The Heterodox View on Economic Development

Authors such as Dani Rodrik and Charles Sabel have criticized the Washington Consensus for its “institutional endowment” approach, also known as the “big-bang approach” (Sabel, 2005, p. 4; UN-DESA, 2005, p. 125). Whereas the former term suggests that economic growth is contingent on a predetermined bundle of factors, the latter implies that introducing market-friendly instruments will inevitably result in higher growth and economic development. Most authors promoting the heterodox view refer to the case of China as to make their point that a gradual and piecemeal introduction of reforms is a key to sustainable development. The theorists explain China’s success with the compatibility of its reforms with the country’s unique institutional setting. Moreover, it is suggested that development is a learning process in which the state and private actors combine their efforts in identifying appropriate policy actions, either targeted to specific economic sectors or the economy as a whole (provision of laws, infrastructure, laboratories etc.).

Rodrik in particular points out the processual emphasis of this developmental approach and states that “the analysis of industrial policy needs to focus not on the policy outcomes—which are inherently unknowable ex ante—but on getting the policy process right” (Rodrik, 2004, p. 3). In this model, where neither outcomes nor concrete policies are defined, the government collaborates with private companies by together overcoming informational and coordination constraints in building up industries. The rationale of this idea is that public and private actors pool their respective resources, which are – due to different perspectives - complementary in the process of problem identification and policy implementation. The relationship between both actors is, however, distinct from earlier developmental theories, which suggest that an authoritarian state dictates policies in a top-down approach; the new ideal in order to optimize the effectiveness of public-private collaboration is that of “embeddedness”, where the “ties that connect citizens and public officials [span] across the publicprivate divide” (Evans, 1996, p. 180). Evans, as well as Rodrik, recognizes the threat of corruption imminent to close relationships between bureaucrats and business people. They therefore promote either powerful internal norms or a balance between full embeddedness and complete autonomy. Instead of fostering rent seeking, these relationships should facilitate the building-up of trust and social capital.

This public-private partnership towards developmental ends leads us to another characteristic feature of heterodox economic theory: the formation of networks, or clusters. Michael Porter has prominently outlined the relevance of cluster formation in his book “The Competitive Advantage of Nations” (1990). Although Porter described national clusters as predominantly private-private partnerships (encompassing firms of related industries, research institutions etc.), his treatment of the case for developing countries is not entirely clear; in parts he seems to sympathize with authoritarian, developmental regimes at an early stage of development (see Porter, 1990, p. 552). According to him, the government may target policies to the advantage and upgrading of selected industries. Later authors building on this theory, such as Rodrik, have not only included embedded governmental agencies in the model, but also civil society. Another difference between Porter and authors such as Rodrik and Sabel, consists in the latter abandoning the idea that successful industries can be identified ex ante. A broad consensus on the economic and political benefits of network building in the age of globalization has also fostered literature on both the functioning and design of networks (see for example Sabel, 2005, pp. 37-50; Messner, 1995, pp. 317-24 and pp. 326-34).

The central state itself stands above vested interests and should not pursue goals other than the “common good.” Hence, it is primarily ascribed a referee role inside networks; its main activity is seen as to ensure a favorable environment for a functioning market, for social cohesion and for a scaling-up of innovative networks. Some of the above authors agree that in every developing country there are functioning institutions and bases for the building-up of social capital, although such often-insulated institutions are typically not revealed in official aggregate figures (Sabel, 2005, pp. 29/30). Instead of trying to identify promising industries, based on the notion of a “comparative advantage” vis-à-vis other economies, the central government should identify such institutions. As the building blocks for capacity building through networks, these institutions trigger a process of removing constraints on development. The state must then ensure the ability of such networks or clusters to constantly upgrade and combine with other societal sectors (scaling-up).

Collaboration inside such networks requires a culture of dialogue that is immune to the domination by vested interests; the policy outcome must serve society as a whole. As mentioned, Evans promotes powerful rules in order to avoid rent seeking by governmental agencies. Others, such as Messner, moreover advocate informal rules that originate from trust and a shared culture. “Moral rules of the game” come into play here, deriving from what Messner calls “cultural deep structures” (Messner, 1995, p. 184). The need for ethics and moral norms today is a topic that is in discussion for the global economic setting as well (Earth Dialogues, 2002, p. 4). It is interesting that although these concerns are increasingly being raised due to the social inequalities intensified by the forces of globalization, most theorists refer to such diffuse terms as “cultural deep structures”, ethics, and “collective identity”. If it is value systems that are an important answer to both today’s problems (unsustainable and unjust economic order) and solutions (networks), then such terms are too vague to be of any help. Instead, religions should be recognized as grown value systems which have developed and which include ethical and moral norms proven over thousands of years. Perhaps this fact will be given more attention in future discussions on the functioning of the current economic system and intra-network collaborations. Signs of such a perception already exist, as on the occasion of the “Earth Dialogues Forum” in Lyon, France in February 2002. Here religions were ascribed a potential leadership role “in the sustainable development debate” (Earth Dialogues, 2002, p. 7).

Thaksinomics

Thaksin’s economic policies can be understood against the background of Thailand’s economic situation following the 1997 financial crisis. In 2001, when Thaksin took office as Prime Minister, the economy grew at 2.2 percent, compared to an average growth rate of ca. 8.6 percent between 1990 and 1996 (the pre-crisis period; see Bank of Thailand, 2007). The Thai economy is highly export-oriented (in 2001 exports accounted for about 57 percent of GDP) and since the crisis, most export-oriented industry is under transnational control.

The country faced a high unemployment rate and a sharp incline in poverty levels, due to the economic contraction in 1998, when the economy shrunk by 10.8 percent. Non-permanent, or “informal” workers were especially heavily hit by the crisis. This in turn directly affected the incomes of rural households, as these depended to a great extent on remittances from informal urban employment, e.g. in the construction business (Pasuk, 31 July 2007). The capacity of the government to tackle these social problems was limited due to high public household debt (peaking at 57.6 percent of GDP in 2001) and the conditions imposed by the IMF restructuring programs following the crisis (including cuts in government spending, closure of bankrupt financial institutions and private companies or market liberalization).

In the pursuit to get Thailand back on track to become a fully industrialized country, the TRT-government undertook a number of schemes targeted at the domestic economy and, later, at foreign investors. Motivated against the background of the social structure of the Thai population (see diagram below), and the resulting recognition that wide parts of Thai society (mainly in rural areas) are excluded from the benefits of economic development, Thaksin introduced expansionary fiscal policies to foster entrepreneurship and purchasing power among the rural poor.

These policies mainly include the “one-million village fund”, a “people’s bank”, a three-year debt moratorium for farmers, a 30-Baht health-care scheme, and the “OneTambon-One-Product (OTOP)” scheme. As in the post-crisis period private banks were still struggling with non-performing loans, Thaksin used “state-owned commercial banks together with specialized banks”2 to fund most of these policies in a “quasi-fiscal” manner (Conroy, 2004, p. 8). These banks were under the supervision of the Ministry of Finance, but the cost of the lending programs was kept off budget initially. To take the case of the village fund, 70,000 communities received a million Baht to be forwarded as credit to individuals to assist micro-business activities. The limit for individual borrowers was set at 20,000 Baht. In practice, the average amount granted to borrowers was about half the amount. As there are often no reliable assessments on both the implementation and the outcome of Thaksin’s povertyalleviation policies, the success of the village fund credit scheme is hard to evaluate. Official reports stating that the default rate is between 2 and 3 percent seem hardly reliable (see Conroy, 2004, p. 9). Though the poverty rate decreased during the implementation period, the extent to which the scheme contributed to this development cannot be assessed either. Regarding the use of the credit grants, a study of Thailand’s National Institute of Development Administration suggests that only 21 percent of the micro-credits directed to farmers were used for productive investments (The Economist, 5 February 2005, p. 24). The rest was spent either for consumption or to pay back higher-interest loans.

Another attempt at boosting rural entrepreneurship was the establishment of the “One Tambon One Product (OTOP)” scheme: here, several state financial institutions were required to provide loans for local village businesses. An American academic describes the scheme as follows (Looney, 2003, p. 6):

This program is nationwide, covering nearly all of Thailand's 7,252 districts. One Tambon is predicated on the idea that every Thai tambon (subdistrict) has a variety of specialized local products. The key assumption of the project is that each community has a comparative advantage in one or more of these traditional products. The project's role is to assist the communities in modernizing the production and distribution process of these products so that they can be competitive at the national and international levels. The government's role is to identify candidate products and then to assist their development through providing necessary support for their eventual success.

The program is clearly intended to find new niches in foreign markets and develop new winners that will provide an alternative to the foreign direct investment-based and mass produced exports products that the country has been fast losing to China and other countries in the region with cheaper labor.

The scheme thus aimed at the building-up of core competencies and consequently, of competitiveness domestically and internationally. Robert Looney indicates some early results quoting government figures3 , according to which

[…] total sales of village enterprises under the program [are put] at $558 million in 2002, with an average profit margin of 26 percent. Their products are also finding their way to the shelves of luxury shops in Japan, the United States and Europe, thus enabling the village producers to earn four or five times more on each item than when sold in the local market (Looney, 2003, p. 6).

A negative outcome seemed to be, however, that most of the villages turned out to produce similar goods and were therefore unable to meet demand accordingly. The shortcomings of the above credit-driven programs (including the debt moratorium for farmers) also posed threats to the banks involved in the government programs. Under the government schemes, which promoted easy money to everyone, usual standards of creditworthiness were ignored. Although these financial institutions held government guarantees on their debt instruments, such relaxed standards could moreover deteriorate the credit behavior of borrowers over the long term. While in retrospective the credit programs have incurred losses and thus proved to be unsustainable in their current form, the post-Thaksin performance of two major banks pursuing the lending programs, the BAAC and GSB, shows that both banks are still profitable and continue implementation (Kate, 2007).

An interesting approach to enhance the creditworthiness of poor lenders was the governments “capital creation” program, introduced towards the end of 2003. Based on the idea of the Peruvian economist Hernando de Soto, the government sought to legally recognize undocumented assets held by the poor, such as land assets, public pavement assets or intellectual property assets (Looney, 2003, p. 6/7). Assets that were formerly held on customary or illegal grounds were thereby turned into capital. The Thaksin government pursued the program mainly by distributing land titles. Although the implementation of the capital creation scheme was not immune to threats, either – in the form of further indebtedness4– the idea not only provided the poor with collateral enabling them to acquire credit from commercial banks, but also resulted in a wider inclusion of the underground economy into the formal economy.

The 30-Baht health-care scheme, on the other hand, was a typical welfare policy. The initial plan was to merge existing risk protection schemes and include those 18.5 million Thais whom those programs did not cover. These programs, introduced over a forty-year period prior to to the universal health care scheme, include the following (BMJ, 2004, p. 103):

Civil servants’ medical benefit scheme—introduced in the 1960s for civil servants and their dependants

Low income card scheme—introduced in the 1970s, providing free care to low income families and individuals, elderly people, children under 12 years, and people with disabilities

Voluntary health card scheme—predominantly rural; introduced in the 1980s and funded through equal matching of household and Ministry of Public Health payments

Social security scheme—introduced in the 1990s; it protects workers only and is mandatory.

The integration of the above schemes into the 30-Baht program failed after resistance from government departments, civil servants and trade unionists. The government thus postponed the plan by establishing the “National Health Security Office” to oversee both the 30-Baht scheme and the risk protection schemes. Eventually, “the civil service and social security schemes [would] be merged into a single universal coverage scheme by decree should that become politically acceptable in the future” (BMJ, 2004, p. 103). The 30-Baht program was financed by budgets of the Ministry of Public Health and additional funding by the government. Each province employing and financing contractor units for primary care undertook the implementation of the scheme. These units (about five to seven in each province) are in charge of providing primary health care to all citizens that register with it. Each of them oversees a network of one hospital and all health centers in the district.

Although the scheme must be appreciated for giving the poor access to public health care provisions for the first time, there are several shortcomings that arose from the initial stage of implementation. One such shortcoming was the lack of adequate financing: the capital provided by the Ministry of Public Health did not wholly cover the lapse of individual user fees. Therefore many provinces and hospitals ran deficits. This shortage moreover affected resources available for medical teaching and research. As the 30-Baht scheme has shifted the emphasis away from hospitals to primary health centers, another problem arose from a shortage of medical staff, especially doctors, in these centers. Lastly, the BMJ-report cites a survey, according to which “those in the lowest income fifth were spending 7.5 percent of their income on health compared with an average of 1.6 percent and 0.1 percent for those in the social security and civil service schemes” and concludes that “This suggests that the scheme has not yet provided effective financial protection” (BMJ, 2004, p. 105).

Although the 30-Baht universal health care scheme is the most prominent, the TRT-government introduced more welfare-type policies, in the form of a life insurance scheme for the poor, scholarships and bicycle loans for poor students. Some of the policies overlap with measures stimulating demand, such as lowering the prices of typical household goods, e.g. computers and televisions. More obvious in the targeting of individual consumers was the fact that the government also eased credit card regulations, for instance. Moreover, Thaksin made it clear that his welfare-schemes were temporary measures to bridge the gap between the rich and the poor. Creating a welfare state was not his intention, as he himself emphasized (Pasuk, 2004, p. 5).

The above domestically-oriented schemes certainly have a potential to narrow the gap between the rural poor and the urban middle-class population. Through the lending programs, rural households have been given the opportunity to take part in the economic process both as consumers and producers. The national economy in turn can benefit through the inclusion of the informal economy and dormant human resources, which add to economic growth. However, this was only part of Thaksin’s motives to pursue these domestically oriented activities. To him, an externallyoriented economy, such as the Thai economy, with exports encompassing 60 percent of GDP, meant being overly-prone to external shocks, as the 1997 financial crisis and the bird flu bitterly demonstrated. Thus, strengthening capitalism within Thailand by e.g. increasing domestic consumption to 60 percent of GDP (compared to 55 percent during his premiership) and reducing the share of exports in GDP to 50 percent (Looney, 2003, p. 4) would mean adjusting to the economic structure of most developed countries. At the same time, by targeting domestic industries with competitive potential, reliance on FDI would be reduced as well, thus allowing for the building-up of core-competencies within Thailand. Consequently, this would allow Thai businesses to move up the value-chain. For the purpose of helping to identify such highpotential industries, the “competitive-advantage”-guru himself, Michael Porter, was hired by the Thai government in 2002. The competitive strengths presented by Porter included tourism, fashion, computer graphics and automobiles. National weaknesses were identified as well, namely low skills, weak technology and an obstructive government. Very much in line with his theory, he prescribed national cluster formation and a strong role for the government in targeting selected industries. Probably bearing in mind the need for technology transfers, the recommendations also included a bigger role for multinational corporations and FDI (Pasuk/Baker, 2004, pp. 113/14).

Although Thaksin’s domestic market stimulus policies constitute the most innovative components of Thaksinomics, his measures included more common and outwardlooking policies as well. The structure of the Thai economy did not allow for a complete neglect of the outside world:

Since 1995, foreign trade had grown from 85 to 125 percent of GDP. Since 1990 FDI has increased more than 10 times. Tourist arrivals, FDI inflows, and foreign participation in the stock market had increased sharply. The GDP growth rate depended more than ever on exports, tourism, and international financial flows, and hence these areas could not be ignored. Increased export performance and tourism in 2002/3 raised the GDP growth rates (Pasuk, 2004, p. 5).

In addition, Keynesian market interventions have a limited effect, the more open an economy is. According to NESDB figures, the government’s domestic market policies contributed only slightly more than 13percent of total GDP.

The TRT-government took these facts into account and communicated to the public and the outside world that its domestic market policies were thought as a counterbalance to losses incurred through the external sector - exports, FDI and tourism. When these factors pick up, the domestic market policies would be relaxed. This strategy, called “dual track strategy”, has become synonymous with Thaksinomics (see Looney, 2003, p. 4). Recognizing the negative relationship between openness and Keynesian instruments, Thaksin promoted this strategy to other ASEAN-members in order to create cross-country synergies. The administration also continued courting foreign investment: the government’s rhetoric on economic issues aimed at increasing investor confidence, and FDI was sought mainly in the sectors of automobile parts, food, fashion, tourism and logistics design. The range of export markets was sought to be expanded to such countries as India, China, the Middle East and Africa (Pasuk, 2004, p. 6).

Big government projects were also launched under Thaksin’s premiership in order to attract domestic and foreign investment, such as infrastructure projects (such as a “Bangkok Transport Master Plan” encompassing the skytrain and subway systems), regional centers of economic activity (one of the plans intended to attract more trade and investment to Chiang Mai, another plan was to create a science park in Phuket) etc. A centuries-old plan to cut a canal through Thailand to shorten the route between Europe and East Asia was considered as well; the cost for this project was estimated to be 35 billion USD (for the cost structure of the infrastructure projects see table 1 below).

Under Thaksin, the Thai economy opened up further through multiple bilateral free trade agreements with e.g. Australia, China and, still in negotiation, with Japan and the United States (the latter currently on hold). However, as the case of the telecommunications industry involving the agreement with Australia shows, the benefits of these treaties are not evenly distributed over all industries (Oskar Andesner, 2 September 2005, Bangkok; personal interview). The TRT-government only selectively pursued trade liberalization, as e.g. the “United States’ Annual Trade Estimate Report on Foreign Trade Barriers” of 2004 demonstrates (Bangkok Post, 5 April 2004). According to the report, there still existed a number of business barriers in the form of high import tariffs and restrictions on foreign investors in several service sectors. In the telecommunication sector state-owned enterprises dominated the market. The last feature of Thaksin’s economic policies to be mentioned here, although it is not an official part of Thaksinomics is the defense of big business interests of the survivors of the Asian Financial Crisis. As Pasuk and Baker point out regarding the structure of the Thai Rak Thai party (Pasuk/Baker, 2002, p. 9):

At the core of Thaksin’s government […] is a group of the biggest Bangkok business groups which have survived the crisis: Thaksin himself, the richest single entrepreneur; CP, the biggest conglomerate; Maleenont, the largest stock-holders on the stock exchange; Summit, one of the biggest Thaiowned manufacturing groups; and so on. Thailand’s biggest business now controls the government.

Thus, most members of Thaksin’s Thai Rak Thai party were prominent corporate leaders, who, according to Pasuk and Baker, had been shaken up by the 1997 crisis. In their view, the state had failed in protecting their interests, whereas Thaksin, a businessman like them, offered the opportunity to regain closer control over politics. The CP Group, Thaksin’s former biggest competitor in the telecom industry, for instance, was the biggest backer of Thaksin’s political rise at the end of the 1990s5 . Pasuk thus viewed Thaksin “as the leader of a big business project to seize the state in order to protect big business against both external and internal threats, and in order to achieve a ‘great leap forward’ into advanced capitalism.” In contrast to all former Thai governments, the economist explained, “Thaksin and his allies want to manage the economy more actively” (Pasuk at a seminar in April 2004, Bangkok).

In the author’s attempt to examine the outcome of Thaksin’s domestic market stimuli, it has become evident that due to the lack of transparency (the credit lending programs were kept off-budget) the losses incurred by the schemes can only be estimated. There were no agencies involved in implementing the economic policies outlined above that were not closely associated with the government (see Surin, 2007, p. 4). Thaksin’s premiership resembled the attitude of a Chinese patriarch heading a family business. His view on the nation was indeed that of a company in competition with other nations and he openly referred to himself as Thailand’s CEO (Pasuk/Baker, 2004, p. 102). It is therefore not surprising that whenever Thaksin commented on his government’s achievements, truth was sacrificed for the sake of good marketing (see for example Conroy, 2004, p. 5; as well as the footnote on p. 18). Traditionally, there is no space for criticism on decisions from the top in Chinese family businesses and thus, Thaksin had no appreciation for scrutiny by the media and the intelligentsia. Dissent by the opposition, NGOs and intellectuals was branded a danger to “national interests,” the media was bribed through advertising money, and self-censorship in the print media became characteristic under the Thaksin regime.

Thaksin eagerly expanded his influence in all sectors of Thai society: By merging with smaller parties he built a solid power base of 377 out of 500 seats in the Lower House of Parliament following the 2005 elections (Surin, 2007, p. 6). The TRT party’s political influence reached such accountability institutions as the Senate as well; Surin Maisrikrod quotes a Senator, for instance, stating that “the number of Senators who vote in favor of government keeps increasing between 50 and 80 (out of 200), especially when the government is determined to pass a bill which is favorable to the telecommunications businesses”. Moreover, Thaksin appointed his relatives and close friends to powerful positions in the army and the police: a former classmate was appointed Commander-in-Chief, the husband of his wife’s secretary became commander of the air force, and his brother-in-law acquired a key position in the Navy. How far Thaksin was able to go in his authoritarian grip on power was revealed by his brutal handling of the unrest in three Muslim-dominated provinces in the far South of Thailand (see Shuman, 2005, p. 18), as well as the extra-judicial killings of some 2,500 suspects during the war on drugs.

It was the army where Thaksin’s attempts of control provoked tensions between the pro-Thaksin and anti-Thaksin groups, the latter headed by General Sonthi Boonyaratkalin. It was this power-struggle which eventually led to Thaksin’s overthrow: in July 2006 General Sonthi removed Thaksin’s allies in high ranks of the military from Bangkok to the provinces. The general was certainly well-aware of the probability that Thaksin would use the annual reshuffle of the armed forces on 30 September 2006 to remove him in turn (Murphy, 2006, p. 4; Surin, 2007, p. 13); the coup just eleven days prior to the event prevented this.

The problem seems to be that Thaksin’s megalomania made him interfere directly with the king’s own network (McCargo, 2005, p. 501). The origins of the monarchy’s prominence stem from the military dictatorship era under Sarit Thanarat (1958-63). Sarit promoted the Thai monarchy in order to gain legitimacy for his holding power. Since that time, the relationship between the palace and the military has remained strong: the king’s “right-hand-man” (Murphy, 2006, p. 3) since the early 1980s is former commander-in-chief General Prem Tinsulanonda, who acts as a link in the king’s network reaching into governments over the span of twenty consecutive years, as well as the military and the major bureaucratic institutions. By setting up his own network as noted above, Thaksin sidelined what is called the “old elite” (Pasuk, 31 July 2007), including the military, judiciary and other sectors of the Thai bureaucracy that often stood under the patronage of the palace.

Thaksin was not only at odds with the king in terms of human resources, but also in terms of policy instruments: in the course of a military crackdown on the Islamic insurgency in Thailand’s deep south, 85 demonstrators were killed, most of whom died handcuffed in the back of military trucks on 25 October 2004. The Prime Minister only reluctantly agreed to adopt more “soft measures” as advocated by the king and set up a National Reconciliation Commission (headed by Anand Panyarachun, who had been appointed prime minister twice by the king). However, Thaksin “sidelined the body and largely ignored its recommendations” (Murphy, 2006, p. 2). Certainly to the resentment of the king, Thaksin had won the support of the rural populations in a few years through his populist policies, whereas “The king took four dec- ades of hard work to become so adored and popular” (Thitinan Pongsudhirak, cited in Murphy, 2006, p. 2). By sidelining traditional bureaucratic channels in drawing direct support from the rural poor, Thaksin built his support on the same foundation as the king. However, he did so by promoting consumerism and a “you can get rich, too” attitude; an approach, which stood in stark contrast to the Buddhist-inspired “Sufficiency Economy Theory” championed by the king. Consequently, many people perceived him as disloyal to the monarch (Surin, 2007, pp. 11/12).

The People Power Party and the 23 December 2007 general elections

Through his alleged disrespect for the king’s policy recommendations and for the sectors of society close to the palace, Thaksin contributed to the September 2006 coup, which resulted in his forced withdrawal from politics and the dissolution of his TRT party. Together with him, another 110 former party executives were banned from taking political positions for five years. Whereas Thaksin remained in self-imposed exile until recently, some of the remaining former party members formed parties of their own afterwards, namely the Ruam Jai Thai Chart Pattana party, Matchimathipattai, and the Puea Paendin party, all contesting the following general elections in late December 2007. The biggest fraction of politically-active ex-TRT members, however, joined the then little-known People Power Party (PPP) in July 2007. Since then, close allies of Thaksin have been among the key executives of the PPP. The sudden prominence of the party has been subject to extensive media coverage ever since, as it was perceived to be the resurrected TRT-party (The Nation, 3 August 2007). The fact that ten million voters rejected the charter of the new constitution drafted by the militaryinstalled interim government through a referendum in August 2007 further indicated that Thaksin still enjoyed a formidable power base mainly in the northern and northeastern parts of Thailand. After the PPP declared that they would run in the general election scheduled for 23 December, the party was expected to attract a large share of rural votes. A victory seemed likely to many observers (The Nation, 25 August 2007).

With the nomination of former Bangkok governor Samak Sundaravej as party leader in late August, the party moreover gained a prominent right-wing spokesperson and defender of Thaksin during the tenure of the interim government. Samak’s alleged involvement in the killings of pro-democracy protesters in October 1976 and in 1992 had earned him the reputation of a heavy-handed authoritarian figure and royalist. Although his current interpretation of the October 1976 incident during a CNN interview sparked fierce reactions from the Thai media⁶ (The Nation, 13 February 2008), this image helped prevent the PPP from the accusation of being disloyal to the monarchy. This in turn benefits Thaksin as well, since acts of lese majeste were among the four charges that had led to the coup in 2006. From the day Samak took office as head of the PPP, in public statements he made clear his conviction that the charges claimed by the coup-makers against the ousted prime minister were unfair.

In the run-up to the elections, the PPP also revealed its affinity to the disbanded TRT party to the still-high number of Thaksin-supporters by using a logo, which highly reminded one of the TRT emblem (see Figure 2). During the pre-election period, the support of many within the urban informal sector for the PPP became visible in Bangkok, as a high number of taxis and Tuk-Tuks featured the party logo on their vehicles.⁷

The general election, which had become a competition between the pro-coup Democrats Party (with its leader Abhisit Vejjajiva) and the pro-Thaksin camp (PPP), brought a victory for the latter (see diagram below). Five hours after the election was concluded, Samak announced his intention to become Prime Minister at a press conference at the party headquarters (The Nation, 24 December 2007). During the next month the PPP succeeded in forming a coalition government with the Chart Thai party, Puea Paendin, Ruam Jai Thai Chart Pattana, Matchimathipattai, and Pracharaj, leaving the Democrats as the sole opposition party in parliament.

The new cabinet, in power since 6 February 2008, now includes some of Thaksin’s close allies (see table 2). Prime Minister Samak has also taken the post as Defense Minister. It is speculated that the nomination of these persons in key positions serves attempts both to intervene into charges of corruption and power abuse made against Thaksin. A number of ministerial advisers have also been identified as “loyalists” of the former prime minister. The 23 February edition of the Bangkok Post quotes a source, according to which “the appointments were proof Mr Samak had no power in the coalition government”, and “that the deposed prime minister had pulled the strings” (Bangkok Post, 23 February 2008).