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Who'll Save Divided Thailand?
04/19/2010 12:01 am EST
Its revered king may lack the strength to reconcile the elites and rural protesters, writes Carlton Delfeld in Around the World with ChartwellETF.com.
You have probably seen the pictures of the ongoing political turmoil in Thailand with the red shirts (the largely rural backers of the former prime minister) doing all they can to force out current Prime Minister Abhisit Vejjajiva, thereby forcing new elections. The army and the aristocracy seem to be firmly in the camp of the prime minister, who just took command 15 months ago.
It seems that Thailand’s twice-elected and now fugitive former prime minister, Thaksin Shinawatra, has the numbers on his side. But his excesses led the army to oust him in 2006. Thomas Fuller of the New York Times notes that Thailand is a country of 145,000 Mercedes Benz sedans and about 75,000 villages that struggle economically. Mr. Thaksin injected liquidity and hope into these villages, which is why they are his most loyal followers.
The social glue that holds the country together despite these wide disparities of income and power—based on deference, graciousness, and politeness—[is coming apart]. Technology is also having an impact. In 2005, after four years of Mr. Thaksin as prime minister, the number of people using mobile phones in the vast, rice-growing northeast had more than doubled to 5.3 million. After the coup in 2006 and through the global financial crisis, debt levels in the northeast doubled to an average of about 100,000 baht, or just over $3,000, per family. This is a lot of money, and rural incomes have stagnated, leading to the political unrest.
In a sentiment that would warm the heart of any Radio Free Asia supporter, a mother of two at a recent political rally put it this way: “I used to think we were born poor and that was that but I have opened my mind to a new way of thinking: We need to change from the rule of the aristocracy to a real democracy.”
Meanwhile it seems puzzling that King Bhumibol Adulyadej, at 82 the world’s longest reigning monarch, does not seem to have the power to settle this political mess. But the king’s health and his power are receding, setting up a free-for-all that has consequences for the country and its stock market. When a large Thai brokerage polled fund managers about political risk factors in 2010, 42% of respondents chose what the brokerage describes as “a change that cannot be mentioned.”
Rumors of King Bhumibol’s death last October sparked a two-day equities sell-off. Few have known any king other than Bhumibol, who ascended in 1946 and became a power broker through his personality and talented staff. Unfortunately, the thought of designated male heir Crown Prince Maha Vajiralongkorn, aged 57, is not comforting based on his reputation.
Even though the iShares MSCI Thailand Fund (NYSE: THD) has held up well during the recent upheavals and is relatively cheap on an earnings basis, the death of the king will rock markets, so a yellow [flag] of caution is in order.
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