May 8 (Bloomberg) -- Thailand’s caretaker government installed an acting prime minister to stave off collapse after a court removed Yingluck Shinawatra, casting doubt on a general election planned for July and risking renewed protests.
The ruling Pheu Thai Party yesterday named Deputy Prime Minister Niwattumrong Boonsongpaisan, 66, as interim premier after the Constitutional Court ousted Yingluck, 46, and some cabinet members. The nine judges of the court were unanimous in finding Yingluck guilty of abuse of power related to the 2011 transfer of a top security official.
The administration will seek to hold on until the planned July 20 vote even as the anti-government movement pushes for its dismissal with other legal cases in train. Yingluck’s supporters, the mostly rural-based Red Shirts, have vowed to protest her ouster, raising the prospect of fresh clashes in Bangkok after violence that has claimed 25 lives since November.
The court decision is “next-to-worst-case for moving forward,” Kevin Hewison, director of the Asia Research Centre at Murdoch University in Perth, said by e-mail. “The political arm-wrestle may well continue unless the Electoral Commission can quickly move to an election where all parties participate.”
The crisis has its roots in the the removal of Yingluck’s brother Thaksin Shinawatra as prime minister in a 2006 coup, with opponents aiming to end the family’s influence over politics. While the court got rid of Yingluck, it didn’t evict her government, which may prolong the political deadlock that has left Southeast Asia’s second-largest economy in the hands of a caretaker administration with limited powers to enact laws since December.
Thailand’s benchmark SET Index of stocks and the baht fell to their lowest levels in a month today. The SET dropped 1.5 percent to 1,382.15 as of 12:30 p.m. in Bangkok and the baht declined 0.3 percent to 32.456 per dollar.
The stalemate remains the biggest risk to Thailand’s economy, which expanded 2.9 percent last year, central bank Governor Prasarn Trairatvorakul said today.
First-quarter gross domestic product data due May 19 “may disappoint many in the market,” DBS Bank economist Gundy Cahyadi wrote in a note yesterday. “Hopes for a pick-up in the economy hinge on the proposed July election. Only a functioning government can provide the critical boost that the economy needs,” Cahyadi said.
GDP probably contracted 1.6 percent in the first quarter, according to a Bloomberg survey of 25 economists conducted Feb. 20-25.
“Yingluck’s removal was so obvious,” Korn Chatikavanij, a former finance minister who resigned last year as deputy leader of the Democrat Party to join the anti-government protests, said yesterday in an interview. “The fact that the Supreme Administrative Court already ruled that it was criminal means that the Constitutional Court ruling was almost just a formality. It was in the price, from my perspective.”
The verdict was the third by the Constitutional Court against backers of Thaksin. In 2008, the court found his allies guilty of vote buying, disbanding their party and banning another 30 executives, including then-Prime Minister Somchai Wongsawat, Thaksin’s brother-in-law. That ruling came just weeks after the court ordered Thaksin ally Samak Sundaravej to step down as prime minister for hosting a cooking show.
Anti-government protesters, a mix of Bangkok’s middle class and southerners led by former Democrat politician Suthep Thaugsuban, accuse Yingluck of being a puppet of her brother who was ousted amid anti-government protests and lives in exile to avoid jail for a corruption conviction. They accuse the Shinawatras of crony capitalism, abuse of power and using populist policies to secure the support of rural voters, and have demanded she make way for an unelected government that would rewrite the nation’s political rules.
Replacement leader Niwattumrong has ties to the family. He held a variety of management roles in the 1990s and 2000s for companies in the telecommunications group founded by Thaksin and sold in 2006 to Singapore’s Temasek Holdings Pte. Among his jobs were president of what was previously called Shinawatra Computer & Communications Pcl and chairman of broadcaster ITV Pcl.
Yingluck “violated the constitution,” Judge Udomsak Nitimontree said yesterday in a nationally-televised ruling. The transfer of the secretary-general of the National Security Council in 2011 “indicates an abuse of power,” the judge said.
Yingluck said in a televised address she had not breached the law and was unsure if she would continue in politics.
“I have worked two years, nine months and two days,” she said. “Every day, every minute of my work, I am proud to have been elected prime minister.”
The ruling is a coordinated attempt to “destroy” the ruling Pheu Thai Party, deputy party leader Phokin Palakul said at a briefing. “We urge people who love democracy to express their opposition to the ruling in peaceful ways.” Holding the July vote is “a way to end the political crisis in a democratic way.”
The Red Shirts have announced plans to rally on May 10, while leaders across the spectrum and the army chief have warned a politically-divided Thailand is at risk of civil war.
Opposition leader Suthep late yesterday called for a rally of his supporters in Bangkok starting tomorrow morning.
About 10 members of Yingluck’s 36-member cabinet who were involved in the 2011 transfer will also step down, including Finance Minister Kittiratt Na-Ranong, Foreign Minister Surapong Tovichakchaikul and Labor Minister Chalerm Yoobamrung, according to the court ruling.
“The question is will the current government without Yingluck be able to hold it together,” Verapat Pariyawong, a Harvard-trained lawyer and independent political analyst, said by e-mail. With her departure “the situation can change very quickly for the worse.”
The government has had limited powers since December, when Yingluck dissolved parliament and called elections in a bid to end the protests. The February poll was invalidated by a court on the grounds the vote did not take place across the country on the same day, something that wasn’t possible as protesters blocked voting in some areas.
The government and the Election Commission have agreed to the new poll on July 20, though a decree has yet to be submitted for royal approval. The Democrat Party has threatened to boycott that vote, as it did in February. Thaksin-allied parties have won the past five ballots, while the Democrats haven’t won a poll in more than two decades.
“The best way is for all sides to agree upon a road map whereby we could return to orderly elections with clear commitments to reforms that are irreversible,” Democrat leader Abhisit Vejjajiva said today in a Bloomberg Television interview from Bangkok. “We would take part in it if we could see that these elections can be held in a free, fair and orderly manner.”
The U.S. government urges all sides to show restraint, State Department spokeswoman Jen Psaki said at a briefing in Washington. “In keeping with Thailand’s democratic ideals, a resolution should include elections and an elected government,” she said.
Thailand’s upheaval may persist for some time, Korn said.
“If this crisis was to end in two weeks, it probably means it is ending badly, with violence leading to military intervention,” he said. “I’m glad that the economy is strong enough to withstand prolonged uncertainty.”
“The fact that both the palace and the military are staying completely out of the political conflict is forcing Thais, especially politicians, to become more mature about how conflict is resolved.”
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