Global Insight Perspective

Significance

The move comes while Thaksin is currently out of the country at the UN General Assembly meeting in the United States.

Implications

Details at this stage are sketchy, but it appears that two separate military factions have emerged, one reportedly backing the monarch and the other supporting Thaksin.

Outlook

Until the situation becomes clearer it is difficult to forecast what will happen. However, Thailand's attempts in recent months to regain its political stability will be unsettled, possibly creating security problems, and probably deterring investors until the situation stabilises.

Risk Ratings

In light of the situation, GI has further downgraded the political and security risk ratings, this time by 0.25 to 3.00 for both. This follows an earlier change to the political risk rating this year. These ratings will be monitored in the coming days and weeks as the situation develops.

Sending the Tanks In

Thaksin has declared a state of emergency following a military coup attempt in the capital, Bangkok. Tanks are reportedly on the streets, with the faction seeking to oust the prime minister surrounding and taking control of Government House. A number of Thaksin's key advisers have been arrested and a political committee has been tasked with reform. For his part, Thaksin has called on the military not to "act illegally", but has clearly been ignored. He has also dismissed the head of the armed forces, General Sonthi Boonyaratglin. The UN agenda has been altered to give Thaksin an opportunity to speak about the development before global leaders, meaning that the prime minister's position and possible course of action may become clearer.

The Run-Up to the Coup

Since political problems began in early 2006, there have been persistent rumours of a coup. This largely reflects Thailand's historical political legacy. Absolute monarchy was abolished in 1932, since when there have been 17—or 18 including the latest attempt—military coups. Democracy is a relatively new phenomenon and has been developing since 1978, although it was given greater impetus and more structure by a new reformist constitution that came into force in 1997. As such, fears of political unrest are inevitably joined by suspicions of military intervention.

Throughout the year, the military has issued repeated assurances that it would remain out of political affairs, and its conduct during and after the April 2006 elections gave weight to this claim. Events in August however, suggested that there might be more to this issue than was perhaps apparent. Thaksin announced that an assassination plot had been uncovered against him, shortly after which the deputy chief of the Internal Security Operations Command, General Panlop Pinmanee, was dismissed for his alleged role in the plot. Adding to the intrigue, it was reported that the explosives used in this attack were the same as those used in the continuing unrest in the south of the country.

Thaksin and the King

At this stage, it is unclear exactly who is behind the apparent coup attempt and exactly what their motives are. Emerging reports suggest that advisers to King Bhumibol Adulyadej have, along with military and police commanders, created a reform commission with the aim of forming an interim government and instigating broader political reform. They have apparently stressed that military action is only temporary and that power will be returned to the politicians shortly. Although relations between Thaksin and the king have been strained, it is unusual for the monarch to intervene so directly in the political sphere. It would also be particularly strange for him to do so at a time when the country seemed to have regained its political stability and was heading towards general elections in November.

Outlook and Implications

At this stage, it is difficult to forecast how this situation will play out without knowing the exact political agenda of those involved. Some observers are arguing that the situation is being heavily overplayed and will stabilise swiftly. If the king is as involved as he currently appears to be, this would lend weight to this argument, given the high level of respect that the Thai people have for their monarch. Furthermore, great stress is being laid on the temporary nature of this military action. Others view these events as political power-play that has possibly even been choreographed by Thaksin himself. Interestingly, on this point, a survey published after the August assassination bomb plot revealed that a large proportion of respondents in Bangkok believed the plot was a political stunt. GI will be monitoring the situation closely, expanding its coverage as events become clearer.

Contact: Raul Dary

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