The king never smiles, p.57
The King Never Smiles, page 57
By that time, things were happening in the Thai economy that would soon have Bhumibol rethinking his endorsement. Ten years of heady growth had left bureaucrats, businessmen, and politicians complacent in the idea of a Thai economic miracle. But by the end of 1996, the economy had begun to melt down, obliterating all $40 billion of national reserves and, by July 1997, forcing a massive devaluation. The entire country, including the palace, went into shock as the economy imploded over the following year. At one point the dollar value of the baht was halved, all but wiping out the country’s banks and leaving thousands of Thai companies insolvent.
The collapse laid bare many of the systemic faults of governance, the sheer mismanagement and deeply corrupt cronyism that had underpinned the boom years. For several years, it became known, the Thais had proudly rejected warnings from respected economists and the International Monetary Fund. Blame for the crash could be pinned not on politicians so much as on the elite closed circle of top bureaucrats and bankers who had, in the name of tradition and culture, rigged the system for themselves.
Nearly all of the country’s tycoons and large business groups, and a large portion of top bureaucrats, politicians, and high-society Thais, were devastated by the devaluation. This included members of the extended royal family, palace staff, and the businesses of the Crown Property Bureau. The Siam Cement Group was the country’s largest offshore borrower, with nearly $5 billion in U.S.-dollar debts when the crisis hit. After the devaluation it was technically insolvent. Worse off was the CPB-controlled Siam Commercial Bank. The bank was heavily leveraged on funds raised abroad, as were most of its biggest customers. Their loan collateral, mostly real estate, was grossly overvalued and, with the real estate market in collapse, didn’t cover even half the value of the loans.7 While Siam Cement had productive assets to sell to cover its debts, Siam Commercial Bank (and indeed all the Thai banks) had little. This wiped out palace income, which had topped $100 million a year in the mid-1990s. Dividends stopped flowing and many tenants stopped paying rent. Even if the palace wanted to, it didn’t have the funds to shore up its major holdings, much less fund its charities.
The crisis evoked extreme pressure to reconstruct the system in a more tenable, fair, and open way. The IMF offered an emergency loan of over $15 billion, tied to strict conditions for cleanup and the reform of laws, the financial system, and economic management. The plan would allow Thailand to emerge from the crisis stronger, but required allowing overindebted businessmen to fail, and punishment for the greatest wrongdoers. This threatened bankruptcy for many of the kingdom’s elite, by holding them responsible for their debts.
Bhumibol was expected to support the implementation of the IMF-prescribed reforms. Instead, he interfered, by attempting to circumvent the normal political process to revive his 1980s royal government with Prem again in charge. After the devaluation, Prime Minister Chavalit came under severe pressure from the threatened Thai elite to reject the IMF plan. But the longer he resisted the IMF, the deeper the baht and the economy sank. In parliament, the pro-IMF Democrats attacked the government for incompetence and inaction, hoping they could oust Chavalit, take power, and then implement both economic reforms and the new constitution.
But when Chavalit looked likely to fall, a group of high-powered industrialists asked Prem to intervene and protect the government. After meeting with Prem, Chavalit bought more time by agreeing to the IMF’s terms, while naming Prem’s personal economic adviser Virabongsa Ramangkura as his crisis manager. Chavalit and his economic ministers then met with the king, and afterward made public appearances with the three military service commanders. It was a 1980s-like show of palace-military-government solidarity with king’s agent Prem in the middle.
The problem was that this palace intervention wasn’t made to resolve a parlia mentary stalemate, but instead to interrupt the still-functioning parliamentary process. There was little justification for it, since Chuan’s Democrats had already proven that they could run the country responsibly. Predictably, Chavalit stalled on implementing the IMF’s painful prescriptions, and the economy spun further out of control. When the Democrats resumed their attacks, Prem stepped in more openly as Chavalit’s guarantor. On his August 25 birthday, surrounded by military and political well-wishers including Chavalit, he called for cooperation and unity. “We cannot afford to be divided, particularly government leaders and the opposition … if we wish to see our country restored to its former prosperous state soon,” he said, sounding much like Bhumibol.
But the Democrats were no longer intimidated. Sukhumbhand Paripatra, now a Democratic member of parliament, branded Prem’s intervention a “silent coup,” citing the constitution’s stipulation that privy councilors had to refrain from politics. Another Democrat, Surin Pitsuwan, said that, again, “It looks like the top brass are in charge of the country. It doesn’t augur well for the process of democracy.” The criticism was directed at Prem, but it implied King Bhumibol as well.8
The fight wasn’t only over the economy. The draft constitution was finalized at the end of August, in the middle of the crisis. Against the king’s advice, it was very long and detailed, codifying the aspirations of thousands of Thais polled for what they expected a constitution to do for them. Chavalit’s party fought to kill the draft, hoping the economic crisis would provide an excuse. They argued, for one, that the draft diminished royal prerogatives and military power. With the support of the powerful conservatives in the senate and the military, Chavalit tried to force a rewrite.
Now the economic crisis worked in the reformers’ favor. Apparently to avoid worsening an already bad situation, Bhumibol communicated through Sumet Tantivejakul that the throne had no problem with the draft.9 “There is no law or any powerful legal clause which could sway the people’s loyalty to the king,” Sumet said, adding that any problems could be amended later. With that message, Chavalit endorsed the charter and sent it to the king on October 11.
It wasn’t clear whether the king intervened because he liked the draft or to avoid another confrontation like 1992. But it didn’t save Chavalit. At the beginning of October the baht was still falling and the IMF deal was faltering. Across the country there was a feeling of cosmic crisis. People made merit in hopes of reversing the bad karma, and the supreme patriarch organized more than 100 monks to pray together at the chapel of the Emerald Buddha, joined by cabinet ministers and palace officials. Many people openly called on the king to save the country.
In response, Prem proposed outright a return to the idea of an unelected king’s government. On October 6 he summoned the country’s top newspaper editors to his home and told them that the parliamentary opposition should agree to form a nonpartisan, unified “national government,” staffed by nonpoliticians, under an independent leader, understood as Prem or his agent.10 Disingenuously, Prem insisted that the ideas were his personal view, not that of a privy councilor—meaning not from the king. “They can be considered the views of a statesman during this time of abnormality, when an economy is in crisis,” he said. But like the king, he suggested the parliament had no use. “When people talk about a national government they misunderstand: they think of the 393 persons in the House of Representatives without division into government and opposition. In my private opinion, I say a national government is getting all the best people in the country to become government, not only the 393; only then can it be a national government. If you are Thai citizen No. 1, you have to be brought in as prime minister; others, numbers 2, 3, 4, 5, have to be brought into the cabinet.”
Showing how far along his thinking was, he named three men, all from his own circle, who he said were the best doctors for the economy.11 Supporting them was patriotic, he argued. Prem was proposing to turn back the clock to the 1980s, entirely contrary to the ideals expressed in the constitution just being readied for the king’s signature. As ever, it was impossible to say with certainty that this was the king’s proposal and not Prem’s alone. But Prem was the chief privy councilor, and had always acted fully aware of and protective of the king’s interests and prestige. It was hard to imagine he had not consulted Bhumibol.
The move stopped the democratic reform movement cold. It fell again to royal-blooded Sukhumbhand to fight back. The idea of a national government, he responded in the Bangkok Post, “can be interpreted to be less than democratic in spirit.”12 He called it an idealization of the 1991–92 technocrat administration of Anand Panyarachun, which he noted existed only in the absence of a functioning constitution and parliament. Now that the country had both, Sukhumbhand said, Prem was out of line. “As a member of the privy council, Gen. Prem is, of course, bound strictly by both constitution and etiquette not to engage in either politics, political partisanship or political advocacy. Therefore, [his interview with the newspaper editors] by definition cannot be political. But what the former premier said is perhaps the most politically significant non-political statement of this troubled year.” Moreover, Sukhumbhand suggested, Prem was setting himself up to return as premier. “If some people could have their way, the privy councilor may yet be transformed from being the most politically powerful non-political person in the country to being an immensely powerful political leader once more.”
Sukhumbhand avoided mentioning the king, emphasizing only that there was no reason to believe that the national government could solve the economic crisis better than any other. But at the end of his piece, he brashly sent a message to Bhumibol. He recounted the British monarchy’s establishment of a national government in 1931 in response to the global economic crisis. This royal intervention only came about, Sukhumbhand pointed out, after the national government idea was proposed and agreed inside the parliament. The message was to let the Thai parliament exhaust its own processes before intervening—something neither Bhumibol nor Prem had ever had the patience for.
The choices caught King Bhumibol, like his uncle King Prajadhipok in 1932, in a complex antinomial bind. Prajadhipok faced a global depression neither he nor his princes really understood, over which his advisers disagreed. Outside the government, pressure was for sweeping reforms that would address the economic challenges, but would also devolve power from the monarchy and slash the economic entitlements of the royals and aristocracy. Prajadhipok’s fateful decision was to listen to his princes’ advice to reject the reforms and protect the elite, essentially themselves. Six weeks afterward, the absolute monarchy was overthrown.
In 1997 Bhumibol faced a similarly complex, partly foreign-derived economic crisis that neither he nor his advisers really understood. He could open the way for Chuan, the new constitution, and the tough IMF reforms. It might save the economy, but the cost would be heavy: the throne, and much of the elite surrounding it, would lose fortunes, and the power of the monarchy could be diluted. Or he could put Prem in charge, stall the constitution, and water down the IMF’s directives. It would protect the fortunes of the aristocracy, and keep in place the hierarchy that guaranteed the throne’s power. Whether or not Bhumibol realized it, it would be at considerable risk to the economy and, as in 1932, the whole system could collapse.
Because everything took place behind the scenes, it isn’t possible to know exactly what Bhumibol said. But it appears he learned from Prajadhipok’s record and took the path of reform. In the midst of the standoff between the Democrats and Prem, on November 3, Chavalit suddenly resigned. Simultaneously the calls for a Prem-led crisis government disappeared, opening the way for Chuan to take power. It would prove to be Bhumibol’s last attempt at hijacking government.
But it hardly meant the king was ready to cede prestige to another Chuan government. The crisis snowballed through Asia, and the economic problems became too deep and intractable for any speedy solution. As the government struggled and stumbled, unencumbered King Bhumibol took ample opportunity to criticize while setting himself out as the repository of wisdom and virtue.
This followed the familiar pattern of the early 1990s. When southern Thailand was hit by extensive flooding in August 1997, as usual the royal family’s foundations claimed the most credit for providing relief, even though the government did more. When urban industries began to lay off large numbers of workers, the palace announced that the king’s Chai Pattana foundation would coordinate government agencies and the private sector to help find new jobs. Such grandstanding had little impact, for there weren’t any jobs, and the real issue for the unemployed was the absence of a social security net of any kind. Even so, the palace appeared more concerned for the jobless than the government.
Only one month into the Chuan administration, Bhumibol used his birthday speech to say, in essence, “I told you so.”13 He attacked political leaders for having taken Thailand along the path of unbridled capitalism and consumerism. Had people embraced his own ideas of a simpler society, he suggested, the crisis would have been avoided. He began by again contrasting the great efficiencies of his own projects while denigrating the government’s efforts. Then, moving to the economic crash, he hit out at the kind of modern global market capitalism that had overwhelmed his ideal of a humble, dhamma-guided kingdom.
Through several personalized parables, he said people had been overly desirous of material things and didn’t think out the results of their actions, for instance borrowing money to spend without the means to repay. “The lesson should be that borrowed money must bring a profit, and not for just playing around doing useless things.” He also scorned the excess ambition of people, like those who built massive factories when small ones would have sufficed. It was this greed, which Bhumibol suggested came with the orthodox capitalism preached by the IMF, that was the root of the crisis. The crash could have been avoided if the country practiced his own economic philosophy. “I have often said … that to become a tiger [economy] is not important. The important thing for us is to have a self-supporting economy. A self-supporting economy means to have enough to survive…. Each village or each district must have relative self-sufficiency. Things that are produced in surplus can be sold, but should be sold in the same region.”
He acknowledged that distinguished economists considered his view old-fashioned and unsophisticated. But Bhumibol argued that chasing world markets with surplus production doesn’t benefit the producers, and only leads to suffering. “Placing too much emphasis on the production of industrial goods will not suc ceed, as the local market has declined because the people now have a lower purchasing power … [and other] countries also have their own difficulties and will not buy our products. If there are industrial products and there are no buyers, the efforts will be of no avail…. A careful step backwards must be taken; a return to less sophisticated methods.”
The step backward was to his New Theory. “If the situation can change back to an economy that is self-sufficient—it does not have to be a hundred percent, or even fifty percent, but perhaps only twenty-five percent—it will be bearable. The remedy will take time; it will not be easy. Usually one is impatient because one suffers, but if it is done from this moment on, the recovery is possible.”
The king’s argument was at best pseudo-economics. It was centuries too late for Thailand to withdraw from the global economy: ancient Ayutthaya was a rice exporter. Foreign trade and investment were key tenets of the 1959 economic plan that the palace claimed Bhumibol had inspired, and had underpinned Thai economic growth ever since.
Even so, King Bhumibol hit a bulls-eye in terms of the national mood. Confused by the government’s complicated explanations, Thais readily turned to the king for inspiration and introspection. They understood the king’s words as fundamental criticism, of themselves for having been greedy; of the politicians who led them into this situation; and of the global capitalists who preyed on Thailand. Like King Mahajanaka, Bhumibol’s lesson was both practically and spiritually perfect: if people had followed his thinking, they wouldn’t be suffering now.
Over the next year the concepts of self-sufficiency and the New Theory became the subject of endless commentary in the mass media, in temple sermons and political speeches. Foes of globalization, foreign capital, and consumerism cited Bhumibol. Students studied his ideas and the army sought ways to implement them, like growing their own vegetables (which had the effect of increasing supply and depressing the income of full-time farmers). There was a new trend of eating cheaply and healthily inspired by Bhumibol’s declaring that, like the poorest peasants, he preferred to eat the coarse unmilled rice, khao klong. “I eat khao klong every day because it is healthy…. Some say it is the poor man’s rice. I am also a poor man.”14
Meanwhile, the palace as an institution was hardly returning to the simple life. Hidden from public view, the king’s men were undertaking a massive rescue of the throne’s collapsed billion-dollar business empire.15 The rescue drew significantly on the stretched resources of the government.
Like many other business groups, the Crown Property Bureau and privy purse investments were in need of substantial new capital to remain solvent. The bureau had a pool of investment reserves, but hardly the several billion dollars necessary for Siam Cement and Siam Commercial Bank to survive under the throne’s control. The palace pulled in the country’s best talent to work on its problems, former bank heads Tarrin Nimmanhaeminda, Vichit Suraphongchai, and Yos Uachukiat. They were pragmatic, tough, and focused on keeping the throne out of the very public fights that erupted between other Thai business groups and their creditors.
The palace was determined to hold on to its 37-percent share of Siam Cement Group. Without new capital from CPB, the only choice for reducing the group’s debt was to sell off subsidiaries, many of which were once seen as pioneer industries for Thailand, automobile parts and electronics manufacturing. But Siam Commercial Bank could not be broken up to raise new capital because the bank and almost all of its subsidiaries had deeply negative net worths. The other Thai banks had only one option, to offer themselves to be taken over by stronger foreign institutions. But CPB chief Chirayut said this was impossible for Siam Commercial, because “the bank is the inherited asset of his majesty King Rama V. The Crown Property Bureau will do everything it can to maintain it. Although eventually all other banks would be taken over by foreigners, Siam Commercial Bank would remain the only Thai bank in this country even if it costs us everything.”16
