DEPUTY PRIME MINISTER PRIDIYATHORN RESIGNS

UNCLAS BANGKOK 001209 SIPDIS SENSITIVE SIPDIS STATE FOR EAP/MLS AND EB COMMERCE FOR EAP/MAC/OKSA TREASURY FOR OASIA STATE PASS TO USTR FOR WEISEL STATE PASS TO FEDERAL RESERVE SAN FRANCISCO FOR DAN FINEMAN STATE PASS FEDERAL RESERVE NEW YORK FOR MATT HILDEBRANDT E.O. 12958: N/A TAGS: ECON PGOV PHUM PREL TH SUBJECT: DEPUTY PRIME MINISTER PRIDIYATHORN RESIGNS SENSITIVE BUT UNCLASSIFIED HANDLE ACCORDINGLY REF: A) 2006 BANGKOK 6156(New Thai Economic Team) B) 2006 BANGKOK 6002(Central Bank Governor Emerges as top Economic Advisor) C) Bangkok 1036 (SOMKID RESIGNS) D) Bangkok 940 (ANAND DOWNBEAT) E) Bangkok 152 (FOREIGN BUSINESS ACT) F) 06 Bangkok 7484 (CAPITAL CONTROLS IMPOSED) ¶1. (U) On February 28, Deputy Prime Minister and Finance Minister Pridiyathorn Devakula resigned his positions in government effective March 1. The reasons he gave for his resignation were: - Unhappiness with the criticism leveled at him by the head of the Manager Media group, Sondhi Limthongkul. Pridiyathorn accused "certain members of this government" of working "for the benefit of certain media." - A none-too-veiled accusation that the current government is somehow working with pro-Thaksin elements, as illustrated by the appointment of former Deputy Prime Minister Somkid (who resiQNQQP8Qguous way. And the connection with the previous government is still continuing. It is because a contact person with Thaksin government is still holding position in this government." - A general sense of being "uncomfortable" with certain cabinet members.eQQ'3k3Q}'|owing, the junta's credibility QX_QGQNign. One local observer argued that Pridiyathorn continues to harbor political ambitions and that he had to start disassociating himself from the current regime in order to position himself for a run at parliament in the next elections -- although some credible figures believe Pridiyathorn's image is now beyond repair (for example, see ref D). ¶3. (SBU) Another story making the rounds in explanation for today's events is that General Sonthi (head of the Council for National Security) working with Pridiyathorn arranged for Pridiyathorn to resign while making accusations regarding the cabinet's probity on the way out. This was done in order to pressure PM Surayud into resigning. The endgame, according to this thesis, would be Pridiyathorn becoming PM. This story is given credibility by those noting Pridiyathorn's close ties to the royal family. ¶4. (SBU) Comment: Shortly after the coup, Pridiyathorn told us (ref B) that he was sought out by the generals to take on the economic portfolio before the tanks rolled on September 19. He was to take care of the economy and reassure foreigner investors while the generals cleaned up the political problems left by Thaksin. By all accounts Pridiyathorn has been the overwhelmingly dominant voice on economic matters in this government and his departure will leave a vacuum that will be difficult to fill; not so muc c}gDCQ which have been widely reviled in the foreign business community) but because there are few credible replacements even for this weak performer. ¶5. (SBU) Comment, continued: With this government having only monthQ&QQ2left in its self-professed mandate, increasingly difficult economic and political environments, and the example of Somkid's recent difficulties, it may prove difficult to find an acceptableQQJQqzom, among other ailments, a severe lack of high-level policy coordination.