Abhisit Floats a Debt Deal to Win Over Red Shirt Protesters

By webadmin on 10:46 pm Mar 31, 2010
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Panarat Thepgumpanat

Bangkok. Thailand’s government is making an overture to thousands of street demonstrators by offering a debt-relief plan for farmers worth $1.3 billion, a scheme apparently intended to help win over the mostly rural protesters.

An official on Wednesday released details of the plan, which halves debts for many farmers and echoes a signature policy of twice-elected and now fugitive former prime minister Thaksin Shinawatra, who remains highly popular among the protesters.

The announcement did nothing to halt plans by the red-shirted protesters for another big rally in Bangkok on Saturday to demand that Prime Minister Abhi­sit Vejjajiva call elections within 15 days, a poll analysts say the government would almost certainly lose.

But it marks the start of an apparent concerted effort by Abhisit to court the rural poor, said Somjai Phagaphasvivat, a professor of politics and economics at Thammasat University.

“Thaksin was hugely popular because of these policies. Now Abhisit is using Thaksin’s policies against him, to try to take away his support,” he said.

“By reaching out to the poor, he’s offering something to the electorate, to increase his popularity and tap into Thaksin’s support, bit by bit, over time.”

The protesters and Abhisit failed to reach agreement in two rounds of televised talks this week. Protest leaders rejected a concession offered by Abhisit on Monday to call elections by the end of the year, about 12 months ahead of deadline.

Jatuporn Prompan, a Red Shirt leader, said protesters were not interested in further talks and would look at new ways to push for elections, vowing to keep up pressure on the government before a Thai holiday period from April 13 to 16.

Despite the political turbulence, foreign investors continue to embrace Thailand, seizing an opportunity to invest in one of Asia’s cheapest and now fastest-rebounding markets, confident Abhisit will prevail in the showdown.

Foreign investors have snapped up $1.2 billion in Thai stocks since Feb. 22, helping to drive the benchmark stock index up 8.3 percent this year, making it Southeast Asia’s second-best performer after Indonesia.

The protesters say British-born, Oxford-educated Abhisit came to power illegitimately, heading a coalition the military cobbled together after courts dissolved a pro-Thaksin party that led the previous coalition government.

It is unclear whether the farm-debt plan will help Abhisit make political inroads into the vote-rich north and northeast, home to about half of Thailand’s 67 million people and aggressively courted by Thaksin.

While he has the firm backing of the military and elite establishment, Abhisit has struggled to win over farmers, whose votes can decide elections in a country that is the world’s biggest rice exporter and second-biggest sugar exporter.

Under the scheme, debts owed by farmers will be halved.

They will also get 15 years to pay off the remaining 50 percent of their original debt, said Vichit Chantachaeng, an acting director of the state Farmers’ Reconstruction and Development Fund.

The plan affects about 510,000 debtors who owed 80 billion baht ($2.5 billion) in nonperforming loans.

“We are sure that the plan could help support farmers to have better lives,” Vichit said, adding that the plan would be submitted for cabinet approval next week.

Some criticized the scheme as a form of subsidy that would inflict damage by rewarding poor management and preventing farmers from becoming more efficient.

Thaksin, ousted in a 2006 coup and convicted in absentia of graft, lives in self-imposed exile.

Widely accused of being corrupt and authoritarian, he remains popular as the first civilian leader to reach out to the poor. His policies included debt relief for farmers.