Thai Supreme Court Ousts Prime Minister Shinawatra

Thai prime minister Yingluck Shinawatra in Berlin, Germany, July 19, 2012
Thai prime minister Yingluck Shinawatra in Berlin, Germany, July 19, 2012 (Wikimedia Commons/Gerd Seidel)

Yingluck Shinawatra’s prime ministership abruptly ended on Wednesday when Thailand’s Constitutional Court ordered her and several of her cabinet ministers to step down. The court ruled that it had been unconstitutional for her to replace her national-security chief three years ago.

The decision has the potential to spark more violence witnessed over the last several months as deep economic and political divisions roil Thailand resulting in paralysis in government.

During a news conference, Shinawatra thanked her supporters and denied breaking the law. She said she would remain committed to democracy, social equality and the public interest, possibly signaling an intention to remain in politics.

In 2011, Shinawatra removed her national-security chief, Thawil Pliensri, in order to give the position to her brother in law. Pliensri was a supporter of the opposition Democrat Party.

The remaining cabinet ministers nominated Niwattumrong Boonsongpaisan, the commerce secretary, to replace Shinawatra and announced that the July 20 elections would take place as scheduled.

The prospects for Shinawatra’s Pheu Thai party remain bright. It has won six consecutive elections going back to 2001. Opposition leader Abhisit Vejjajiva has not supported holding elections in July over fear of losing again, calling for a referendum instead on proposed political changes.

The court decision was viewed as the milder of measures versus fears of the entire cabinet being removed. Only the ministers who came in three years ago and who were closely aligned with Yingluck Shinawatra were targeted. Even so, Shinawatra’s supporters, the “red shirts,” promised a mass demonstration on Saturday in Bangkok.

This is the third time the court ruled against the Shinawatra family and its party, removing the prime minister in each instance. Yingluck’s brother, Thaksin, was removed in 2006 and is now living in Dubai. His economic programs, including rice subsidies, mainly benefited the poor and were continued under his sister’s leadership, despite causing great consternation among the ruling and middle classes in Thai society.

The court’s ruling is the latest in a series of political differences over the direction of the country. Most of the red shirts believe the court supports the Democrat Party. Meanwhile, the yellow shirted supporters of the royal family staunchly oppose the populist policies of the Shinawatras. Months of protests and counterprotests has resulted in gridlock.

The only institution able to hold the country together remains the monarchy but King Bhumibol Adulyadej has reigned since 1946. He is currently in his eighties and said to be ailing. His successor, Crown Prince Maha Vajiralongkorn, is believed to sympathize with the Shinawatras and would therefore be an unwelcome replacement for the opposition.

China, Vietnam Trade Blows Over South China Sea Oil

Policemen in the streets of Hanoi, Vietnam, March 6, 2009
Policemen in the streets of Hanoi, Vietnam, March 6, 2009 (Flickr/Likeyesterday)

China’s state media and Vietnam’s Foreign Ministry traded harsh words this week. The exchange came after the Vietnamese issued a strong protest over Chinese plans to search for oil in a disputed area of the South China Sea.

It would be the first time that China has moved its massive and mobile deepwater drilling rig into the disputed area.

Both nations have claims over the islands in questions, which Vietnam calls the Paracel and China the Xisha Islands. They waters around them are believed to contain vast quantities of oil and natural gas deposits.

The row came just days after President Barack Obama wrapped up a trip to Asia. Visiting Japan, Malaysia, the Philippines and South Korea, the American leader reaffirmed his country’s commitments to maintaining security in the region. Japan, Malaysia and the Philippines all have disputes with China over islands in the East and South China Seas.

In an editorial in The Global Times, considered a mouthpiece for the ruling Communist Party, there were fiery words directed toward Vietnam. It said the Southeast Asian country lacked will; that it didn’t have “the guts to attack” China’s rig directly. It warned Vietnam that if it became more aggressive, “China should give Hanoi the lesson it deserves.”

China’s Maritime Safety Administration on Monday barred ships from coming within three nautical miles of the oil rig which will be conducting explorations until August.

Vietnam claims the Paracel islands as its own and are within its exclusive economic zone. The Foreign Ministry said China’s action is illegal and that the rig will be operating on Vietnam’s continental shelf within 120 nautical miles off its coast.

Tensions in the area have been steadily rising since China’s assertion of sovereignty over almost the entire South China Sea in 2010. A year later, China warned Vietnam that it would not hesitate to use military force to back up its claims. Since then there have been tit for tat responses by both sides and numerous provocations by Chinese maritime and fishing vessels.

In 2012, Vietnam partnered with Russia’s Gazprom to develop two offshore gasfields in the sea and it has issued a license to ExxonMobil as well.

Philippines, United States Sign New Defense Agreement

Aerial view of the Subic Bay Naval Base in the Philippines, August 28, 1981
Aerial view of the Subic Bay Naval Base in the Philippines, August 28, 1981 (US Navy/Larry Foster)

The United States and the Philippines signed a security agreement on Monday allowing for more American troops to be stationed in the country on a rotational basis. The deal gives the Americans greater access to many of the bases they used to maintain, including the Subic Bay Naval Base, for the next ten years.

The agreement marks a turnabout for American-Filipino relations after the United States withdrew most of their troops in 1992 in the face of local protests. It also reflects the new security environment in Asia.

On the final stop of his Asia trip, President Barak Obama appeared with his Filipino counterpart, Benigno S. Aquino III, at a news conference in Manila. Obama took pains to say the deal is not intended to contain China but to “make sure that international rules and norms are protected.”

China and the Philippines are locked in a dispute over claims to uninhabited islands and territorial waters in the South China Sea. In that light, the agreement with the United States is not unexpected. China’s military buildup is causing angst in the region. Its smaller neighbors are becoming increasingly alarmed that their security interests may be threatened without the Americans engaged in Asia. As a result, the Americans are courted by countries in Asia to be a hedge against China.

The Philippines understands it needs the United States military to protect its interest as its own navy was no match for China’s in a recent dispute.

In 2012, in Scarborough Shoal, Chinese maritime patrols had begun enforcing what they said was Chinese sovereign territory. It pushed local Filipino fishermen out of the area. With tensions rising and an armed clash likely to occur, the United States stepped in and persuaded both sides to pull back.

The agreement did not hold as Chinese ships eventually retook the area and continue to hold it today.

Against China’s large navy, the Filipino coast guard is largely helpless. Filipino fishermen for generations made their living off the Scarborough Shoal and are now no longer able to ply their trade.

In that context, it is no wonder that the United States Navy is back with a more visible presence in the Philippines 22 years after being evicted from its bases.

America, Japan Seen to Be Making Progress in Pacific Trade Talks

President Barack Obama is welcomed in Tokyo by Emperor Akihito of Japan, April 24
President Barack Obama is welcomed in Tokyo by Emperor Akihito of Japan, April 24 (State Department/William Ng)

When President Barack Obama departed Japan last week, on the first leg of a four country Asian tour that will also take him to Malaysia, the Philippines and South Korea, the headlines were that he had failed to reach a trade accord with Tokyo. The sticking point of agricultural subsidies, which have always been the major stumbling block, halted progress on the proposed Trans Pacific Partnership. But American and Japanese negotiators are actually said to be making real progress on this issue with the outlines of a compromise taking shape.

If Japan and the United states come to a bilateral agreement as a prelude to broader negotiations among the participants in the Trans Pacific Partnership, it would constitute a significant development for the region and global trade. It would also give Japan’s prime minister, Shinzō Abe, his third economic reform “arrow” to stimulate the island nation’s economy and Obama a diplomatic victory as well as renewed momentum for his Asia pivot.

In addition, the United States will have provided an alternative to the supposed “Beijing Consensus,” the state centered economic model championed by China’s rise that many observers in Asia predicted would gain in popularity at the expense of free markets.

The “high quality” Trans Pacific Partnership trading bloc should liberalize trade, strengthen intellectual property rights and provide greater access to the financial and insurance sectors in the twelve participating countries. While China has been excluded, implementation of the trade agreement will put more pressure on its leaders to adopt liberal trade rules and agree to stricter intellectual property regulations as a prerequisite for entry.

Talks between America and Japan have progressed over the last few weeks with negotiators now discussing specific reforms and protections on the most sensitive agricultural products, according to Jeffrey J. Schott of the Peterson Institute for International Economics. Specifically, Japan is believed to be offering concessions on beef, pork and dairy products — priorities for the United States — while the Americans are said to be offering flexibility on the implementation of reforms by Japan. That is, they would not demand the total elimination of protections on all of Japan’s agricultural products.

Abe is seemingly committed to confronting the powerful constituencies in Japan that have heretofore inhibited freer trade. In bilateral talks, Japan is believed to have agreed to deeper cuts in its agricultural subsidies than it did in its trade agreement with Australia.

Signifying the seriousness that the negotiations have reached, senior officials from the American Department of Agriculture recently joined in the talks. They are said to be delving into the details of the cuts on specific products while discussing the depth of access in each other’s market.

There are meetings scheduled in Vietnam in the middle of May between the chief negotiators of the prospective trade bloc’s countries. Assuming the American-Japanese bilateral talks are successfully concluded by then, analysts are predicting that a full agreement could be completed by the summer. It would then go back to each country for approval.

The importance of the current bilateral talks between Japan and the United States cannot be overstated. They constitute the two largest economies by far in the Trans Pacific Partnership and an agreement between them would provide guidelines for the rest of the group.

Agricultural subsidies have been the traditional sticking point in free-trade agreements globally. Depending on the details, successfully overcoming hurdles on this issue also has the potential to provide a template for future world trade talks.

East Asia Nervously Watching Events in Crimea

Presidents Xi Jinping of China and Vladimir Putin of Russia at the Kremlin in Moscow, March 22, 2013
Presidents Xi Jinping of China and Vladimir Putin of Russia at the Kremlin in Moscow, March 22, 2013 (Presidential Press and Information Office)

When the Crimea was voting to secede from Ukraine and join Russia, President Vladimir Putin was said to be on his proverbial hands and knees offering cheap gas and other inducements to China for its support. But China decided in no uncertain terms that it would stay out of this dispute when it abstained from a resolution condemning the Crimean vote in the United Nations Security Council. China is walking a diplomatic tightrope. It wants to avoid antagonizing a key ally in Russia without siding with the West and causing repercussions in East Asia.

What is certain is that East Asians are watching China’s actions closely for indications of its future policy in regards to the disputes it has in the East and South China Seas with its smaller neighbors.

While China is not joining the sanctions led by Europe, Japan and the United States against Putin’s cronies anytime soon, Sino-Russian relations were dealt a blow nonetheless when China abstained from a resolution that had been introduced in the Security Council by the Americans. Russia was left alone to block this condemnation of the Crimean referendum. The resolution received thirteen votes in favor.

On the one hand, China does not want to endorse the changing of international borders which could set a precedent for its restive regions of Tibet and Xinjiang. China has barred foreign journalists from the regions and deployed more security there in recent years to quell widening unrest and protests against the central government.

China shares a long border with Russia that has been unstable at times and which brought the two powers to the brink of war in the 1960s. With China’s military increasingly focused on its maritime disputes in the East and South China Sea, coupled with domestic unrest in its western provinces, it can ill afford to see a deterioration on its northern border.

But China also does not want to side with the West at the expense of Russia, a key ally which it relies on for energy imports. It is altogether an inopportune time to risk a rupture in trade relations with Russia because the Chinese economy is showing further evidence of slowing after the release of the purchasing manager’s index last week. Measuring China’s manufacturing industry, it showed weakness for the fifth month in a row. This follows economists at Wall Street banks cutting their forecast of economic growth for 2014 during the first quarter. China needs Russia as much as Russia needs China.

In a few months, Putin is expected in Beijing to sign a massive natural gas supply deal with the Chinese. The agreement has taken years to negotiate and it looks as though it is finally complete. But one could argue that just as negotiations are concluding, China has gained enormous leverage by the threat of deeper sanctions coming down on Russia from the West. There is no evidence as of yet that China is willing to use this leverage to push the Russians into making more concessions.

A deal with China at this time for Putin would certainly help forestall his growing isolation and bring in hard currency. If Russia invades other regions of Ukraine, however, President Barack Obama had promised an expansion of sanctions and held out the possibility of targeting Russian oil and gas industries.

The stakes are high in Ukraine. China is carefully watching the West’s reaction to Russia’s annexation of the Crimea. Its increasingly aggressive moves in the East and South China Seas over disputed islands with its neighbors offer an arena where China could follow Russia should the West fail to respond strongly. Taiwan, for one, would be gravely concerned. So would Japan, the Philippines and Vietnam.

In Europe last week, Chinese president Xi Jinping called on the International Monetary Fund to extend financial support to Ukraine. Previously, China had proposed setting up an international mechanism to find a political solution. It seems that China is willing to look past Russia’s actions in the Crimea and go about business as usual.

Snap Elections Fail to Put Thailand’s Political Crisis to Rest

Thai prime minister Yingluck Shinawatra addresses the United Nations Human Rights Council in Geneva, Switzerland, September 9, 2013
Thai prime minister Yingluck Shinawatra addresses the United Nations Human Rights Council in Geneva, Switzerland, September 9, 2013 (UN/Jean-Marc Ferré)

Despite snap elections on Sunday, Thailand’s two largest political forces remain at a stalemate and with class and ethnic divisions deepening, tensions remain high across the country.

Prime Minister Yingluck Shinawatra’s ruling Pheu Thai party was almost guaranteed to win a majority with the opposition Democrats boycotting the vote. They insist on constitutional reforms before participating in any more elections, knowing that otherwise Pheu Thai, which is most popular in the rural north of the country, will stay in power.

Opposition protesters have occupied large parts of Bangkok, the capital, surrounding key government buildings and virtually shutting down the government. Last week, thousands of police forces were deployed in and around Bangkok and a state of emergency was declared after violence had prevented some early voting.

On Saturday, a gunfight broke out when opposition “yellow shirts” blocked access to an administrative building containing ballot boxes. The government later announced that voting would be delayed in the area. Voting was eventually canceled in more than 12 percent of districts around the country, most of them in the south which is the Democrats’ stronghold.

Despite Pheu Thai’s likely victory, it might not be able to form a new government. The opposition refused to contest the elections in at least 28 seats, preventing the ruling party from achieving a quorum in parliament. Thus, the political legitimacy Shinawatra sought by calling snap elections ahead of massive protests appears fleeting. The crisis will continue.

The ultimate arbiter in Thailand remains King Bhumibol Adulyadej. On the throne since 1946, the monarch is 86 years old and said to be ailing. Many Thai believe that his son and likely successor, Maha Vajiralongkorn, will be easily influenced Shinawatra’s brother, the former premier Thaksin, who was deposed in a coup in 2006.

Thaksin is still a polarizing figure in Thai politics. Accused of corruption, vote rigging and of using the military in bloody crackdowns against southern insurgents, the populist leader diverted government spending programs away from the elite and vested interests in Bangkok in favor of rural districts in the north that have traditionally lagged behind the rest of the country. The ruling class harbors deep resentment against him and his family for this reason.

Rice subsidies that were instituted by Yingluck Shinawatra have recently come under investigation with the opposition seeing them as tantamount to bribes for rural voters. What is more, the opposition is firm in believing that Thaksin is really still in control of the government. When Yingluck considered stepping down in early January, it was her brother who convinced her to press on. Another sister is in charge of the Pheu Thai party.

The other major player in this is the army which has so far chosen to remain above the fray. But given its extensive history of coups — it has staged up to twenty since the beginning of the constitutional monarchy in 1932 — there is always the possibility of it deciding to resolve the political impasse on its own. After the last putch in 2006, which ousted Thaksin, it came under withering criticism worldwide. His sister Yingluck was elected in 2011.

The crisis flared up again in October when Pheu Thai proposed to pardon those officers involved in the 2006 coup. An amnesty bill would have also covered those responsible for the crackdowns on Shinawatra’s supporters in 2010 as well as the political reprisals through May 2012.

The opposition, numbering in the tens of thousands, took to the streets, fearing that the bill would mean the return of Thaksin.

The seeming dichotomy of the position held by anti-government protesters, led by former deputy prime minister Suthep Thaugsuban, is that they are undermining a democratically-elected government with calls for greater democracy. They argue for a temporary suspension of the Constitution to be replaced by an unelected “people’s council” that would run the country until “fair” elections could be held. Which presumably means elections that the Democrat Party can win.

With an incomplete election, the Constitutional Court will likely step in and annul the result. This could result in more demonstrations and possibly more violence. The only certainty is that Thai politics is in for more of a rough period. Where it ends is anyone’s guess. Or more accurately — when the army or the monarchy decides it has had enough.

Vietnam Expected to Loosen State Controls, If Carefully

The Vietnamese flag flies over the walls of the Imperial City in Huế, September 9
The Vietnamese flag flies over the walls of the Imperial City in Huế, September 9 (Greg Willis)

The international community is keeping a close watch on Vietnam’s National Assembly as it is convening a month long session to decide the extent to which it will amend the Constitution. The session is expected to end next week with lawmakers believed ready to give the go ahead on loosening the communist country’s economy, finance and investment laws.

The big question is: will the government take on its vested interests and reform the heavily indebted state-owned enterprises?

Determined to participate in the Trans Pacific Partnership trade talks, Vietnam is likely to continue opening up its economy to outside investment, lifting limits on foreign ownership of companies and reforming the banking sector.

But the economy has been slowing over the last three years largely because its state-owned companies, which account for some 40 percent of gross domestic product, are increasingly burdened with bad debt. Mandated by the government to play a leading role in the economy, they have had access to easy credit and invested in areas outside their expertise, leading to heavy losses.

These losses also imperiled the state’s banks that lent them the money. The banks are carrying the largest amount of nonperforming loans among the six Southeast Asian nations covered by the Fitch rating agency. The government has dismantled almost one in ten state-owned enterprises, according to the Center for Strategic and International Studies in Washington DC, but there is more to be done as growth came in below the government’s own 7 percent target during the last three years. Last year’s 5.25 percent growth rate even was the lowest in thirteen years’ time.

The central bank has been able to get inflation under control somewhat. It was 9.1 percent in 2012, down from 18.7 percent in 2011.

The prospect of the economy stalling further has perhaps spurred the government to be more aggressive in confronting the debt problem.

In July, the central bank created the Vietnam Asset Management Company as a vehicle for buying nonperforming loans from its banks. This “bad debt bank” has so far purchased $709 million in assets. It is expected to buy up to $6.6 billion in total.

The central bank has also vowed to prosecute officials who are involved in corruption. This week, a former general director of Agribank Financial Leasing as well as the former chairman of a building firm were sentenced to death after they were convicted of embezzling more than $25 million from state companies. Nine other executives were put in prison for up to fourteen years each.

The impetus behind the crackdown is the growing realization that the current model has outgrown its usefulness. With the economy slowing, the public’s angst is growing. The Communist Party is intent on reforming the economy in order to keep growth intact and to attract foreign direct investment. Moreover, it wants to avoid a meltdown in the banking system and being blamed for driving the economy into the ground if that happens. Above all, the party intends to stay in power.

However, reforming the state-owned enterprises and embracing greater economic openness is a risky move. State companies are the party’s means to control the economy. The more control it relinquishes, the greater the loss of its influence politically.

It is commonly held that greater economic freedom ultimately leads to people demanding greater political freedom as well. Vietnam’s ruling party party no doubt realizes this and is surely balancing its decisions carefully.