Thailand's Family Affair May Unnerve Markets: The Ticker

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By William Pesek

So much for patience in Thailand.

The nation's new foreign minister starts Wednesday, yet the most tantalizing diplomatic question isn't waiting for Surapong Tovichakchaikul to come to work: When will exiled former Thai leader Thaksin Shinawatra return to Bangkok? A lot sooner than many of us thought, it appears.

When Thaksin's sister, Yingluck Shinawatra, was running for the premiership, she demurred whenever asked about her brother's homecoming. Opponents worried Yingluck would move too quickly to promote amnesty for Thaksin, who has been living in Dubai since fleeing a 2008 jail term for abuse of power.

Just days after being sworn in, Yingluck's government asked Japan to grant a visa for Thaksin, and Tokyo complied. Japan should have said no; it has clear laws on the books against welcoming those sentenced to significant jail time. Germany also lifted a travel ban on Thaksin.

To engineer her brother's return, Yingluck must overcome opposition from the military, courts and bureaucracy. It will be a messy process that is sure to unnerve markets at a time when Thailand is struggling to attract more foreign investment.

Yingluck should slow down. Thailand's first female leader has never held a political office of any kind. Her sudden appearance on the electoral scene ahead of the July 3 vote had critics deriding her as a Thaksin lackey. Yingluck, 44, should rack up some legislative successes and prove she isn't a puppet before even considering her brother's repatriation. He was removed in a 2006 coup amid allegations he used his office to benefit his family businesses. Thai authorities seized $1.6 billion of Thaksin's wealth. Since then, Thais have suffered any number of massive, and at times violent, protests that closed down Bangkok's airport and forced the humiliating evacuation of Asian leaders gathered for a summit meeting.

For all his legal woes, Thaksin is still curiously popular, and his Pheu Thai Party keeps winning elections. Yet political chaos is the last thing Thailand needs as markets brace for another global financial crisis. The tolerance of international investors is running exceedingly thin. Repatriating Thaksin too soon will only try that patience at the worst possible time.

(William Pesek is a Bloomberg View columnist.)

-0- Aug/15/2011 21:36 GMT