VZCZCXRO3486
PP RUEHCN RUEHDT RUEHHM
DE RUEHCHI #0187/01 3270341
ZNR UUUUU ZZH
P 230341Z NOV 07
FM AMCONSUL CHIANG MAI
TO RUEHC/SECSTATE WASHDC PRIORITY 0610
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHCHI/AMCONSUL CHIANG MAI 0664

UNCLAS SECTION 01 OF 02 CHIANG MAI 000187 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON KDEM TH
SUBJECT: NORTHERNERS REMAIN LOYAL TO "THAKSINOMICS" 
 
REF: A. CHIANG MAI 185 (NORTHERN VILLAGERS EXPECT RTG TO TRY TO LIMIT PPP SUCCESS) 
     ¶B. CHIANG MAI 182 (THAKSIN LOYALISTS POISED TO RECAPTURE NORTH) 
 
CHIANG MAI 00000187  001.2 OF 002 
 
 
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SUMMARY 
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¶1. (SBU) In the run-up to the December 23 election, villagers 
from northern Thailand praise former Prime Minister Thaksin's 
populist economic policies, especially the Village Fund credit 
program and the 30 Baht health care plan.  Villagers' admiration 
for these policies present a challenge for the marketing of King 
Bhumibol's concept of the "sufficiency economy," which many 
interpret to mean belt-tightening by consumers.  With most 
leading political parties flocking to emulate Thaksin's populist 
programs, the more decisive factors on election day among 
northern voters will be personal relationships, vote-buying, and 
loyalty to Thaksin and his government's track record in making 
good on its promises.  End Summary. 
 
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THE GOOD OLE DAYS OF THAKSINOMICS 
--------------------------------- 
 
¶2. (U) Village leaders across four provinces of northern 
Thailand expressed satisfaction with the populist economic 
policies of former Prime Minister Thaksin and his now-banned 
Thai Rak Thai (TRT) party.  Villagers told EconOff and EconLES 
that northern people are "attached to Thaksin's economic 
policies."  In a trip to Chiang Mai, Chiang Rai, Sukhothai, and 
Kampangphet provinces, local leaders specified the following 
economic policies as part of the legacy of Thaksinomics in 
northern Thailand: 
 
-- The Village Fund: Started in 2001, the Village Fund is a one 
million baht (approximately $29,000 USD) fund managed by an 
elected committee that issues loans to villagers at low interest 
rates with minimal collateral. 
 
-- The 30 Baht Health Care Plan: The RTG provided subsidized 
government health care at 30 baht (approximately $.88 USD) per 
visit.  Following the coup, the new military-appointed 
government removed the 30 baht fee in an effort to placate 
villagers, but the sustainability of the health care system is 
in question, as is the quality of the health care available. 
 
-- Education Fund: Students could request 10,000 baht per person 
(approximately $300 USD) from the Government Lottery Officer to 
support their education. 
 
-- Agricultural Price Supports: The RTG under Thaksin guaranteed 
high agricultural prices by purchasing agricultural goods to 
force the price up.  For example, while the true market price 
for rice was about $117 per ton during the Thaksin 
administration, the government price was $176 per ton, forcing 
the domestic market price to $147 per ton. 
 
¶3. (SBU) Villagers credit the success of Thaksin's populist 
policies to his ability to effectively make civil servants work 
for the people.  That said, however, farmers in particular have 
little faith that any future government -- regardless of the 
ruling party -- will be able to solve their economic problems, 
notwithstanding the recent boom in global commodity prices. 
These problems include, primarily, the rising costs of inputs 
such as fuel, fertilizer, and pesticides.  Thailand has met 
recent global rice demand, for example, by selling off rice 
previously stockpiled during Thaksin's era.  According to 
farmers in Chiang Rai province, they can only rely on "good 
friends" to support their economic interests now. 
 
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THE VILLAGE FUND: THE BEST DEBT MONEY CAN BUY 
--------------------------------------------- 
 
¶4. (U) The Thaksin administration policy that received the most 
praise among northern Thai villagers was the Village Fund, which 
allows village members to borrow money from the fund at a low 
interest rate and pay back their debt over the course of a year. 
 The consensus among village leaders was that the Village Fund 
is a good program that the next government should continue, as 
the interim government has.  Village leaders and members of 
Village Fund communities praised the fund for three reasons: 
 
-- Money borrowed from the fund could be reinvested locally thus 
increasing production in the village; 
 
-- Revenue generated from interest payments could be used for 
village activities or public expenses such as tables and chairs 
in public parks; 
 
-- The default rate on loans is low because borrowing members 
know that they must pay back in order for their fellow villagers 
to get loans. 
 
CHIANG MAI 00000187  002 OF 002 
 
 
 
¶5. (SBU) Despite all of these benefits of the Village Fund, 
village leaders and government officials admitted that it has 
pushed some borrowers into debt.  One village leader in a suburb 
of Chiang Mai stated that there are cases of individuals who 
borrow from the Village Fund then repay with money borrowed from 
private loans, thus causing the person to go deeper into debt. 
Other villagers in Chiang Rai and Sukhothai admitted to such 
cases in their villages as well.  Community development 
officials in Sukhothai said, however, that although some Village 
Fund members repay their loans with private loans, they are 
discouraged from doing so and are encouraged to request 
assistance from the Village Fund Committee when they cannot 
repay.  Despite these cases, village leaders believe that the 
Village Fund is a success and contributes to northern Thailand's 
loyalty to Thaksin's populist economics. 
 
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"PEOPLE FIRST!" AND OTHER BROAD ECONOMIC PLATFORMS 
--------------------------------------------- ----- 
 
¶6. (SBU) Given the sustained popularity of Thaksin's populist 
economic policies, most leading political parties have flocked 
to the populist camp.  There are no significant differences 
across the parties' economic platforms, according to members of 
the Chambers of Commerce in both Chiang Mai and Kampangphet.  A 
Chiang Rai-based candidate of the People's Power Party (PPP - 
the self-annointed successor party to TRT) stated that even the 
Democrat Party, the PPP's main rival, has adopted the slogan 
"People First!" in order to emphasize the populist aspects of 
its platform.  Moreover, with many smaller parties such as Chart 
Thai and Matchima Thippathai acquiring former TRT members, 
village leaders say that they are still touting the same 
populist messages but under new party banners. 
 
¶7. (SBU) Despite the broad support for populist economic 
policies among leading political parties, local leaders in 
northern Thailand believe that none -- even PPP -- will be as 
efficient in implementing economic initiatives as former PM 
Thaksin's TRT, which held an overwhelming majority in the last 
elected parliament.  Instead, village leaders believe that 
personal relationships and vote-buying will be the primary pull 
factors during the election (Ref A).  According to Chiang Rai 
Rajabhat University political economist Udon Wongtamtip, money 
and personal relations are equally important in rural areas of 
northern Thailand.  Village leaders in Chiang Mai, Chiang Rai, 
Sukhothai, and Kampangphet all agreed that the party which pays 
the most for votes will reap the greatest support in the 
northern provinces.  According to one Chiang Mai University 
political science professor, people in rural areas believe that 
all politicians are corrupt.  What distinguishes them, he said, 
is what they give back to the people despite their corruption. 
Chiang Rai Farmers Network President Pranom Chermchaiyaphum 
expects the PPP to offer the highest price for votes, though 
village leaders expect the military-appointed government to 
target the PPP in its campaign to tackle vote-buying. 
 
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THE INSUFFICIENT SUFFICIENCY ECONOMY 
------------------------------------ 
 
¶8. (SBU) For local government officials in the north, an 
alternative to Thaksin's widely praised populism is King 
Bhumibol's concept of the sufficiency economy.  Officials from 
Sukhothai's Office of Community Development lauded the 
sufficiency economy as built on Buddhist values and the motto 
"live well and happy" by practicing moderation in consumption. 
Villagers said that local governments are marketing the concept 
heavily in northern Thailand as a counterpoint to Thaksin's 
philosophy that all Thais should have liberal access to credit 
and modern amenities, such as mobile phones and motorcycles. 
Despite the fact that the sufficiency economy concept is 
targeted at farmers, villagers in Kampangphet were skeptical, 
arguing that it does not apply to poor farmers who must borrow 
money to spend on inputs (fuel, fertilizer, pesticides, etc.) 
rather than the luxuries of modern life. 
 
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COMMENT 
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¶9. (SBU) Broad support for former PM Thaksin's economic populism 
still holds strong across northern Thailand.  With most rival 
parties parroting the PPP/TRT populist platform, economic policy 
issues could have a diminished role in voter's decisions on 
December 23.  However, most northern voters remain loyal to 
Thaksin and generally trust the PPP as the successor to a TRT 
party that made good on its promises to implement populist 
policies (Ref B). 
MORROW