By Marwaan Macan-Markar
BANGKOK, Jul 13 2005 (IPS)

From enjoying a status of near invincibility for almost four-and-a-half years, Thai Prime Minister Thaksin Shinawatra is waking up to a reality that makes him look like any other local politician – vulnerable and on the defensive.

An increasing number of newspaper headlines screaming about Thaksin’s errors in judgement and questionable polices convey this emerging shift.

Despite having an unprecedented majority in the parliament – the ruling Thai Rak Thai (Thais Love Thai) or TRT party secured 377 seats in the 500- member legislative assembly in general elections conducted in February, this year û Thaksin’s popularity has been sliding.

There is little mystery as to why such political security as should come from that thumping majority is not adding up in Thaksin’s favour – an opinion poll published this week pointed to a declining economy.

Over 40 percent of the 4,634 people surveyed in 25 provinces from across the country said they had little confidence in the government’s handling of the economy, as opposed to nearly 14 percent who still had faith in TRT’s policies, states the poll conducted by Bangkok’s Assumption University.

Thaksin, himself, won a 45.9 percent approval rating, which was a drop from the over 77 percent support he got during a poll conducted by the same university in February.

The year he appeared most invincible was in 2003, when he received over an 82 percent approval rating in an end-of-the year opinion poll and was also voted in another independent survey as the ‘Person of the Year.’

Rising global oil prices has been one factor that has sent Thaksin down this slippery slope, since Bangkok has incurred a trade deficit due to a fuel subsidy introduced in January 2004 to cushion the effect of rising oil on the local consumers.

By June this year, Thailand was 4.7 billion U.S. dollars in the red after having enjoyed a trade surplus till the end of 2004. The 18-month long oil subsidy bill has cost the country two billion U.S. dollars.

On Tuesday, as a clear mark of admission that such an oil subsidy policy had failed, Thaksin announced that the government was doing away with the subsidy. ‘’He urged the people not to panic in the face of rising fuel prices, insisting that all relevant figures confirmed the economy was still in fine shape,” the ‘Bangkok Post’ newspaper commented on Wednesday.

But economists who had warned the government against the oil subsidy see this week’s policy shift differently. ‘’This represents the failure of the government’s transport policy. Floating the oil price now is too late,” Somboon Siriprachai, an economist at Bangkok’s Thammasat University, told IPS. ‘’Thailand is facing an energy crisis.”

The oil subsidy gave a ‘’false sense of reality” to Thai consumers, resulting in them spending more money on cars, argues Thitinan Pongsudhirak, a political-economist at Bangkok’s Chulalongkorn University. ‘’He encouraged people to live beyond their means.”

The increasing traffic jams in Bangkok û even on Sunday afternoons û offers an apt image of this reality that Thaksin has created as part of the economic policy called ‘’Thaksinomics,” which was implemented since he became premier in 2001.

‘’People have been encouraged to consume more, which is central to Thaksinomics, and made to believe that the good times are back,” said Thitinan during an interview.

At the same time, Thaksin is being urged by economists to reconsider a massive infrastructure programme he wants to unleash over the next five years valued at US 41 billion dollars.

Thailand’s current account deficit would rise from 1.7 percent value of the country’s gross domestic product (GDP) in 2005 to 2.5 percent in 2006 and up to nearly six percent of GDP value in 2008 due to material and machinery to be imported for the mega projects, states the Thailand Development and Research Institute, a Bangkok-based independent think tank.

‘’The 1.7 trillion baht (41 billion dollars) set aside for mega projects should be halved to stem current account deficits, which can pose a serious threat to the national coffers in the long run,” the Thai language ‘Tharn Settakij’ newspaper said in an editorial this week.

On top of this is a slowing economy, currently estimated to grow by four percent this year, according to available reports, than the 6.1 percent economic growth this country achieved in 2004.

For many analysts, the need of the hour is caution and not the ‘’populist policies” that have been the hallmark of Thaksinomics, such as financial packages to sections of the public to have more money to spend.

Among those who benefited during the first Thaksin administration were the country’s rural poor and farmers saddled with heavy debts. The government argued at that time that the money being given to the 75,000 villages to boost the grassroots economy.

On Tuesday, the government unveiled another spending package, which included measures to increase the wages of bureaucrats, a hike in the minimum wage for workers and injecting 20 billion baht to rural villages.

While such moves suggest that Thaksin still has faith in his consumer-driven policies of ‘Thaksinomics,’ leading analysts say it is the wrong prescription.

‘’The government can’t continue to hand out candy to the public because Thailand is suffering from productivity losses as a result of higher burden of oil imports,” Supavudh Saicheua, managing director of the Bangkok-based Phrata Securites, was quoted as having told Wednesday’s ‘The Nation’ newspaper. ‘’Giving away money will only add to inflation.”

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