MY DINNER WITH THAKSIN

C O N F I D E N T I A L SECTION 01 OF 04 BANGKOK 003208

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E.O. 12958: DECL: 05/13/2015
TAGS: PGOV PREL PTER BU TH IZ BURMA ASEAN
SUBJECT: MY DINNER WITH THAKSIN

Classified By: AMBASSADOR RALPH L. BOYCE. REASON: 1.4 (D)


1. (C) Summary: I had dinner on May 12 with Prime
Minister Thaksin. He was in a receptive mode. On trade
issues, Thaksin indicated that he was ready to push his
ministers to reengage on all FTA issues and said there was
"no problem" in lifting Thailand's ban on U.S. beef. He
accepted constructive criticism of his previous hard-line
policy in Thailand's troubled south and acknowledged the need
for new approaches. Thaksin also acknowledged the damage his
constructive engagement policy on Burma had done to
Thailand's international image and indicated that the RTG may
lower its profile on Burma and align itself more with an
ASEAN consensus. The Prime Minister welcomed the news of
Lockheed Martin's willingness to discuss a barter arrangement
in its F-16 package. The only less than positive note was
Thaksin's contention that his need to manage Thai Muslim
sentiments in the south made a new Thai ground commitment to
Iraq difficult. End summary.

GE INVISION ON HIS MIND


2. (C) Thaksin had invited me to dinner last week, but the
eruption of the GE Invision issue had intervened in the
meantime. This issue occupied much of the early part of our
meal and is reported septel. The strains of dealing with the
GE Invision controversy showed on Thaksin's face as he sat
down. He appeared haggard and tense, but gradually relaxed
as dinner progressed. Early on, we reprised some of our
earlier meetings, before he was Prime Minister and I was
Ambassador. I recounted a conversation that I had with him
about ten years ago in which I predicted that as soon as he
entered politics he would be subject to accusations that he
would enrich himself through his office. Thaksin noted this
and then surprisingly said that he was considering shedding
his telecommunications businesses, possibly selling it in its
entirety to Singapore Telecom this year.

WHERE'S THE BEEF?


3. (C) Because we were dining at Hamilton's Steak House at
the Dusit Thani Hotel, I took the opportunity to raise
Thailand's continuing ban on U.S. beef imports due to
BSE-related fears. Thaksin claimed that he was unaware of
the ban and in a humorous vein, he compared U.S. beef
favorably with its Australian (too tough) and Argentinean
(smells like grass) rivals. Following the banter, I asked
Thaksin if I could so inform the Agriculture Minister that
her boss believed that there was no necessity in continuing
the ban. "No problem," Thaksin replied. (Note: I saw the
Agriculture Minister the next morning on a previously
scheduled courtesy call and conveyed this news. End note.)

FTA


4. (C) Using the beef issue as an example, I commented to
Thaksin that major decision-making obviously centered on him.
Even his most trusted ministers appeared unwilling to embark
in new directions without his specific instruction. The FTA
was a good example. Despite the Prime Minister's oft-stated
commitment to a comprehensive FTA with the U.S., it was clear
that certain of his advisors and ministers (I didn't name
names) were unwilling to engage during negotiations on issues
such as financial services, IPR, labor and environment.
Thaksin replied that he clearly understood the need for a
comprehensive agreement that included these issues, and also
was aware that key aides such as Deputy Prime Minister and
Finance Minister Somkid Jatusripitak were lukewarm on the
issue of financial services. Thaksin added that he himself
was not apprehensive over the effect of an FTA on Thailand's
financial services sector. The Thai banking system needed
"shaking up," Thaksin said. I welcomed his stance and urged
him to give his ministers a firm kick in this direction. I
noted that the Thai team that was to discuss financial
services at the recent Pattaya round of FTA talks had not
even shown up - this was not acceptable. I also told Thaksin
that at a meeting earlier with Commerce Minister Thanong
(another minister less than enthused on FTA issues) I had
reiterated this point - rather than not attend, it was in
Thailand's interest to go, engage and discuss.


5. (C) Thaksin agreed that the conversations must be
two-way and comprehensive. There could not be an FTA unless
the interests of both parties were addressed. I described to
Thaksin Deputy Secretary Zoellick's success during his recent
visit in discussions on FTA with a Thai parliamentary group
(septel),in which he addressed each of their concerns head
on. Most parliamentarians came away with a better
understanding of the issues. Both sides needed to explain
clearly their FTA issues and concerns. Thaksin agreed,
adding that Deputy Secretary Zoellick's suggestion that in
certain areas the FTA could be phased in over a number of
years had been very useful.

THE SOUTH

6. (C) I told Thaksin that if we had met about three months
ago, I would have expressed grave concerns over his policies
of the last year plus in the troubled Muslim majority deep
southern provinces. However, with formation of the National
Reconciliation Commission (NRC),headed by former Prime
Minister Anand Panyarachun, and his own admissions in
Parliament that it was time to look at new approaches, I
sensed that he was on the right track. It was possible, I
added, that Thaksin's new stance was costing the separatists
their best recruiting tool - his previous hard line stance.
The Prime Minister did not contest this point. I pointed out
that the overwhelming majority of Muslims had no truck with
violence or radical beliefs but, at the same time, were
highly resentful of being lumped in with radicals - something
that leaders should avoid in their statements.


7. (C) Continuing in this vein, I suggested to Thaksin that
on the next occasion that he wanted Malaysia to return to
Thailand an accused Thai separatist or investigate alleged
separatist camps in Malaysia or Indonesia, he should call
Prime Minister Badawi or President Yudhoyono privately before
resorting to issuing public statements. While both Malaysia
and Indonesia were quick to defend themselves against public
accusations that they were harboring terrorists, they also
had a deep understanding of the dangers and if approached
quietly and off-line could be very helpful. Thaksin took
this on board, but vented his resentment of what he
considered Malaysia's unhelpfulness when Thai Muslim
separatists retreated into Kelantan state. Thaksin added
that he understood that Malaysia had its own problems in
Kelantan, but said that Kuala Lumpur must sympathize with
Thailand's situation on its porous border.

BURMA


8. (C) Thaksin recalled his conversation with Deputy
Secretary Zoellick (septel) and repeated his comment at that

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time that neither constructive engagement nor sanctions had
worked. What should we do? I replied by telling Thaksin
that Thailand's international image was suffering from its
engagement policy with the SPDC - rather than being part of
the solution, Thailand was viewed by many as being part of
the problem. For example, I said, last December in a radio
address Thaksin had reported Than Shwe's argument that Aung
San Suu Kyi's continuing imprisonment was necessary to
prevent Burma's disintegration. Thaksin then went on to say
that it was "reasonable" to be concerned about the country
coming apart. However, reportage of his remarks described
Thaksin as saying he found it reasonable to keep Aung San Suu
Kyi locked up. Thaksin gave an exasperated sigh, referred to
his often tense relations with both international and
domestic media, but took the point that Thailand must be wary
of its image on Burma.

SURPRISING COMMENT ON REGIME CHANGE


9. (C) I noted to Thaksin that a number of ASEAN nations
were beginning to view Burma as a serious impediment to the
organization, particularly its upcoming chairmanship. Rather
than issue unilateral statements regarding (and seemingly
supporting) Burma, Thailand would be better served by letting
ASEAN take the lead and become part of a consensus. Burma
had shown indications that it might skip its turn at the
ASEAN chair. Thailand should back away and let ASEAN's will
prevail, I emphasized. In response, Thaksin said that
Rangoon's relinquishing of the chair would be "not enough."
Thaksin added that this would only indicate that the regime
was so unwilling to loosen its grip on power that it would
sacrifice the prestige of holding ASEAN's chair. Then,
surprisingly, he said that the only solution was "regime
change" in Rangoon. The generals were "impenetrable,"
Thaksin complained. They were suspicious of the outside and
suspicious of each other. Their only concern was their own
protection and they feared that any opening to the NLD would
lead ultimately to their destruction.


10. (C) I replied by saying that in future meetings with
the SPDC leaders Thaksin might remind them that Aung San Suu
Kyi had stated that she was not interested in retribution,
only in the building of a democratic future in Burma.
Turning to the recent bombings in Rangoon, Thaksin said that
he agreed with theories that Khin Nyunt supporters were
likely responsible and suggested that these incidents could
signal the beginning of the unraveling of the SPDC. He noted
that Burmese Prime Minister Soe Win had abruptly canceled a
recently scheduled visit to Thailand - probably, Thaksin
speculated, from fear of being out of the country at a
sensitive time.

CHANGE OF POLICY ON THE BORDER?


11. (C) Thaksin said that if Soe Win had come, he would
have expressed to his Burmese counterpart his increasing
irritation with the situation on Thailand's border with
Burma. Rangoon's use of the Wa to attack Shan formations had
pushed some Shan across the border into Thailand - as much as
two kilometers in places. Thaksin said that Thailand was
currently allowing the fleeing Shan to cross the border. He
added that he was considering turning the tables and using
the Shan to deploy against the Wa in Burma. He asked for my
views. I pointed out that four years ago Thaksin had
reversed a very similar strategy that had been implemented by
his predecessor, Chuan Leekpai. I added that it was his
right, of course, to return to the previous policy and if he
did so it would send a strong message to the SPDC.

IRAQ


12. (C) We turned the discussion to Iraq. In earlier
meetings with Admiral Fallon and Deputy Secretary Zoellick
Thaksin had said that he would consider some "humanitarian"
presence in Iraq. At this private dinner, Thaksin seemed
extremely sensitive to the issue, particularly the symbolism
that a Thai presence in Iraq would have in the south.
Thaksin stressed that as an ally Thailand supported the U.S.
on Iraq, but asked us to be sensitive to his own efforts to
manage the situation in Thailand's south. I responded that
we were sensitive to his situation but had to emphasize that
to be an active member of the coalition, presence on the
ground was the proof. We left it at that.

ADVOCACY


13. (C) On the pending combat aircraft purchase in
Thailand, I noted that Thaksin's current account concerns had
led him to decide not to go with either counter trade or
offset arrangements, but to seek a strict barter agreement.
I told him that earlier that day I had met Commerce Minister
Thanong and informed him that Lockheed Martin was ready to
discuss with his Ministry a 100 percent barter arrangement
for the purchase of the F-16, but added that Commerce was
apparently still under the impression that the Prime
Minister's previous stipulation that only Gripen and Sukhoi
could bid still applied. Thaksin welcomed the news of
Lockheed Martin's readiness to discuss a barter arrangement
and added that the Thai Air Force would be "very happy."


14. (C) I also raised the issue of General Electric's bid
(together with Pratt and Whitney in the Engine Alliance) to
provide engines for Royal Thai Airlines Airbuses. Thaksin
laughed and said that we should first get the GE Invision
issue resolved - otherwise he would have to go with Rolls
Royce.

SURIKIART CANDIDACY


15. (C) I asked the Prime Minister about Deputy Prime
Minister and former Foreign Minister Surikiart's bid to be
the next UN Secretary General. Thaksin replied that if it
was Asia's turn to take over, then Surikiart had a good
chance of succeeding Kofi Annan. I asked what effect Sri
Lanka's interest in its own candidate, Jayantha Dhanapala,
would have on the race. Where was China going with its
support? Thaksin replied that even if Sri Lanka were
serious, Thailand had more support among Asian countries. I
decided to leave the question of Dr. Surikiarts's quest at
that.

THAI POLITICS


16. (C) Turning to Thaksin's overwhelming electoral victory
last February, I told Thaksin that I had followed Thai
politics for close to two decades and, in my view, he had
clearly revolutionized the Thai political landscape. I asked
him what he intended to do with his massive mandate. Thaksin
said that he expected his second term would be easier, though
he agreed with my assertion that running a faction-loaded 377
seat party was no easier than running a five party coalition.
At one point in the dinner Thaksin asked if I could imagine
a worse beginning to a political year, ticking off the
tsunami, high world oil prices, continuing avian flu concerns

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and the drought in Thailand. His most difficult political
task now, Thaksin said, was satisfying the "professional
politicians" in the factions. They expected influential
ministerial and administrative positions, but were incapable
of being effective in these jobs. He had tried to appoint
them to less significant slots to try to minimize their
potential to damage. Thaksin said that he expected to run
for a third term to ensure that the next generation of party
leaders would be sufficiently groomed before he finally
retired.

SLIGHTS THE OPPOSITION


17. (C) Thaksin did not have much good to say about his
current opposition counterpart, Democrat Party (DP) leader
Abhisit Vejjajiva. Thaksin described the younger politician
as too "cool" a personality for Thai politics. Without a
hint of irony Thaksin said that Abhisit's arrogance would get
him in trouble as would his lack of respect towards elder
politicians. Noting that the DP had reverted to essentially
being a regional party based in the south, I recalled a trip
to their stronghold in the mid-nineties in which it had
appeared that the party seemed clapped-out ideologically,
bound in tradition, happy to be a local power and unwilling
to address the increasingly complex issues facing Thailand.
They seemed to be undergoing a similar cycle now. Thaksin
agreed, and noted that when former Prime Minister and Chart
Pattana (CP) Party leader Chatichai Choonhaven was on his
deathbed, Thaksin had been approached to take over as head of
the CP. Thaksin said that he made the better decision to
form the Thai Rak Thai Party rather than take over an
old-line, later discredited party. (Note: CP has now become
part of the Thai Rak Thai. End note)

COMMENT


18. (C) This dinner was an opportunity to cover a wide
range of issues with Thaksin in a relatively direct and open
setting. Thaksin was in general very forthcoming and his
comments on his political problems and the possible sale of
his telecommunications companies were surprising and
refreshingly candid. Overall, the outcome of dinner with
Thaksin looks encouraging. Thaksin took on board our
constructive criticisms over his Burma policy and his earlier
stance towards Thailand's southern problems. He appears
ready to reenergize Thai engagement on FTA. He also appears
ready to open the combat aircraft competition to Lockheed
Martin and to lift restrictions on U.S. beef imports. The
Prime Minister was in an acceptance mode and looks ready to
move in the right direction on a number of our issues. End
comment.

BOYCE