Columns

Column: Dispatches From the Edge: Thai Coup, Wolfowitz on the Ropes, Ecuador’s Election

By Conn Hallinan
Friday October 13, 2006

The coup in Thailand was treated by most of the U.S. media with profound confusion over what was at stake, coupled with a certain admiration at its bloodless efficiency. Photos of soldiers being handed roses and children posing in front of tanks were all the rage on front pages and the six o’clock news. But if the Sept. 19 putsch turns out to be the coup de grace for Thailand’s young democracy, a major culprit in the whole sordid business will be the International Monetary Fund (IMF).  

According to Walden Bello, Professor of Sociology at the University of the Philippines and author of “The Siamese Tragedy: Development and Disintegration in Modern Thailand,” the current coup finds its roots in the role played by the IMF during the 1997-2001 Asian financial crisis that devastated economies throughout the region. 

In fact, the crisis was largely a result of IMF pressure to institute the neo-liberal “Washington Consensus” of opening financial markets to foreign investors, privatizing social services and cutting public spending. According to Bello, when the government of Barnharn Silipa-Archa resisted, the IMF engineered its ouster in 1996 and got the compliant—and deeply corrupt—government of former general Chavalit Yongchiyudi. 

The 1997 crisis was sparked when foreign investors pulled up their stakes and sent the Thai economy into free fall. Because the economic checks and balances, along with the social safety net, had all been dismantled, one million Thais were pushed below the poverty line. 

The $72 billion “aid bailout” that the IMF offered was predicated on Thailand accelerating its acceptance of the Washington Consensus. The Thais agreed, but never saw a penny. Instead of using the aid to shore up the desperately damaged economy, the IMF used it to pay off foreign creditors. 

If most Thais concluded the IMF had hijacked their country, they were essentially right. Bello points out that the IMF did pretty much the same thing in the Philippines and Pakistan, and in both cases ended up undermining people’s commitment to democracy. Why vote or care who is in power if someone in Washington is making all the decisions?  

Billionaire Thanksin Shinwatra was elected in 2001 on an anti-IMF platform with promises of a debt moratorium for farmers, low cost loans, and health care. While he did institute these measures, he also began to systematically undermine the constitution, amass enormous political power, and enrich himself and his supporters.  

Thanksin’s populist policies won him wide support among the rural and urban poor, but his authoritarianism further weakened the democratic institutions already damaged by the IMF. While the military stayed on the sidelines, he summarily executed some 2,500 drug dealers, escalated the oppression of ethnic Malays in Southern Thailand, and garnered yet more assets for his family and supporters. But when he tried to pack the military with his own supporters, the generals struck. 

Bello says the coup’s long-term effects are likely to be deeply damaging to Thailand’s democracy. After 14 years during which the military stayed out of politics, the army is back in charge. And the new government, led by General Surayud Chulanont, a member of King Bhumidol Adulyadej’s Privy Council, announced that it would appoint the drafters of a new constitution. 

But the old one was a genuinely democratic document. “The only thing wrong with Thailand,” Senator Somkait Onwimm told the Financial Times, “is that we tend to have a lot of bad people, and good laws.” 

As Bello points out, the Thai coup is the second high-profile collapse of an “elite-democracy” since the 1999 coup in Pakistan. “It may not be the last,” he warns.  

 

Will the Wolfie survive? World Bank President Paul Wolfowitz took a shellacking at last month’s joint meeting between the Bank and the IMF over his policy of ranking the fight against corruption higher than the alleviation of poverty.  

British International Development Secretary Hilary Benn fired the first broadside when he suspended a $94 million pledge to the Bank unless Wolfowitz agreed to stop making “onerous demands” on poor countries. “Our job, and the job [of the bank] is to help eliminate poverty,” Benn said. “This means we should not walk away from our responsibilities to poor people, whatever the behavior of public officials and politicians in the countries where they live.” 

Benn went on to say that “rich countries” must share some of the blame for corruption, pointing to companies “who provide the bribes or offer opportunities to hide stolen assets.” 

Wolfowitz has come under increasing criticism for what critics charge are his arbitrary actions around corruption. He cut off aid to Congo because he read newspaper reports that its president ran up extravagant hotel bills during last year’s United Nations General Assembly meeting in New York. He killed $800 million for a maternal and children’s health program in India because there were allegations of corruption. 

Bank officials who objected have been sidelined. “He presumes that anyone who opposes him is either incompetent or corrupt,” Roberto Danino, a former senior vice-president of the Bank, and ex-prime minister of Peru, told the New York Times. 

When Wolfowitz proposed making the UN’s goal of reducing poverty by 50 percent over the next nine years secondary to fighting corruption, the representatives of the Bank’s shareholder governments slapped him down. Instead, they voted that they, not Wolfowitz, will have the final say over the anti-corruption campaign. 

Wolfowitz’s leading critics are European countries, which are increasingly nervous about their waning power to influence the world’s economy. Many Asian nations were so angry at the Bank and the IMF for their roles in the 1997 financial crisis, that they created the Chaing Mai Initiative, a parallel lending group to bypass the huge lending institutions. 

The U.S. and European countries dominate the IMF and the World Bank. As one critic pointed out, the basic problem with both institutions is that those who have the votes don’t need the money, while those who need the money, don’t have the votes. 

Part of the uproar is about Wolfowitz himself. He owes his position to President George W. Bush and, like the White House, runs things from the top down, relying on a small cadre of neo-conservative Republican activists. As the Financial Times editorialized, “This is no way to run a railroad; and it is not the way to choose the head of the premier development institution.” 

 

Rafael Correa, the leftist frontrunner in Ecuador’s Oct. 15 election, took sharp issue with Venezuelan President Hugo Chavez’s calling President George W. Bush “the Devil.” Speaking on Quito’s Channel 8 television, Correa said, “Calling Bush the Devil is offending the Devil. The Devil is evil, but intelligent. I believe Bush is a tremendously dimwitted president who has done great damage to his country and the world.” 

Correa is running 11 points ahead of his nearest rival, center-left candidate Leon Roldos. Correa needs 40 percent in the first round to avoid a runoff, something no presidential candidate has ever accomplished in Ecuador. 

A former finance minister, he is calling for closing the huge U.S. military base at Manta, and renegotiating the nation’s oil contracts and free trade agreements. He delivers many of his speeches in Quichua, the indigenous language of the highlands.