Any way out of the Thai political mess?

Amidst increasing protests against the government, these new charges have caused more difficulties for the Thai government and worsened political unrest in Thailand.

The rice price subsidy scheme, which began 2 years ago, was part of the Prime Minister’s campaign manifests in seeking farmer support and helped Yingluck win the election in 2011. Under the scheme, the Government buys rice from farmers at prices up to 50% higher than the market price.

As Thailand was the world’s largest rice exporter at that time, this scheme was expected to cause global rice price hikes and bring great benefit to Thailand.

Policy backfires

However, the scheme failed because Thailand’s competitors suddenly raised their export volumes undermining Yingluck’s plan and her political position as well. The Thai government is now struggling with a huge inventory of rice and world rice prices have not increased as expected.

The scheme is costing the Thai government nearly US$10 billion a year and has increased the national budget deficit. The Thai government has been unable to pay the Thai farmers and its debt has reached nearly US$4 billion. The implementation of the scheme has encouraged spreading corruption. The opposition was inspired by the failure of this scheme to demonstrate against the government.

Farmers who used to support the Pheu Thai party have also protested against the government in the past few days and are demanding that the Prime Minister step down. The farmers’ anger reached its peak last week, when more than 2,000 Thai farmers drove tractors to the capital city to demand more support for rice growers.

Yingluck has paid 4,000 farmers about US$22 million. The total amount the government promised to pay is US$4 billion, but in its current circumstances, the government lacks the money to pay the farmers.

No way out

The Thai government’s inability to pay the farmers has eroded its most loyal voters support. So far, the Prime Minister hasn’t taken any strong measures to suppress the protests, trying to avoid a violent unrest, and leaving the door open to negotiations with protest leaders.

Analysts see no easy way out for the administration in the face of uncompromising demands by the protestors. The opposition, headed by Suthep Thangsuban, wants Yingluck to resign and hand over power to an appointed council that will be free of corruption.

But it’s unclear how council members will be selected and how further corruption will be prevented. This has made it difficult for the government and the opposition to reach a compromise. The Thai government’s attitude seems to be trying its supporters’ patience. Recently, 4,000 leaders of the pro-government movement held meetings across Thailand to revise their strategic aims. Millions of government supporters are now ready to flock to Bangkok to confront the protestors.

If the Thai government and PM Yingluck are charged with corruption in the rice price subsidy program and this leads to a government collapse, Thailand’s situation will even become more complicated. In case the government collapses, the Red-Shirts will also take to the streets and a civil war will be very likely.