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Ousted former Thai prime minister Yingluck Shinawatra greets supporters as she arrives at the Supreme Court in Bangkok on August 1.(Photo by Hiroshi Kotani)

Tensions mount as Yingluck judgment day closes in

Ruling on former Thai Prime Minister likely to reignite tension

HIROSHI KOTANI, Nikkei staff writer | Thailand

BANGKOK -- Thailand's Supreme Court is set to rule on a case against former Prime Minister Yingluck Shinawatra, who stands accused of negligence over a hugely costly farm subsidy program. 

But, whichever way the decision goes on Aug. 25, long-standing and bitter divisions risk being reignited.

Yingluck and her brother Thaksin, also a former prime minister, have polarized Thai politics for years. The junta has just about managed to keep a lid on hostilities between their backers and opponents since it took power, but the ruling will be their biggest challenge yet in this regard.

Prosecutors argue the former prime minister knowingly allowed her so-called rice pledging scheme to damage state finances. If convicted, she faces up to 10 years in prison.

On Aug. 1, some 1,000 of her supporters gathered in front of the Supreme Court to chant their support. In her closing arguments, Yingluck once again denied the charges. "I have never neglected anything that cause damage the country and people. The rice pledging scheme is a good and beneficial public policy based on sound economic principles," she declared.

In 2011, with Thaksin in self-imposed exile having himself been convicted of corruption, Yingluck became Thailand's first female prime minister on an almost identical platform to her brother.

Aimed at increasing incomes and domestic demand, her economic policies were welcomed by pro-Thaksin farmers. But they were so thorough that they ended up leaving deep scars on the Thai economy.

The rice scheme was introduced almost immediately after she took office. It was ostensibly a loan program but farmers had no obligation to repay the money. The government bought the rice at a premium of around 50% above market rates, causing fiscal deficit to swell. Critics argue the program was subject to rampant abuse through padded quotes and inappropriate routing of stocked government rice.

The scheme continued until the government was toppled by a military coup in May 2014, but the damage had been done. By one estimate, the government lost over 500 billion baht ($15 billion) on the program. Prosecutors argue Yingluck's inaction over the scheme constitutes a crime. 

With the loan scheme being a subsidy program in all but name, farmers grossly increased their output. The price of the crop spiked while the quality deteriorated. The country's agricultural sector remains inefficient to this day.

In 2012, India overtook Thailand as the world's top rice exporter -- a position it had held for over 30 years and has since been unable to regain.

At the same time, the government suddenly raised the daily minimum wage by 40-90% to 300 baht across the country. The measure was intended to adjust the imbalance in wages between urban and rural areas, but ended up crippling the international competitiveness of the country's labor-intensive industries. 

Measures to help shore up demand for new cars and housing only had a temporary effect, and the economy continues to suffer from the subsequent fall in demand and increased household debt.

Thailand's gross domestic product grew by a mere 3.2% in 2016, well below its potential rate of 5% and the third-lowest figure among the 10 members of the Association of Southeast Asian Nations.

But having failed on the economy and being accused of a crime while in office are two completely different things. Columnist Atiya Achakulwisut, posed the following question in the Bangkok Post: "Should the military regime have to go on trial if [the planned high-speed train] happens to run at a loss after opening?"

Last October, the junta ordered Yingluck to pay 35.7 billion baht in damages to cover the losses the program incurred. With the former prime minister refusing to comply, the government last month froze her 12 bank accounts.

Pro-Thaksin groups argue the ongoing trial is politically motivated, meant to weaken their presence.

As many as 10,000 Thaksin supporters are expected at the Supreme Court on the day of the ruling. Reports say the junta has been increasing its monitoring of pro-Thaksin activists in the north and northeast of the country. It continues to ban political activities.

The junta promised to bring reconciliation to a divided country, yet it seems the only guaranteed outcome next week is that more oil will be poured on the fire.

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