As Thailand marks the 20th anniversary of being the epicenter of the Asian financial crisis, the country and its squabbling elites have plenty to ponder. Thailand has had many chances to become a vibrant democracy and a developed economy, but it has deteriorated into a military dictatorship while growth slumps.
This was not what many imagined of Thailand when it was experiencing years of growth and promising democratization. Unless the country can find the will for political compromise and consensus in the next few years, the cold reality is that it may well enter long-term stagnation and decline, despite its favorable market size and geographical location.
Thailand has spent three lost decades failing to live up to its potential. The first was the decade prior to 1997, when the Thai economy was one of the fastest-growing in the world, expanding more than 7% annually, with three consecutive years of double-digit growth in the late 1980s. But during that same period, Thailand's long-insulated macroeconomy -- traditionally managed by technocrats -- became politicized and captured by vested interests, while growth was based on excessive foreign debt.
An ambitious strategy to turn the Cold War battlefields of Indochina into a Thailand-centered marketplace and financial hub went awry as "hot money" flowed into the economy. By the mid-1990s, the combination of a fixed exchange rate, capital inflows and inflexible monetary policy in an open economy caused macroeconomic management to flounder. The bursting bubble resulted in a perfect crisis, with shoddy economic policies on one hand and corruption and cronyism on the other.
The second lost decade began more auspiciously when Thais, emerging from the rubble of a ruined economy, crafted a reformed constitution that promised to lift the country's politics from the gutter of patronage and graft. In reaction to a vicious cycle of corruption, coups and constitutional upheavals, the 1997 constitution featured check-and-balance mechanisms and independent watchdog institutions to promote transparency and accountability. Despite early anti-corruption successes, it eventually ran into Thaksin Shinawatra's powerful party machine, which dominated Thai elections into the 21st century.
Inevitably, Thaksin became a political monopolist in the same way he had dominated telecommunications. This undermined the country's fledgling democracy and posed an existential threat to established power centers. All that was good in the 1997 constitution was eventually marginalized, manipulated and co-opted. The 2006 military coup that ousted Thaksin marked the end of a second wasted decade during which democratic consolidation was not achieved.
The third squandered decade extended from the first anti-Thaksin coup to May 2014, when a putsch by the same clique of army generals behind the 2006 takeover dislodged the government of Yingluck Shinawatra, Thaksin's sister. The latest coup, the 13th in 85 years of constitutional rule, was unlike any other.
A TIGHTER GRIP Led by Gen. Prayuth Chan-ocha, who subsequently became prime minister, the latest coup was meant as a prelude to a royal succession and re-establishment of a bureaucratic state that benefited the interests of the military and officialdom at the expense of elected representation. With the death on Oct. 13, 2016 of King Bhumibol Adulyadej -- who reigned for seven decades and presided over Thailand's modernization from agrarian backwater to postindustrial concrete jungle -- the generals took no chances by assuming direct control.
Thailand is in a precarious limbo after three years of military rule. King Bhumibol was so popular and had earned so much moral authority from his personal nation-building projects that his death left a void that cannot be filled by his son and successor, King Maha Vajiralongkorn. As the monarchy remains inchoate under the new king, the ruling generals have taken matters into their own hands, using a rubber-stamp legislature and a pliant drafting committee to introduce a new constitution, which replaces another military-backed version introduced in 2007. The 2017 constitution -- Thailand's third in 20 years -- marks a reversal of the 1997 charter and represents a throwback to Thailand's undemocratic past by creating a tightly controlled legislative system.
The new constitution allows a 250-member Senate appointed by the military to block laws passed by an elected 500-member lower chamber. The generals will need only 126 of the lower house lawmakers for a simple majority with the two chambers voting together. That will be enough to win key votes and to select the next prime minister after a parliamentary election expected in the second half of 2018.
Prayuth's military regime has also decreed that the new government must follow strategic development programs formulated by the military for the next 20 years. The military, in other words, will supervise Thailand for the foreseeable future, with elected representatives effectively marginalized.
The generals' aim may be to ensure the survival of the monarchy whatever happens. But problems await. Without accountability and popular legitimacy, the generals now stand accused of corruption and graft. They have tilted Thailand's foreign policy toward China, which has imperiled the traditionally deft Thai balancing act between major powers.
So far, the junta has been careful not to harm dissidents physically, although hundreds have been harassed in violation of their civil rights. If the generals become more heavy-handed and violent, popular protests may ensue. Angered by the political entrenchment of the generals, Thaksin's Pheu Thai party and its nemesis, the Democrat Party, could unite in a civilian front to oppose the military.
A NEW DYNAMIC The relationship between the junta and the new king remains uncertain. Trying to save the throne at all costs could upset the traditionally symbiotic ties between the military and the monarchy. And factionalism always lurks within the army's ranks. If the junta miscalculates, Prayuth and his cohorts, particularly his deputy and defense minister Gen. Prawit Wongsuwan, could be overthrown.
That said, Thailand may have a fourth decade to get its house in order. The average economic growth rate in 1999-2016 was 4%, but between 2011 and 2016 growth slowed to 3%. This is the new normal for the economy, suffering from political instability but underpinned by its role as the anchor for development in mainland Southeast Asia. In the long term, 3% growth may not be enough to satisfy local expectations, and the rate could slow further as regional competition intensifies. But if political stability returns, the economy could expand by 4-6% annually over the next decade.
Thailand needs to cultivate a power-sharing arrangement between military and civilian leaders after the election, with the monarchy playing an accountable constitutional role. If such a compromise emerges, Thailand will be on the right track. But if there is a continued effort to centralize power under a winner-takes-all mindset, the country could face another lost decade and share the fates of Myanmar and the Philippines, which were bright stars in the 1950s and 1960s before fading into stagnation.
Thitinan Pongsudhirak teaches international political economy and directs the Institute of Security and International Studies at Chulalongkorn University in Bangkok.