S.E. Asia's Market Woes Claim Thailand Premier
Premier said Monday he will resign. Economic crisis worsens. IMF reforms prove difficult.
BANGKOK — Southeast Asia's economic crisis has claimed its first political casualty.
In Thailand, where the region's market turmoil began a few months ago, Prime Minister Yongchaiyudh Chavalit said yesterday that he was resigning after 11 months in office to let other people manage the crisis.
He had become the man that many Thais had come to despise after their long economic boom came to a screeching halt.
Mr. Chavalit had become a focus for middle class discontent in recent weeks. Political cartoons in national newspapers lampooned him as an oaf who had lost his way and posters pinned up around the city said his New Aspiration Party was hopeless.
In Bangkok, where Chavalit's party won no seats in the last election, the prime minister's party had come to embody the corruption which has eroded Thailand's economic miracle.
His resignation will likely offer only a temporary reprieve for Thailand's sagging economy, which has seen its currency, the baht, plunge by 60 percent against the dollar since July. Analysts are expecting to see graphs at the stock exchange nudge upwards again, but probably not for long.
So far this year, Thailand's stock market has performed worse than any other in the Pacific Rim, its index plummeting by 66 percent.
The former general's departure will likely raise more questions than it will answer.
Many Thais are bracing themselves for the full effect of an economic crash that may see up to 30,000 auto workers and 25,000 finance workers out of a job. Some forecasts say that some 2.2 million Thais may lose their jobs in the wake of the current crisis, Thailand's worst in decades.
Criticism of Chavalit has highlighted the dilemma of "old-style" politicians who are caught between trying to pander to popular opinion and implementing often-harsh economic reforms.
In August, Thailand accepted a $17.2 billion credit line from the International Monetary Fund (IMF), conditional on the government complying with a number of reforms and austerity measures, aimed at reshaping the country's battered economy.
As Chavalit steps down, his successor, still not named, will be obliged to perform a delicate balancing act between implementing the IMF's reforms and pleasing an electorate unaccustomed to the hardship of an economic recession.
When he rescinded an IMF-inspired tax hike on oil prices last month because of popular discontent, Chavalit showed that he did not have the leadership or the nerve to push through such reforms.
As the initial elation at Chavalit's departure clears, the question of his succession will loom large.
One likely candidate is Chatichai Choonhavan, a former prime minister who was ousted from power in 1991 by a military coup, following allegations of massive corruption. Today Chatichai is leader of the Chat Pattana Party, the second-largest member of a fractious six-party coalition which constitutes Thailand's government.
Ironically, many analysts blame Chatichai for encouraging the emergence of a "bubble economy" in the late 1980s and early 1990s, based on massive, unhedged financial and property speculation, which has led to Thailand's current economic difficulties.
Another possible candidate is Chuan Leekpai, also a former prime minister, and leader of the main opposition Democrat Party. Observers say that politicians may be reluctant to jump into a situation fraught with explosive political issues.
"I'm skeptical the Democrats would jump in since an election would come so soon, and by being in the government now they will take part of the blame," notes Pisit Leeahtam, executive vice president of Bangkok Bank, Thailand's largest commercial bank.
Whoever takes over, Thailand will remain adrift amidst a sea of uncertainty for weeks and possibly months to come.
An interim prime minister is expected to take over from Chavalit, pending elections that will likely be held early next year, following the passage of new election law, laid down by a recently reformed Constitution. While investors may be cheered by Chavalit's departure, Thailand's woes are far from over.
Ironically, on the same day of Chavalit's announcement, Thailand released a letter from President Clinton assuring Chavalit that the United States will "continue to work with you and the international financial institutions."