ABHISIT,S SIX MONTH CHECK-UP: STAYIN ALIVE,

C O N F I D E N T I A L SECTION 01 OF 04 BANGKOK 002009

SIPDIS

STATE FOR EAP/MLS, NSC FOR BADER

E.O. 12958: DECL: 08/13/2019
TAGS: PGOV PREL ECON KDEM TH
SUBJECT: ABHISIT,S SIX MONTH CHECK-UP: STAYIN ALIVE,

REF: A. BANGKOK 1980 (SOUTHERN THAILAND)

B. BANGKOK 1817 (AMBASSADOR MEETS WITH REDSHIRTS)

C. BANGKOK 1265 (POLITICAL ROUNDUP)

D. BANGKOK 1157 (POLITICAL IMPASSE)

E. BANGKOK 841 (ABHISIT AT 100 DAYS)

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Classified By: AMBASSADOR ERIC G. JOHN, REASON: 1.4 (B) AND (D).

SUMMARY AND COMMENT
--------------


1. (C) Defying the longevity projections of seasoned Thai
political handicappers everywhere, Prime Minister Abhisit
Vejjajiva recently marked the six-month point in his tenure
by mounting a public defense of his administration's record
to date. Abhisit expressed optimism that his government had
successfully negotiated the worst of Thailand's economic
travails, highlighted more than 100 of his government's
signature achievements, and vowed to tackle the seemingly
intractable social and political cleavages that have hampered
his every initiative. He also conceded that progress in
dealing with the South had been slow and promised to
reinvigorate his efforts on that front. Given the disastrous
political and economic hand that Abhisit was dealt, however,
most neutral observers would agree that not only has Abhisit
done well simply to survive six months in office, but he has
also steadied a faltering economy, stared down numerous
political challenges, and said the right things about
handling the South and tackling corruption.


2. (C) Comment: Notwithstanding Abhisit's most impressive
accomplishment to date -- surviving more than six-months in
office -- serious challenges lie in wait at every turn.
These challenges will command Abhisit's constant attention
and possibly imperil his chances of successfully negotiating
his way through another six-months in office, though most
pundits now predict new elections sometime in 2010. The
political challenges alone are formidable. Former Prime
Minister Thaksin Shinawatra's Puea Thai party will maintain
its dogged political opposition to Abhisit's every move,
while his "red-shirts" keep the public pressure on Abhisit
through street protests and other tactics. Meanwhile,
dissension within his own Democrat Party -- not to mention
deep-seeded problems with his governing coalition's political
partners -- only serves to accentuate the fragility of his
political standing. Abhisit's weak political footing will
continue to hamper his efforts to deal with the seemingly
never-ending political problems, stabilize Thailand's
export-driven economy, and address the restive south, all
while trying to maintain positive relations with the
military. In other words, Abhisit may have survived in
office longer than most analysts projected, but no one is
uncorking champagne or taking anything for granted. Serious
work remains to be done; how much time he has in office is an
open question. End Summary and Comment.

THE FIREFIGHTER IN CHIEF'S ASSESSMENT
--------------


3. (SBU) During an August 6 performance review of his first
six months in office, belatedly delivered nearly eight months
after his December 17, 2008 election by parliament, Abhisit
compared his early responsibilities to those of a firefighter
charged with protecting a nation awash in flames. Seeking to
underscore the turbulent nature of his tenure, Abhisit argued
metaphorically that his government had initially focused on
evacuating the Thai citizenry from the flames, and would now
be able to turn its attention to extinguishing the fire and
rebuilding the country. In Abhisit's estimation, the
government had cushioned Thailand from the full impact of the
economic downturn while simultaneously weathering several
political challenges and registering over 100 policy
achievements.


4. (SBU) Turning to the policy achievements, Prime Minister
Abhisit pointed to free compulsory education as one of his
government's signature accomplishments, before citing monthly
stipends for senior citizens and favorable pricing schemes
for Thai agricultural products as other notable initiatives.
In Abhisit's view, these policy achievements demonstrated

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that the government had effectively delivered on its promise
to improve life for the average Thai citizen by buttressing
the social safety net.

THAKSIN AND THE REDSHIRTS LURKING
--------------


5. (C) Progress continues to be elusive however, in Abhisit's
quest to heal the long-standing societal and political rift
that has beset Thailand since the 2006 coup. Despite
Abhisit's best intentions, this dynamic is not likely to
change any time soon either, at least until questions about a
looming royal succession are fully resolved. During
anti-government protests by the anti-government United Front
for Democracy against Dictatorship (UDD -- aka "redshirts")
in April, fugitive former Prime Minister Thaksin Shinawatra
incited his supporters via video link. On April 9, Thaksin
called for "the last revolution of the country to root out
all the elite members who are behind the coup of 2006," and
he stated: "The power of the people is paramount. There must
be no other power beyond the power of the people any more."
(Ref C)


6. (C) While Thaksin has been more rhetorically subdued since
his red-shirts rioted in Pattaya and Bangkok in mid-April,
his overriding objective remains the same: keep the Abhisit
administration off balance by any means necessary. In the
latest manifestation of Thaksin's single minded determination
towards this end, Thaksin and his proxies have orchestrated a
massive signature gathering petition campaign seeking royal
amnesty for Thaksin (Ref B). Media reports suggest this
campaign has already netted several million signatures, and
redshirt organizers plan to deliver the signatures to the
Office of the King's Private Secretary on August 17.

WITH FRIENDS LIKE THESE..
--------------


7. (C) Unfortunately for Abhisit, the news doesn't get much
better within his own party, or among his governing coalition
"allies." Maintaining the delicate political balance that
put Abhisit in power has increasingly become an exercise in
triage, and each day brings new challenges and exposes
additional signs of disunity. In recent weeks alone, a
handful of parliamentarians from his Democrat party have
taken Abhisit to task on policy prerogatives, publicly airing
the growing internal party dissension along the way. The
damage is not isolated to his own party either, as coalition
party members have become increasingly bold in their own
public critiques, a strong sign that the alliance has not
proven as lucrative as some would have hoped. Even the
red-shirt's anti-Thaksin counterpart in the streets -- the
yellow-shirted People's Alliance for Democracy (PAD) -- has
chosen to part ways with Abhisit and the Democrats by forming
their own political party. While this break may ultimately
prove to be a net plus for the Democrats in as much as it
allows Abhisit and company to maintain a safe distance from
the 2008 occupation of Government House and Bangkok's
airports, the new party will undoubtedly pull votes away from
the Democrats (Ref C).

THE ECONOMY - NOT BAD
--------------


8. (C) By almost any objective measure, the Abhisit
administration has done a solid job navigating very difficult
economic terrain. Shortly after assuming office, Abhisit's
economic team energetically pitched its stimulus plan to
foreign investors. At the same time, they broadened many of
the populist policies of previous governments -- including a
new 2000 baht ($60) giveaway to every citizen enrolled in the
national social security program -- as part of a stimulus
package the government pushed through parliament. A recent
confab of university economists awarded the government a "7
out of 10" for the efficiency with which the stimulus package
has already been absorbed into the economy and its success in
minimizing the unemployment rate growth rate. The government
also deserves credit for its management of the financial
sector, which learned its lesson during the 1997 economic
crisis and avoided the "toxic" derivatives that weakened

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banks elsewhere, thereby keeping Thai financial institutions
in relatively good shape.


9. (C) In spite of Abhisit's best efforts, the economy has
continued to falter however, due in large measure to a heavy
reliance on exports. Exports account for approximately 70
percent of GDP and have fallen nearly 20 percent. As a
result, conventional wisdom holds that until the global
markets recover, Thailand's stimulus efforts will have a
relatively limited impact. Many Thai are also worried about
the debt that the government is accruing in an effort to keep
the economy afloat until developed economies recover. In
fact, the government had already skirted
constitutionally-mandated limits on the amount of public debt
it could take on before it recently secured approval to fund
long-term infrastructure projects that will further encumber
the government with debt.


10. (C) On the trade and investment climate front, there has
been more vigorous IPR enforcement, highlighted by raids on
retail and manufacturing operations. Abhisit's
administration has also said that it is studying the Foreign
Business Act with an eye on expanding foreign business
opportunities, though few concrete steps have been taken in
that direction thus far. In an encouraging sign of progress
in the corruption fight, the entire (crooked) Thai Airways
board was replaced, and Abhisit has elsewhere fought to
relieve the government from over-priced contractual
obligations. Longstanding customs issues have emerged with
renewed vigor, however, with threats of ludicrously high
penalties (hundreds of millions of dollars) routinely levied
at prominent foreign companies such as Amway, BMW and various
Japanese car makers. To date foreign embassies have
successfully lobbied policy-makers from allowing these
threats from going forward. On balance, the overall economic
track record is positive, though we suspect Abhisit's
government would have enjoyed greater success without the
constraints imposed by coalition partners with control over
key ministries and bent on securing their own economic
interests.

ABHISIT AND THE MILITARY
--------------


11. (C) By all appearances, Abhisit has managed relations
with the military during his first six months more
successfully than either of his two immediate predecessors -
Samak Sundaravej and Somchai Wongsuwan. Both Samak and
Somchai often appeared to be alternatively either at odds
with, or uncommonly deferential to the military. The Abhisit
administration has had its share of challenges in managing
relations with the military, particularly over southern
policy. April protests by the reds in Pattaya forced the
embarrassing cancellation of an ASEAN Summit and highlighted
issues with civilian command and control of security forces.
At the time, there was speculation that Abhisit was in danger
of losing his power when red protests spread through Bangkok
and seemed to expose the government's inability to maintain
control. However, the subsequent show of force by the
military April 13 in dispersing the protesters immediately
enhanced Abhisit's standing.


12. (C) In terms of the ongoing border dispute with Cambodia,
the military's actions appear to be well-coordinated with the
government. In a further sign of good relations, the ARMY
accepted a significant budget reduction without protest.
That said, the controversy over the ongoing investigation
into the attempted assassination of PAD leader Sondi
Limthongkul, with a number of active duty special forces
implicated (septel) could yet test the limits of this largely
amicable relationship.


13. (C) The biggest exception to this dynamic is with respect
to southern policy. To his credit, Abhisit singled out the
southern situation as a top priority shortly after assuming
office. He spearheaded a plan to reinvest civilian officials
with authority over the southern insurgency, and is
investigating the possibility of lifting the draconian
security laws that allow security forces to detain and hold
suspects without charges or trial. He also launched a

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"Southern Cabinet" to oversee relevant budget and policy
issues, vowed to establish a new organization with overall
responsibility for the south, and asked deputy Democrat Party
leader Kraisak Choonhaven to engage in confidential
discussions with separatists facilitated by the Henri Dunant
Centre in Jakarta (Ref A). In addition, the PM signaled he
would consider a special administrative zone in southern
Thailand to deal with issues of governance, and noted that he
would entertain the possibility of "peace talks" to end the
violence.


14. (C) Unfortunately, none of Abhisit's initiatives has
translated into any visible change on the ground yet, and
army resistance in particular will be difficult to overcome,
given the national challenges faced in Bangkok. In late June,
Army Commander General Anupong Paochinda pointedly noted in
press statements that the political aspects of Abhisit's
strategy extended only as far as economic development and
education; there would be no discussions with insurgents, he
stated. Furthermore, Democrat Party SecGen and DPM Suthep,
focused on coalition management, the red-shirt challenge, and
maintaining relations with the army, seems to side with
Anupong against Abhisit's apparent willingness to take bolder
steps.
JOHN