Political Risk Analysis - All Signs Point To Continued Military Control - MAY 2018

BMI View: We see little prospect of the newly founded Future Forward Party winning the upcoming Thai election, now scheduled for February 2019, and believe that a divided vote would play into the hands of the military. Even if the Pheu Thai Party manages to avoid being dissolved by the junta and wins the election, its hands will be tied in government, with real power still likely to remain in the hands of the military.

Although the Thai general elections have been postponed once again until February 2019, the government has allowed parties to register in anticipation of the vote, suggesting that the new timeline has a good chance of being met despite the persistent trend of the military delaying the vote. One party receiving the bulk of the media attention is the Future Forward Party, which is led by a wealthy 39-year old Thai auto heir Thanathorn Juangroongruangkit, and is looking to appeal to younger voters. Thanathorn has billed the party as a third force in Thai politics that can heal the country's longstanding political divide. Despite the media hype, we believe that the new party has little chance of winning and will instead dilute the urban working class votes of the Pheu Thai Party, ultimately benefiting the junta establishment. Regardless of which party comes to power, we expect the military to continue to play a heavy role in the governance of Thailand.

Future Forward Party Has High Hopes But Low Chances

The Future Forward Party, which debuted on March 15, will focus on progressive policies based on democratic principles and intends to appeal to the country's dissatisfied youth. Helmed by a political outsider and consisting of young founding members from various walks of life, the new party is seen as contrast to the Democrat party which is backed by the yellow shirts that consists of royalists, nationalists, and the urban middle-class and elites.

A survey by the University of the Thai Chamber of Commerce and the Anti-Corruption Organisation of Thailand released in February showed that a majority of Thai citizens believe that corruption in the country has gotten worse or stayed the same since the military government came to power in the 2014 coup, which was ostensibly aimed at reducing corruption. This comes after the government's credibility was seriously undermined in January due allegations of hidden wealth surrounding Deputy Prime Minister Prawit Wongsuwan, a close ally of Prime Minister Prayuth Chan-ocha ( see 'Corruption Scandal Poses A Risk To Military's Popularity As Elections Approach', January 26). The protests near the Grand Palace on February 10, reportedly attended by around 400 people in direct violation to the ban on political assembly, is a testament to the increased dissatisfaction of the current government among young citizens.

With the population becoming increasingly discontented with the political division and impasse, Thanathorn, who has been likened to French political outsider Emmanuel Macron, who rose to power out of relative obscurity, has been seen by some as a potential long shot for the top job. However, this seems much less likely to happen in Thailand given the entrenched political power of the military-backed royalist elites as well as the Pheu Thai Party, and the provisions in the new constitution that make it difficult for new parties to gain power. In our view, it is much more likely that the Future Forward Party, as well as other smaller parties, cannibalise the urban working class support of the Pheu Thai Party, effectively playing into the hands of the military establishment. Indeed, provisions in the new constitution would allow Prayuth to be elected Prime Minister in the event that a divided lower house fails to elect a leader.

Democrats And Pheu Thai Highly Unlikely To Joining Forces

Although democracy proponents have also floated the possibility that the Pheu Thai Party could join forces with its arch rival the Democrat Party in order to remove the military from power, we believe that this seems equally unlikely. Democrat Party leader Abhisit Vejjajiva ruled out such a possibility in a statement on March 10, arguing that the Pheu Thai Party has proven that it is unable to detach itself from the so-called Thaksinocracy - a terms that refers to the Thaksin-led autocracy that has dominated the party since the early-2000s. Both Thaksin and Yingluck Shinawatra, who were recently seen in Singapore along with Pheu Thai Party officials, have urged their supporters to unite ahead of the elections.

Junta May Take A Page From Hun Sen's Book

With a third party showing little chance of breaking through and the two main parties refusing to work together, the largest threat facing the military government is a strong showing from the Pheu Thai Party. With this in mind, we will not be surprised to see the junta make efforts to dissolve the party under provisions in the new constitution. The new constitution prohibits any political party from being controlled or influenced by an outsider - a clause that was clearly introduced to reduce Thaksin's influence in Thai politics. A legal team for the National Council for Peace and Order (the official name of the military government) is reportedly investigating and following up on recent meetings between party members, former executives, and Thaksin across Asia.

The junta may feel emboldened to dissolve the party after seeing Cambodian Prime Minister Hun Sen dissolve his political opposition back in late-2017 and the hitherto weak response from the US or the EU. While such a move would likely invite harsh criticism from the West, Prayuth has shown little concern for such criticism in the past.

Even if the junta does not take such steps, the military will maintain a dominant role in government regardless of which party comes into power. The new proportional voting system will make it easier for smaller political parties to gain seats (and conversely harder for the larger parties to win an overall majority), resulting in weaker and more fragmented coalition administrations. Meanwhile, supposing that the Pheu Thai Party does manage to regain power, the new constitution would also ensure that political parties will be held more tightly to account by the constitutional court making the impeachment of politicians easier. Future governments will also be required to adhere to the military's own 20-year reform plan for the country, facing penalties if they refuse to do so. With this in mind, even if elections are held in February 2019, which is by no means guaranteed, the path to democracy remains highly uncertain.