Risks Rise That Military Could Outstays Its Welcome

BMI View: We have upgraded our short-term political risk rating for Thailand owing to the renewed stability provided by the military's tight grip on power, and the improvement in policy enactment. However, while we believe that a return to civilian rule will be forthcoming over the next 1-2 years, the lack of clarity regarding so-called democratic reforms raises the likelihood that a well-functioning democracy will not be the end result.

Short-term political stability has been restored since the Thai military seized power in a coup in May. The banning of protests and implementation of curfews has seen incidences of violent clashes between the Red Shirts and Yellow Shirts die down greatly. The hope is that with violence having subdued, opposing forces can work together on a solution to the recurring crisis. However, little progress has been made, and while the military has continued to claim that democratic reforms are needed before the country can return to civilian rule, the lack of clarity is fanning concerns that the military will remain in power for an extended period, raising risks of a Red Shirt backlash.

In the first sign of any organised opposition to the military, exiled Thai minister Charupong Reuangsuwan is seeking to work with fellow dissidents to restore 'democratic principles' by organising resistance to the military both inside and outside the country, under the name of The Organisation of Free Thais for Human Rights and Democracy (also known as Seri Thai, named after the group that fought against Japanese occupation during World War Two). It is not yet clear from which country the new organisation will operate, although Charupong is thought to be in Cambodia working alongside Jakrapob Penkair, an outspoken Red-Shirt activist and former minister who fled from lese majeste charges in 2009.

Risks Rise That Military Could Outstays Its Welcome

BMI View: We have upgraded our short-term political risk rating for Thailand owing to the renewed stability provided by the military's tight grip on power, and the improvement in policy enactment. However, while we believe that a return to civilian rule will be forthcoming over the next 1-2 years, the lack of clarity regarding so-called democratic reforms raises the likelihood that a well-functioning democracy will not be the end result.

Short-term political stability has been restored since the Thai military seized power in a coup in May. The banning of protests and implementation of curfews has seen incidences of violent clashes between the Red Shirts and Yellow Shirts die down greatly. The hope is that with violence having subdued, opposing forces can work together on a solution to the recurring crisis. However, little progress has been made, and while the military has continued to claim that democratic reforms are needed before the country can return to civilian rule, the lack of clarity is fanning concerns that the military will remain in power for an extended period, raising risks of a Red Shirt backlash.

In the first sign of any organised opposition to the military, exiled Thai minister Charupong Reuangsuwan is seeking to work with fellow dissidents to restore 'democratic principles' by organising resistance to the military both inside and outside the country, under the name of The Organisation of Free Thais for Human Rights and Democracy (also known as Seri Thai, named after the group that fought against Japanese occupation during World War Two). It is not yet clear from which country the new organisation will operate, although Charupong is thought to be in Cambodia working alongside Jakrapob Penkair, an outspoken Red-Shirt activist and former minister who fled from lese majeste charges in 2009.

At present, the movement does not pose a threat to the military or political stability. The Pheu Thai leadership has denied it has links with Seri Thai, and the military is likely to crack down harshly on those attempting to support the group. While it is unclear if former Prime Minister Thaksin Shinawatra has a hand in the movement, his widespread support and his financial resources would be necessary in order for it to take root. We have slightly revised up our short-term political risk rating to 62.3 from 60.8 out of 100, owing to a boost in the 'social stability' and policy-making process' categories.

Long-Term Outlook Remains Highly Uncertain

It could be argued that the military's assumption of power was necessary in order to prevent further bloodshed and allow both sides to engage in much-needed discussion. If the junta can manage to bridge the gap between the Red Shirts and Yellow Shirts, then there is every chance that Thailand can emerge strongly from its current crisis. However, their actions over recent weeks, including the crackdown on media freedom, the summoning of hundreds of politicians, academics, activists and journalists from both sides of the political spectrum, and the recent scheme of offering rewards to anyone providing pictures of those thought to be displaying opposition to the coup, suggest that the military may be more interested in consolidating its power than reforming the political system.

The head of the military junta General Prayuth Chan-ocha has refused to give a timeline for the eventual handover of power although it seems unlikely to take place within the next 12 months. Although we would expect an eventual return to civilian government, it is looking increasingly likely at this stage that the military is in no rush, and the longer the junta remains in power, the more likely it is that fully-functioning democracy will not be the end result. As such, our long-term political risk rating remains at 59.8.

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