Uncertain future for new Thai government
It's the economy, stupid. But Thailand's new government has more pressing matters, including legal challenges and unfinished business after the 2006 coup. The game may be up before it has begun if charges of election offences stick against People Power, the main party in the coalition government, and two minor partners. Verdicts that could dissolve the parties may come next month.
Meanwhile, a corruption probe lingers over Prime Minister Samak Sundaravej from his days as Bangkok governor, while Yongyuth Tiyapairat, the House of Representatives speaker, could face charges for an ill-judged police raid.
They will have to fight hard because the courts occasionally prove immune to influence and pressure - unfortunately, not often enough. Guilty verdicts will cost them their plum jobs in the government and possibly senior positions in the People Power Party.
On top of this, People Power will be busy keeping a promise to bring party godfather Thaksin Shinawatra back from exile and find a way to bring corruption cases brought by the junta against him to a close with, at worst, a slap on the wrist.
Also on the agenda is a pardon for Thaksin and 110 other senior members of Thai Rak Thai, People Power's predecessor, which was banned from politics for five years last May for election fraud.
That ban keeps many relatively capable politicians on the sidelines instead of in the cabinet. Not all those taking their places will be poodles. Some will try to prove their worth, introducing yet more uncertainty. Were the economy beginning a cyclical recovery, as it did when Thaksin first led Thai Rak Thai to power in 2001, none of this would matter much.
As it is, the economy is sluggish, investment is slack and imports are weak - while exports are strong, causing the current-account surplus to balloon.
Matters have been made worse by the central bank, which thinks the baht's rise could stifle exports. This is true for industries like furniture that use local materials, but not so for those using imported parts, like IT. Tourism might take a hit but, with prices soaring worldwide for key exports like food, rubber and palm oil, a strong baht can be weathered.
To fight the market the central bank is buying US dollars, a costly move not least because it saddles the bank with a weakening currency and encourages inflation through rising US dollar prices, especially for energy.
Meanwhile, killings continue daily in the southern borderlands where the Malay Muslim majority is trapped between militant separatists and the security forces.
This delicate situation requires sophisticated policy, addressing the state's shortcomings and errors while employing political means to wean supporters away from the militants. Mr Samak's approach is seemingly simpler: he strongly supported deadly crackdowns on democracy protesters in 1976 and 1992.The honeymoon for this government will be brief.
David Fullbrook is an independent researcher and writer on Asian affairs
