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NOVEMBER 6, 2000 VOL. 156 NO. 18

Yvan Cohen for TIME.
The retail sector is still doing it tough; many stores have to put up permanent sales signs to attract careful shoppers.

Broken Dreams
Thailand's uneven economic recovery has turned the have-nots against Chuan's government

Report Card: The IMF overreached in Asia
'People Are Tired of this IMF Mantra of Reform': Exclusive interview with Thai academics Pasuk Phongpaichit and Chris Baker

Chalad Worachat is at it again. Half-naked, rail-thin and splayed out on a bamboo mat across the street from Thailand's parliament, the social activist and former lawmaker has been on a hunger strike for more than 90 days. His first high-profile public fast, in 1992, helped ignite the protests that brought down the country's last military dictatorship. His hunger strike in 1994 helped spark a movement that brought about a new reform constitution. Now Chalad is demanding that Prime Minister Chuan Leekpai and his "capitalist dictatorship" go.

Once again, Chalad seems to have his finger on the pulse of the nation. People across Thailand appear just as eager as the activist to toss the Prime Minister and his Democratic Party out of power. And with Chuan set to dissolve parliament and call national elections, Thais may have a chance to do that by early next year.

COVER: It Comes Down to This
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Prime Minister Yoshiro Mori's mouth gets him in trouble—again

THAILAND: What Recovery?
Though the country has pulled out of its financial tailspin, many citizens are still suffering—and blame the Prime Minister
Report Card: The IMF overreached in Asia

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A recent poll shows Chuan trailing his rival, telecom tycoon Thaksin Shinawatra, in the poor northeast by 19% to 49%, while in the capital he is behind 33% to Thaksin's 37%. Some members of Thaksin's Thai Rak Thai (Thai Love Thai) Party believe they can capture more than half of the 400 parliamentary seats up for grabs in the election, meaning a coalition government would be unnecessary. The outlook for the ruling Democrats is so bleak that in September Chuan told his party at its annual caucus, "We may need a miracle to win."

It's a startling comedown for the Prime Minister. When Chuan took office in November 1997, the country was in the throes of a panic. The International Monetary Fund had been called in by the previous government and was dispensing a $17.2 billion bailout. The economy was contracting by 10%, nearly 2 million workers were losing their jobs,the baht was plummeting against the dollar and the banks were teetering on the verge of collapse. After three years of Chuan's stewardship, the economy is now headed for 5% growth this year, unemployment is receding and the baht is relatively stable. Nonetheless, the support isn't there. "Chuan will almost certainly be ejected," predicts noted economist Ammar Siamwalla.

What went wrong? Simply put, many Thais feel the recovery hasn't extended to them. "Poverty was declining before the crisis, but it has been increasing again," says Kosit Piempras, a former Finance Minister. Farmers, who make up 60% of Thailand's population, have been suffering as commodity prices fall on world markets, and are once again descending upon Bangkok to protest. More than $28 billion in nonperforming loans has crippled the nation's banks, which in turn have stopped lending to businesses and stalled the economy. The tough times have weakened public support for drastic reforms. That has soured foreign investors on the country. A free fall in the stock market, one of the three worst performing bourses in the world this year, and recent slight declines in the value of the baht, have Finance Minister Tarrin Nimmanahaeminda on the defensive against critics who say Thailand is heading for a second crisis. "The question is whether our recovery is sustainable," says Supavud Saicheua, an economist at Merrill Lynch Phatra Securities in Bangkok. "More and more people are saying no."

That's certainly the way Thailand's rural residents see it. "This government only cares about helping rich bankers. They don't care about the poor," says Sombat Theparat, who has camped outside Government House for the past six months. Sombat is one of 2,000 rural poor who have been living in a cluster of shanties made of bamboo mats and plastic tarpaulins surrounding the gates of the ornate Italian mansion where Chuan and his cabinet work. Sombat, who lost his land to a dam project, hails from Chaiyaphum province in the country's northeast. The region is Thailand's poorest, and its people suffered the most during the crisis. It's also the region with the most voters, but Chuan's Democrats—viewed as a party of city slickers insensitive to the needs of farmers—rarely ever win there. Chuan hasn't done much to improve that image, refusing to meet with the protesters and urging them to go back to the provinces. Opposition to the Prime Minister is running high, fanned in part by a revered monk whose followers have been campaigning for Chuan and Tarrin to be impeached on corruption charges.

They may have picked the wrong fights: Tarrin is notoriously honest, and the Prime Minister is the poorest member of his own cabinet, with just $73,000 in declared assets. But during their tenure, several other members of the administration have been caught with their hands in the public till—most notably Chuan's powerful Interior Minister, Sanan Kachornprasart, who was forced to resign in a corruption scandal. Economist Pasuk Phongpaichit estimates that 20% of the government budget is lost each year to graft. The problem is so serious that former Prime Minister Prem Tinsulanonda, now an adviser to King Bhumibol Adulyadej, warned recently that corruption was the greatest threat to the country's survival. So far, no one involved in any of the scandals has gone to jail, and frustration over corruption is fueling a widespread urge to throw the bums out.

Thaksin is poised to capitalize on this unfocused anger. A billionaire telecommunications mogul and former Deputy Prime Minister, Thaksin and his two-year-old Thai Rak Thai party appear to be headed for a landslide victory in December, carried along by support from businessmen and farmers in the north and northeast. Thaksin has accomplished all of this by projecting himself as a populist—and by using his enormous war chest to induce scores of parliamentarians to jump to his party. Supporters say Thaksin is bringing new faces and new debates to the political arena. "The Democratic Party has failed us and we have no alternative except Thaksin," says Korn Chatikavanij, Chase Manhattan Bank's senior country officer for Thailand.

Thaksin has his doubters as well. He has promised farmers a three-year debt moratorium, loans to each of Thailand's 80,000 villages to spur employment and a tax cut—all while promising not to run up the budget deficit. "It's Thailand's version of voodoo economics," says Kobsak Chutikul, director general of the Economic Affairs Department. Many economists believe that the measures, which could increase the government's debt and fuel inflation, will do more harm than good. But it's not certain that Thaksin will be be around to implement any of his ideas. In September, the National Counter Corruption Commission began investigating the tycoon for allegedly making a false declaration of assets when he was Deputy Prime Minister. At issue is whether or not he tried to conceal ownership of millions of dollars worth of stocks by transferring them to his maid, driver and nanny. If the Constitutional Court concludes that he did, he would be banned from politics for five years.

The anti-Chuan sentiment, in fact, may reflect little more than disappointment with the system as a whole. Instead of galvanizing the country, says Chris Baker, co-author with Pasuk of Thailand's Crisis, the nation's woes have contributed to divisions between rich and poor, city and country, those pushing for aggressive reforms and those who favor a more protectionist approach. Whoever wins the election will need a clear mandate not just to implement meaningful change, but to bring the country together. "Unfortunately, whether it's Chuan or Thaksin, they will have only lukewarm and reluctant support," says economist Supavud. "That's the last thing we want, but it's what we're going to get."

That kind of gloom is promoting apathy as well as animosity toward the ruling party. "Things won't be better after the election because we don't have real choices. None of these politicians has answers," Chalad says. Voters may grant him Chuan's ouster this December. But he'll probably have reason to go on another hunger strike soon enough.

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