Bloomberg News

Thai Junta Leader Dissolves Senate to Control Lawmaking

May 25, 2014

Army Chief Prayuth Chan-Ocha

Thai Army Chief Prayuth Chan-Ocha, center, arrives for a meeting at the Army Club in Bangkok on May 20, 2014. Photographer: Pornchai Kittiwongsakul/AFP/Getty Images

Thailand’s junta met the head of the central bank, the stock exchange and other economic officials to discuss measures to safeguard growth in Southeast Asia’s second-biggest economy three days after a military coup.

Officials including Bank of Thailand Governor Prasarn Trairatvorakul attended the meeting called by the National Council for Peace and Order at an army compound in Bangkok. Army Commander Prayuth Chan-Ocha dissolved the Senate yesterday, removing the last democratic institution in the country and giving the military junta more freedom to put new laws in place. He put Air Chief Marshal Prajin Juntong in charge of the key economic ministries the day before.

Prayuth takes charge of an economy that shrank 0.6 percent in the first quarter as seven months of unrest saps consumer spending and slows growth in industrial production. A nationwide overnight curfew is discouraging tourists who were already wary about visiting the capital because of political violence that has killed at least 28 since November. There were protests over the weekend in Bangkok and Chiang Mai in defiance of martial law that was imposed two days before the coup.

“The task at hand now is to boost economy, which is in pretty bad shape,” Thanavath Phonvichai, an economist at the University of the Thai Chamber of Commerce in Bangkok, said today by phone. “Low-income earners have no money, which is mainly a result of delayed payments under the rice-buying program. NCPO is handling this problem now and this should help sustain the economy from falling further.”

Officials discussed overdue payments to farmers under the rice-subsidy program and measures to accelerate state spending and plans for the next fiscal budget, Thai Bankers’ Association Secretary-General Thawatchai Yongkittikul told reporters after the meeting.

No Choice

Prayuth said he had no choice other than to take power after meetings called by the army among key figures from both sides of the political divide failed to find a solution. The coup threatens to increase the deep polarization that has taken hold in Thailand over the past decade between the largely rural-based supporters of former Prime Minister Thaksin Shinawatra, who was ousted in a 2006 coup, and his royalist opponents.

The Senate had been Thailand’s only lawmaking body since December, when former Prime Minister Yingluck Shinawatra dissolved the lower house of Parliament and called an election to appease anti-government protesters. After past coups, including the 2006 putsch that ousted her brother Thaksin, the new constitution would include a clause protecting the coup-makers from prosecution.

Army Detentions

The junta has moved to detain key figures from Yingluck’s former government, leaders of rival street protest movements, academics and a former protest leader who once seized Bangkok’s airports. Yingluck was later released and is safe at an undisclosed location, the Thai-language Dailynews newspaper reported yesterday. Army spokesman Winthai Suvaree declined to confirm today whether Yingluck had been released.

Abhisit Vejjajiva, a former prime minister and leader of the Democrat Party that supported the anti-government movement, was detained and released. “I apologize for not being able to defend democracy by pushing for reforms under the constitution,” he said today on his official Twitter feed.

The NCPO’s orders have been broadcast in the form of nationally televised announcements by the military since Prayuth seized power May 22 in Thailand’s 12th coup since 1932. The junta has threatened to shut down media outlets and social media platforms that allow the broadcast or publication of content that might incite unrest, and international news channels remained blocked today.

Bangkok Protests

Protests against the coup took place yesterday at Victory Monument in Bangkok and in Chiang Mai in the country’s north. Soldiers and protesters faced off today outside Amarin Plaza in Bangkok’s Ratchaprasong shopping district, the site of a deadly crackdown on pro-democracy protesters in 2010 that left more than 90 people dead.

The army said 21 people were arrested in Khon Kaen province in the nation’s northeast. The people later confessed they were ordered by a pro-government group known as the Red Shirts to incite violence, the army said.

Before the coup, anti-government protesters had been demanding an unelected council run the country to wipe out the influence of Thaksin and Yingluck, whom they accuse of corruption and using the appeal of economically damaging populist policies to win the last five elections. After Thaksin’s overthrow, it was more than a year before elections were held and civilian rule was restored.

U.S. Sanctions

The U.S. denounced the military’s action and said it’s suspending $3.5 million in aid to Thailand. It’s also canceling a readiness and training exercise along with visits by U.S. and Thai commanders to each others’ facilities, the Pentagon said in a statement late yesterday. A U.S.-sponsored firearms training program in Thailand for the police and a study trip for senior Thai police officers have also been canceled.

“We are increasingly concerned about actions the military has taken,” the Department of State said in a statement. “It has dissolved the Senate, detained a number of people, called in some academics and journalists, and continued to restrict the press. We again call on the military to release those detained for political reasons, end restrictions on the media, and move to restore civilian rule and democracy through elections.”

The U.S. military understands the situation in Thailand, though the U.S. government has “different principles and rules,” Thai army spokesman Winthai said today. The NCPO has tried to clarify to the international community that the coup was necessary to avoid further violence and economic damage, he said.

Prayuth suspended Adul Sangsingkeo from police chief duties and handed responsibility to his deputy, Watcharapol Prasanratchakij, army spokesman Winthai said. Officials were assigned to various parts of the government, including naming Air Chief Marshal Prajin to head the finance, commerce, industry and energy ministries.

The coup may damage investor confidence and the central bank will monitor the new government structure and assess their plans for the economy, Governor Prasarn said May 23.

“Once the economy is being supported, sentiment should pick up and things should steadily get better,” said Thanavath from the University of the Thai Chamber of Commerce. “We need to speed up budget disbursement. Once we can fast-track spending, the economy should pick up and confidence will also improve.”

To contact Bloomberg News staff for this story: Tony Jordan in Bangkok at tjordan3@bloomberg.net

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


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