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No budget, no elevators: political crisis gums up Thai government

Posted: 19 May 2014 09:05 PM PDT

BANGKOK (Reuters) - Bangkok's Government House, the seat of power in the heart of the Thai capital, has stood empty for six months, except for the troops guarding it from protesters who want to oust the administration and overhaul Thailand's democracy.

Last week, as if to illustrate just how dysfunctional Thai politics has become, leaders of the protests were allowed to move into a building in the sprawling compound. The prime minister's office, cabinet meeting room and the rest of the premises housing the apparatus of government remained shut.

Thailand has been without a properly functioning government since December, and the strain is starting to show, from a failure to draw up a state budget to civil servants' complaints of an inability to fix ministry elevators.

Bangkok has all but withdrawn from the international stage, with the country led by a caretaker prime minister unable to take foreign policy decisions, travel on state business or officially receive international leaders.

The crisis, the latest instalment of a near-decade-long power struggle between ousted former Prime Minister Thaksin Shinawatra and the royalist establishment, has already pushed the economy to the brink of recession.

And things could worsen if there is no budget in place for the coming fiscal year, which starts in October.

"The new budget from Oct. 1 may be only partially processed, and mainly for fixed expenditure such as payrolls," said Manas Jamveha, comptroller general at the Finance Ministry. "There'll be no new investment for certain, except for projects carrying over from the previous budget years."

Ministers should have sent a budget to parliament in May - but parliament was dissolved late last year when then Prime Minister Yingluck Shinawatra, Thaksin's younger sister, called a snap general election.

The vote in February was disrupted and later annulled and her caretaker government had to limp on with limited powers.

Last year the budget for 2013/14 was passed on Aug. 23. This year Thailand will be lucky to have a parliament by August.


The Finance Ministry's Manas reckoned it would take a new government five or six months to start discretionary spending under a new budget.

There is little sign, however, that a new government is close to being formed. The Election Commission has backtracked on plans to re-run the general election on July 20.

Yingluck herself was ousted by the courts this month, and the farce threatens to descend into tragedy if the "acting caretaker prime minister" appointed by her party finds his already feeble authority contested by an alternative premier that the anti-government protesters want installed.

Protest leader Suthep Thaugsuban, from his new base amid the Venetian Gothic splendour of Government House, promised at the weekend to launch a "final push" to sweep away the remnants of Yingluck's administration.

The finance department does not even have a full-time minister: Kittirat Na Ranong was removed by the courts along with Yingluck. Acting Prime Minister Niwatthamrong Boonsongphaisan will keep the seat warm but will be spread thin, as he has also kept his old job as commerce minister.

The Revenue Department is functioning normally, said Suttichai Sangkamanee, its director general, noting taxes from individuals were holding up but revenue from some businesses, such as importers of machinery, was down, reflecting a slowdown in industry due to the grim political and economic outlook.

As elsewhere, however, policy decisions are frozen.

Suttichai said the government had to roll over a cut in the corporate tax rate to 20 percent, otherwise it would lapse at the end of December, and it needed to extend the 7 percent value-added tax before it reverted to 10 percent in September.

"We can try to get approval from the Election Commission, as needed, if there's still no new government. It's crucial for businesses to plan ahead and they need to see if the tax cuts will remain in place in the coming year," he said.


By law, a caretaker government can only embark on new spending with the approval of the Election Commission and it cannot initiate projects that commit the next government.

"Our everyday work hasn't been affected but, of course, budgets have," said Sophon Mekthon, director of the Centre for Disease Control and Prevention at the Ministry of Public Health. "We can't think ahead, we can't plan and decisions such as human resources allocation have been difficult."

Yingluck failed to secure funds for a ruinous rice-buying scheme, angering her traditional supporters in the northeast, and the government has found itself powerless to help other farmers as rubber prices have fallen to 4-1/2-year lows.

"We can't do anything. The Thai government itself has no right to borrow money or allocate any budget to intervene in the market," said Chanachai Plengsiriwat, head of the Rubber Estate Organisation, the state body overseeing the industry.

As the region's second biggest economy, Thailand considers itself a big hitter in the Association of Southeast Asian Nations, but finds itself hamstrung on the international stage.

"The Thai government doesn't sign international agreements because that would need parliamentary approval," said Foreign Ministry spokesman Sek Wanamethee.

Yingluck was a frequent traveller - she spent more time abroad than in parliament, the opposition mocked - apparently undeterred by the fate of her brother, who was toppled by the military in 2006 whilst on a trip to the United Nations.

But her globetrotting dried up when the protests started, as did visits by foreign dignitaries.

Surong Bulakul, chief financial officer at top energy company PTT, noted a hold-up on several major projects.

A planned initial public offering for its Star Petroleum Refining Co (SPRC) was awaiting approval from a committee that is chaired by the prime minister.

PTT wants the government to raise the retail price of gas used for cooking and fuelling vehicles.

"No one is in charge of this and it needs a new government to make a decision," Surong said.

For civil servants, frustration at such policy inertia is compounded by the everyday irritation of having no one to sign off on spending.

"There are several trivial problems ... We need approval for a budget to fix the elevators at our building since officials can't get to their office," said Theerapong Rodprasert, deputy permanent secretary at the Transport Ministry. "This has to be delayed as we can't get the money to pay the contractor."

(Reporting by Khettiya Jittapong, Pisit Changplayngam, Amy Sawitta Lefevre, Kitiphong Thaicharoen, Apornrath Phoonphongphiphat and Viparat Jantraprap; Editing by Simon Webb and Alex Richardson)

'This is not a coup' says Thai army, as martial law declared

Posted: 19 May 2014 09:00 PM PDT

BANGKOK (Reuters) - Thailand's army declared martial law nationwide on Tuesday to restore order after six months of street protests that have left the country without a proper functioning government, but denied that it was staging a military coup.

While troops patrolled the streets of Bangkok, the caretaker government led by supporters of self-exiled former premier Thaksin Shinawatra was still in office, military and government officials said. Ministers were not informed of the army's plans before the surprise announcement on television at 3 a.m. (2100 BST on Monday).

Army chief General Prayuth Chan-ocha said the military was taking charge of public security because of violent protests that had claimed lives and caused damage. Nearly 30 people have been killed since the protests began in November last year.

"We are concerned this violence could harm the country's security in general. Then, in order to restore law and order to the country, we have declared martial law," Prayuth said.

"I'm asking all those activist groups to stop all activities and cooperate with us in seeking a way out of this crisis."

Prayuth had invited government leaders to a meeting at 2 p.m. (0800 BST), an army spokesman said.

Both pro- and anti-government protesters are camped out at different places in Bangkok and the army ordered them to remain where they were and not march anywhere to prevent clashes.

The army also called on media not to broadcast material that would affect national security.


The caretaker government, wary of the army given its past interventions on the side of the establishment, welcomed the move to restore order. It said it had not been informed about martial law in advance but it was still running the country.

"The government doesn't have a problem with this and can govern the country as normal," caretaker Justice Minister Chaikasem Nitisiri, told Reuters.

Thailand has been stuck in political limbo since Prime Minister Yingluck Shinawatra, Thaksin's younger sister, and nine of her ministers were dismissed on May 7 after a court found them guilty of abuse of power. An acting prime minister has since taken over.

The crisis, the latest instalment of a near-decade-long power struggle between former telecoms tycoon Thaksin and the royalist establishment, has brought the country to the brink of recession.

The military, which put down a pro-Thaksin protest movement in 2010, has staged numerous coups since Thailand became a constitutional monarchy in 1932. The last one was in 2006 to oust Thaksin, a billionaire who has lived in self-exile since 2008 but commands huge support among the poor.

The United States, which cut aid to its military ally after the 2006 coup, said it was monitoring the situation in Thailand closely.

"We expect the army to honour its commitment to make this a temporary action to prevent violence, and to not undermine democratic institutions," said U.S. State Department spokeswoman Jen Psaki in a statement.

Army chief Prayuth had warned last week, after three people were killed in a gun and grenade attack on anti-government protesters in Bangkok, that troops might have to be used to restore order if the violence continued.

"The army chief was moving towards imposition of martial law ever since his announcement last week that the army would use full force if things get out of hand," said a senior army official, who spoke on condition of anonymity.

"He now feels that the police cannot handle security and is alarmed by grenade attacks and other incidents and the fact neither side looks like it will back down."

The army tried to mediate in the crisis late last year, bringing together then premier Yingluck and anti-government protest leader Suthep Thaugsuban. It has played down fears of a coup, stressing that politicians must resolve the dispute.


Troops stopped some traffic from entering the city and placed sandbags outside a city centre police headquarters, witnesses said. Soldiers had also secured television stations.

"We need cooperation from them to announce to the people 'do not panic, this is not a coup'," an army general said.

Ten satellite television channels, including stations run by pro- and anti-government groups, were ordered to stop broadcasting to "preserve peace and order".

The baht fell against the dollar in early trade but steadied later and dealers suspected that was due to intervention by the central bank. At 0346 GMT the baht was quoted at 32.48/50 per dollar after earlier trading at a low of around 32.64.

The stock market fell around 1 percent.

Acting Prime Minister Niwatthamrong Boonsongphaisan on Monday ruled out resigning as a way out of the crisis that is stunting economic growth, as the anti-government protesters stepped up their pressure to remove him and install a new administration.

Six months of turmoil, including a disrupted general election and violence on the streets, is dragging down Southeast Asia's second-biggest economy, which shrank 2.1 percent in the first quarter of the year.

Andrew Colquhoun, Head of Asia-Pacific Sovereigns at ratings agency Fitch, said the imposition of martial law was not necessarily negative for Thailand's government debt, and might even help break the political deadlock.

"The key factors for the ratings are whether Thailand can avert more serious and bloody political disorder, and whether we see a return to a fully functioning government that is able to make policy and pass a budget for the next fiscal year starting in October," he said.


While the anti-government protesters want a "neutral" prime minister appointed to oversee electoral reforms aimed at ending Thaksin's influence, the government views an early general election as the best way out - the ruling Puea Thai Party would be well placed to win. But a vote tentatively scheduled for July 20 already looked unlikely to take place.

Opposition supporters disrupted a Feb. 2 election which was later declared void by the Constitutional Court. The protesters say they reject any vote before electoral reforms.

Jatuporn Prompan, leader of pro-government "red shirt" activists, said he and his followers would keep up their protest in Bangkok's western outskirts until the restoration of "democratic principles" leading to an election.

"That's fine," Jatuporn told Reuters when asked about his reaction to martial law. "We will stay here and continue our protest until the country is back to democratic principles, which will lead to an election and getting a new elected prime minister."

The anti-government protesters said they still wanted the caretaker government out.

"We will not march today but we will stay and continue the protest until we achieve our goal," anti-government protest leader Sathit Wongnongtoey told Reuters.

Weak exports and the political mayhem have damaged the economy, prompting the state planning agency to cut its forecast for 2014 growth to between 1.5 and 2.5 percent, from a range of 3.0 to 4.0 percent.

(Reporting by Bangkok Bureau; Writing by Robert Birsel and Dean Yates; Editing by Alan Raybould and Alex Richardson)

Thai army tells TV stations run by rival political groups to shut down

Posted: 19 May 2014 08:30 PM PDT

BANGKOK (Reuters) - Thailand's army said on Tuesday that 10 satellite television channels must stop broadcasting, including stations run by pro- and anti-govt groups, in order to "preserve peace and order".

The army declared martial law earlier on Tuesday to restore order after six months of anti-government protests.

"The army asks that satellite television channels stop broadcasting in order to prevent the distortion of news, which creates misunderstanding," the army said in a televised statement.

(Reporting by Amy Sawitta Lefevre; Editing by Alan Raybould and Simon Cameron-Moore)


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