Thai parties start coalition deal-making

Thailand's political parties got down to hard bargaining on Monday. Consultations began after voters roundly rejected last year's military coup but failed to give supporters of ousted Prime Minister Thaksin Shinawatra an outright majority. Thai parties start coalition deal-making The deal-making looks likely to be long, dirty and tense after Sunday's vote showed a country polarized between Thaksin supporters in the People Power Party (PPP) and opponents represented mostly by the Democrat Party. "There is still plenty of room for mischief," the Bangkok Post said in an editorial. "Other groups, including the military, must abide by the election decision." PPP leader Samak Sundaravej, who openly admits to being a Thaksin proxy, said he would "certainly" be prime minister and invited small parties to join his own 228 seats in the 480-member parliament to form a coalition government. The big question is whether the army and royalist establishment, whom the Thaksin camp accuses of masterminding the coup, will stand by and let this happen. Two of the crucial minor parties, Chart Thai (Thai Nation) and Puea Pandin (Motherland), with 65 seats between them, would act together and take their time making a decision, Chart Thai leader and former prime minister Banharn Silpa-archa said. He left open the possibility of a coalition with the Democrats, who won 166 seats. Parliament must meet within 30 days of the election and then has a month to elect a prime minister. However, the army and Thailand's old elite are likely to call in every favor to stop Thaksin making a comeback by proxy, including getting the Election Commission (EC) to whittle down PPP numbers by disqualifying candidates for vote fraud. "At every step in coming days and weeks, the EC must be seen to be doing exactly the right thing in every decision," the Bangkok Post said. S&P warning There was no immediate market reaction as Thailand is on a holiday for the election. The stock and currency markets reopen on Tuesday, Christmas Day. But reflecting fears of another coup, ratings agency Standard & Poor's said any more military meddling would be likely to lead to a credit downgrade, making it harder for Thailand to borrow money on international markets. "If such divisions result in another unconstitutional replacement of the government, or social unrest, the political and economic consequences will be much more negative than experienced so far," S&P said. Underlying the political horse-trading is the fear of trouble on the streets of the capital, where prior to the coup the middle classes staged months of anti-Thaksin protests, paralyzing government and hitting consumer confidence. Despite his unpopularity in Bangkok after four fractious years as governor, Samak shrugged off fears protests would give the army cover to step in again after the obvious failure of the 2006 coup in consigning Thaksin to the history books. "It is a victory for this country," Samak said of the vote, adding that new army chief Anupong Paochinda was a "good guy" committed to keeping out of politics. The military's preferred outcome is a government led by the Democrats, the main opposition during Thaksin's five years in power, even though most analysts say such a weak coalition of at least five parties would be unlikely to last beyond a year. Financial markets hope the return of an elected administration will signal the end of a period of disappointing economic growth, likely to fall from 5.1 percent in 2006 towards 4 percent this year, the lowest rate in six years. "As a positive, you could argue that the election did go ahead, but I don't know what the military is going to do, and I don't pretend to know what they are going to do," said David Cohen of Action Economics in Singapore. "Maybe that will make foreign investors a little bit wary."

Thai parties start coalition deal-making

The deal-making looks likely to be long, dirty and tense after Sunday's vote showed a country polarized between Thaksin supporters in the People Power Party (PPP) and opponents represented mostly by the Democrat Party.

"There is still plenty of room for mischief," the Bangkok Post said in an editorial. "Other groups, including the military, must abide by the election decision."

PPP leader Samak Sundaravej, who openly admits to being a Thaksin proxy, said he would "certainly" be prime minister and invited small parties to join his own 228 seats in the 480-member parliament to form a coalition government.

The big question is whether the army and royalist establishment, whom the Thaksin camp accuses of masterminding the coup, will stand by and let this happen.

Two of the crucial minor parties, Chart Thai (Thai Nation) and Puea Pandin (Motherland), with 65 seats between them, would act together and take their time making a decision, Chart Thai leader and former prime minister Banharn Silpa-archa said.

He left open the possibility of a coalition with the Democrats, who won 166 seats.

Parliament must meet within 30 days of the election and then has a month to elect a prime minister.

However, the army and Thailand's old elite are likely to call in every favor to stop Thaksin making a comeback by proxy, including getting the Election Commission (EC) to whittle down PPP numbers by disqualifying candidates for vote fraud.

"At every step in coming days and weeks, the EC must be seen to be doing exactly the right thing in every decision," the Bangkok Post said.

S&P warning

There was no immediate market reaction as Thailand is on a holiday for the election. The stock and currency markets reopen on Tuesday, Christmas Day.

But reflecting fears of another coup, ratings agency Standard & Poor's said any more military meddling would be likely to lead to a credit downgrade, making it harder for Thailand to borrow money on international markets.

"If such divisions result in another unconstitutional replacement of the government, or social unrest, the political and economic consequences will be much more negative than experienced so far," S&P said.

Underlying the political horse-trading is the fear of trouble on the streets of the capital, where prior to the coup the middle classes staged months of anti-Thaksin protests, paralyzing government and hitting consumer confidence.

Despite his unpopularity in Bangkok after four fractious years as governor, Samak shrugged off fears protests would give the army cover to step in again after the obvious failure of the 2006 coup in consigning Thaksin to the history books.

"It is a victory for this country," Samak said of the vote, adding that new army chief Anupong Paochinda was a "good guy" committed to keeping out of politics.

The military's preferred outcome is a government led by the Democrats, the main opposition during Thaksin's five years in power, even though most analysts say such a weak coalition of at least five parties would be unlikely to last beyond a year.

Financial markets hope the return of an elected administration will signal the end of a period of disappointing economic growth, likely to fall from 5.1 percent in 2006 towards 4 percent this year, the lowest rate in six years.

"As a positive, you could argue that the election did go ahead, but I don't know what the military is going to do, and I don't pretend to know what they are going to do," said David Cohen of Action Economics in Singapore.

"Maybe that will make foreign investors a little bit wary."