A Demotion Is In The Works For Thailand's Generals

In three short months since taking charge, Anand Panyarachun, Thailand's interim premier, has made huge strides. By ousting military leaders responsible for the May massacre of demonstrators and replacing them with respected professional officers, he has already met the protesters' main demands. Now, in the three weeks before the elder statesman goes back into retirement, Anand is trying to curb the military's economic power by removing the generals from the state enterprises that have been a lucrative source of graft.

Anand's reforms will be on the line when Thais go to the polls on Sept. 13. Right now, the outcome looks too close to call. While the prodemocracy forces are expected to score big in Bangkok, politicians still loyal to generals and tainted by corruption charges will do well in the rural areas. They may even be able to form a winning coalition by buying votes and playing on the countryside's resentment over its exclusion from Thailand's decade of economic boom.

But even if the old guard hangs on, they will be wary of returning to business as usual. Pressure for change is coming from Thailand's rising middle class and young business executives, some of whom are starting to finance reform candidates. "No matter who wins the election, they won't last long unless they meet the public's desire to run the country more professionally," predicts Bangkok Bank Ltd. Chief Economist Nimit Nontapunthawat.

FLYING PORK. What is really at stake is the pace of reform. The military will dig in against moves to limit its big role in industry. Senior officers enjoy generous perks from leading private corporations, and different services control such state monopolies as telecommunications, ports, and railways. Top generals rely on commissions from public-works and weapons contracts to compile multimillion-dollar nest eggs. Politicians join them at the trough--using some of the proceeds to pay off voters and allies.

Anand, who is determined to scrap this system, is making Thai Airways International Ltd. (thai) a model for future cleanup campaigns. Once a well-managed carrier, the airline has nearly been wrecked by air force generals who turned it into a pork barrel. Anand is probing some dubious deals and is in the process of ousting Kaset Rojananil, a key figure in the May massacre, as thai chairman and air force chief. He has also kicked generals and their cronies out of the telephone and transit authorities. He believes the ultimate solution is to privatize state enterprises.

With so much riding on the elections, even Thailand's usually complacent business community is getting involved in politics. A club of young bankers and developers called Business Management Services Co. is bankrolling the prodemocracy campaign. Activists include Akorn Hoontrakul, chairman of the Imperial Hotel Group, Thailand's third-largest hotel chain. In another new twist, Nippon Paint (Thailand) Ltd., owned by Japanese and Singaporean interests, is funding tv spots in which animated characters urge viewers to go to the polls and not sell their votes. "The ads were my idea," says Nippon Paint's 42-year-old Thai general manager, Suebphongse Poonsatha. "But the board quickly gave me approval."

Thais are heartened by the examples of South Korea and Taiwan, whose affluent societies eventually curbed the power of the military. While no one expects that six decades of military interference in government and the economy will end overnight, the days when Thailand's generals called all the shots look to be drawing to a close.

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