military. This is Thailand’s most dangerous coup.”

Yellow Shirts

Thailand’s instability stretches back decades, with more than 20 prime ministers since 1946. Until Thaksin’s term from 2001 to 2005, no prime minister had ever served a full term. Turmoil has worsened since 2006 as the nation has divided into two camps: Red and yellow.

The yellow shirts comprise Bangkok’s middle class, royalists and retired generals. They have called for several versions of an appointed government in the past few months and are aligned with the opposition Democrats, who have not won a national vote since 1992 and boycotted a February poll.

Thailand is a constitutional monarchy and King Bhumibol Adulyadej, 86, has reigned since 1946.

Double Standards

The red shirts point to the coup and subsequent court rulings that dissolved parties allied with Thaksin as proof that Thai society is unjust and filled with double standards. They took to the streets in both 2009 and 2010, calling for new elections. The protests in 2010 were put down by the military, resulting in more than 90 deaths.

Prayuth said he aimed to reform the political sphere, the economy and society, without giving details. The anti-Thaksin movement now led by Suthep Thaugsuban had pushed for the formation of an appointed council to replace governments linked to the former premier.

“Nobody welcomes the coup, but I believe that the ruling government had many opportunities in the last six months to avoid this,” Kiat Sittheeamorn, a senior member of the Democrat party, said by phone. “They never moved back an inch to avoid this. They had six months to address the demands of the demonstrators. They did not do a thing about it.”

Thailand had a fully-elected Senate for nine years under its 1997 constitution. The current charter, written in 2007 by a military-appointed assembly, calls for just over half the members to be directly elected with the rest appointed by a commission.

“It remains to be seen how far the military goes to take permanent control of government or turn it over to a new, likely royalist, caretaker,” analysts Christian Lewis and Shaun D. Levine from Eurasia Group said in an e-mailed note.

“It will be several days before governance plans materialize, as street-level security under martial law will remain the top concern. But we don’t see last night’s coup as marking the end to a period of political instability.”

To contact the reporters on this story: Chris Blake in Bangkok at cblake28@bloomberg.net; Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net Tony Jordan

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