Yingluck’s Dilemma: Governing a Divided Nation

By Ernie Bower and Rizal Siddik

Yingluck Shinawatra, now sworn in as Prime Minister, during Pheu Thai Party's last campaign rally before Thailand's general elections on July 3.

Yingluck Shinawatra, now sworn in as Prime Minister, during Puea Thai Party's last campaign rally before Thailand's general elections on July 3.

Thailand’s new 35-member cabinet led by the country’s first female prime minister, Yingluck Shinawatra, was sworn in on August 9. Twenty-nine members of the cabinet are members of the new prime minister’s victorious Puea Thai Party, while four members belong to political parties that joined the prime minister’s coalition, and two are outsiders.

It is uncertain whether a decisive national election victory will be enough to move Thailand beyond its bitter divisions and toward national reconciliation. Markets and investors stayed the course through years of turmoil and delivered impressive economic growth even when political controversy and unrest dominated the headlines. Now that a new government is taking power, markets and investors seem at least temporarily reassured.

However, a closer look suggests that Thailand’s deep divide will continue to challenge political stability. Parties opposed to rule by Puea Thai, led by the sister of former prime minister Thaksin Shinawatra, have plans to challenge the new government through the judicial system, parliamentary rules, and constitutional challenges. Time will tell if these efforts will gain traction or hobble Yingluck’s government.

As menacing as the opposition may be, living up to her party’s own campaign promises could provide the most daunting policy hurdles for Thailand’s new cabinet.

One of the new government’s first challenges will be to deliver on Puea Thai’s populist election campaign promises without spawning inflation, which is already running at over 4 percent. The party called for increasing the minimum wage by 40 percent to $10 a day, revamping the country’s health care system, providing tablet computers to all of the Kingdom’s school children, and increasing spending on infrastructure projects, which would cost about 20 percent of GDP (over $75 billion). Since many of these populist policies were chosen based on political rather than economic considerations, they may be difficult to implement sustainably. In his first interview as finance minister, Thirachai Phuvanatnaranubala said the pledge to raise the minimum wage is intended to increase the income of workers to boost domestic consumption. As Thailand relies on exports for about 60 percent of its GDP, recent global market turmoil will likely decrease the demand for Thai products. Thirachai told the Financial Times, “I’m hoping that we are showing the way for other Asian economies in terms of investing in our own countries rather than relying on the U.S. and Europe as our economic drivers.”

Yingluck will face a second critical challenge in how she deals with her exiled brother. Her ability to manage Thaksin’s attempt to return to Thailand (a key Puea Thai campaign pledge) without his having to serve a two-year prison term for corruption and abuse of power is crucial. So is managing the widespread perception that Thaksin has significant influence over his sister’s government.

If not handled carefully, these issues could provoke strong reactions from opposing factions in Thailand, including the military, royalists, and Thaksin’s hard-core sympathizers, reigniting protests reminiscent of the 2010 demonstrations.

It is clear that opposition forces will do everything in their power to impede Yingluck in her efforts to govern the country. Her success as prime minister will depend in large part on the degree to which she can stay focused on good governance, deliver on her economic promises, and perhaps most importantly demonstrate independence from her brother without alienating his supporters.

Ernest Z. Bower is a Senior Adviser and Director of the Southeast Asia Program and the Pacific Partners Initiative at CSIS. Rizal Siddik is a researcher with the Southeast Asia Program.

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