VZCZCXRO6696
OO RUEHCHI RUEHDT RUEHHM
DE RUEHBK #2749/01 1361010
ZNR UUUUU ZZH
O 161010Z MAY 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6959
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBY/AMEMBASSY CANBERRA 7129
RUEHWL/AMEMBASSY WELLINGTON 1748
RUEHBJ/AMEMBASSY BEIJING 4220
RUEHKO/AMEMBASSY TOKYO 9262
RUEHUL/AMEMBASSY SEOUL 3105
RUEHCHI/AMCONSUL CHIANG MAI 3557
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEHNSC/NSC WASHDC
RUEKJCS/JCS WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/USCINCPAC HONOLULU HI

UNCLAS SECTION 01 OF 04 BANGKOK 002749 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
FROM THE AMBASSADOR FOR EAP A/S HILL 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PHUM ECON EINV KDEM MOPS ASEC TH
SUBJECT: SCENESETTER FOR EAP A/S HILL'S VISIT TO THAILAND 
 
 
BANGKOK 00002749  001.2 OF 004 
 
 
SUMMARY 
------- 
 
¶1. (SBU) Chris, your visit will help us to reinforce with 
top-level RTG officials the need to return to democratic 
governance through elections by the year's end.  Political 
parties, NGOs, and others in the political class are 
currently debating an initial draft of the constitution, to 
be finalized by July and then put to voters in a September 
referendum.  An upcoming Tribunal ruling may dissolve 
Thailand's two largest political parties, and leading figures 
in those parties could be banned from holding political 
office for five years.  Applying such a ban to deposed Prime 
Minister Thaksin would help prevent his return to political 
life; the authorities have so far been unable to present a 
strong case indicting him for the abuses of power which the 
coup leaders cited as justification for their putsch.  Senior 
military leaders may be reluctant to allow elections before 
Thaksin's prosecution is set in motion, but they have little 
time left, as public dissatisfaction with the current 
government is mounting, and there are public signs of 
friction between the military leaders and Prime Minister 
Surayud.  Many Thais fear the USG has been co-opted by 
Thaksin's high-priced lobbyists, whose hand has been 
suspected behind our placement of Thailand on our IPR 
Priority Watch List.  The economy has slowed considerably due 
primarily to poor economic management by the government. Our 
reaction to IPR violations and upcoming changes to our 
extension of tariff preferences for certain Thai products 
have heightened trade tensions.  Vicious insurgent attacks in 
southern Thailand continue on a daily basis, despite the 
current government's efforts at reconciliation.  You will 
arrive days after the conclusion of Cobra Gold, our largest 
military training exercise in the region.  End Summary. 
 
CONSTITUTION PAVING THE WAY FOR ELECTIONS 
----------------------------------------- 
 
¶2. (SBU) Despite mishaps along the way, the leaders of the 
post-coup institutions have so far managed to stick to the 
schedule they outlined right after the September 2006 coup; 
in April, the Constitution Drafting Committee (CDC) publicly 
released the first draft of a new Constitution.  This draft 
has proven controversial, although not unexpectedly so, as it: 
 
- provides for a Senate that would be appointed, rather than 
elected -- marking a reversion to pre-1997 ways; 
 
- creates a "crisis council" with unspecified powers and 
unclear guidelines; 
 
- effectively grants amnesty to those who launched the 2006 
coup d'etat; 
 
- provides officials of the judiciary with functions that 
appear more political than judicial, such as selecting 
members of independent government agencies; and 
 
- does not enshrine Buddhism as the state religion, 
disappointing many in Buddhist organizations. 
 
¶3. (SBU) Political parties, NGOs, media commentators, and 
other civil society members have publicly criticized the 
draft constitution.  We believe it likely that the draft will 
be revised in significant ways, in response to these 
concerns.  The Constitution Drafting Assembly (of which the 
CDC is a subset) has until early July to produce a final 
draft.  This draft will then be submitted to the public in a 
referendum, likely to take place in early September.  If the 
electorate rejects the draft, the interim constitution 
provides that the Council for National Security (CNS) and the 
cabinet must work together to select a previous constitution, 
modify it, and promulgate it.  The deadlines established for 
this process make it possible that the authorities will 
fulfill the Prime Minister's commitment to holding elections 
in mid or late December. 
 
 
BANGKOK 00002749  002.2 OF 004 
 
 
TRIBUNAL MAY DISSOLVE POLITICAL PARTIES 
--------------------------------------- 
 
¶4. (SBU) The participants in those elections remain 
uncertain, however.  The Constitutional Tribunal -- a new 
institution created post-coup -- is currently determining 
whether the Thai Rak Thai Party (TRT) and the Democrat Party 
(DP) committed "undemocratic acts" in connection with April 
2006 elections.  The Tribunal's determination is expected on 
May 30.  A post-coup decree retroactively established that, 
if a party is ordered dissolved, the members of the party's 
executive board become ineligible to hold political office 
for five years.  In the case of TRT, the party of deposed 
Prime Minister Thaksin, the executive board at the time of 
the alleged infractions consisted of 119 people, including 
many traditional power brokers from the North and Northeast. 
Although the charges of "undemocratic acts" are credible 
(and, in fact, were first lodged prior to the coup), 
disenfranchising such a large group of politicians could 
prove destabilizing. 
 
THAKSIN REMAINS OF CONCERN 
-------------------------- 
 
¶5. (SBU) Nevertheless, the Constitutional Tribunal ruling may 
be one important way to begin uprooting Thaksin's influence, 
and to bar him from returning to political life in the near 
future.  The CNS established the Asset Examination Committee 
(AEC) soon after the coup, in order to investigate 
allegations of corruption by Thaksin and his cronies, but the 
AEC has worked slowly.  It has recommended charging Thaksin 
for supporting his wife's purchase of property from a state 
body.  It also has recommended indicting Thaksin's entire 
cabinet for establishing a government lottery without 
following proper procedures.  These cases may help Thaksin's 
lawyers stay gainfully employed, but they do not threaten to 
bare a system of governance so corrupt and authoritarian as 
to have warranted a coup d'etat.  The AEC continues its work, 
but it remains unclear whether its investigations will 
produce the sort of damning evidence against Thaksin that 
might erode support for him in the rural areas where his 
populist policies endeared him to voters.  With Thaksin's 
popularity in those areas -- and his wealth -- largely 
intact, the coup leaders continue to feel Thaksin represents 
a substantial threat. 
 
SUSPICIONS OF THAKSIN'S INFLUENCE WITH THE USG 
--------------------------------------------- - 
 
¶6. (SBU) Many Thais also fear that Thaksin, by hiring 
American lobbyists and public relations firms, has been able 
to win support from the USG.  We have had to repeatedly 
explain even to cosmopolitan interlocutors that our policy is 
based on principled support for democracy, not on pressure 
from paid advocates.  The situation is further muddied by an 
American public relations campaign that has been highly 
critical of Thailand's issuance of compulsory licenses for 
branded prescription medicines, and has condemned in 
emotional terms the nature of the post-coup government. 
(This campaign appears to be inspired by Abbott Laboratories, 
but Abbott and Thaksin are both clients of the same public 
relations firm.)  In this context, there are widespread Thai 
suspicions that our recent placement of Thailand on the USTR 
Special 301 Priority Watch List for IPR violations was 
retaliation for the RTG's issuance of compulsory licenses. 
We have repeatedly said publicly that this is not the case; 
while the compulsory licenses may have contributed to USTR's 
determination, the primary factor was increased, open 
availability of pirated apparel, software, and video and 
music discs.  It will be useful to have you reiterate this 
publicly while you are here. 
 
GOVERNMENT APPEARS SHAKY 
------------------------ 
 
¶7. (SBU) The constant anxiety expressed about Thaksin's 
lingering influence is exacerbated by the interim 
 
BANGKOK 00002749  003.2 OF 004 
 
 
administration's low level of public support.  Although 
Surayud Chulanont was popular with the public when he 
received his appointment as Prime Minister, since then he has 
been seen as largely ineffective.  He appears ill-served by a 
cabinet made up mostly of retired bureaucrats, and he has 
proven himself averse to conducting a large scale reshuffle. 
Consequently, rumors persist of a "re-coup," and some -- 
especially die-hard foes of Thaksin -- have expressed hope 
that CNS Chief General Sonthi Boonyaratglin would nudge 
Surayud out of office and appoint himself as Prime Minister. 
We have reinforced with Sonthi and others our opposition to 
an active duty military officer heading the interim 
administration. 
 
INVESTMENT CLIMATE DETERIORATES 
------------------------------- 
 
¶8. (SBU) Political dynamics have had a negative impact on 
economic conditions.  One attempt to establish Thaksin's 
wrongdoings centered on the use of cut-out ("nominee") 
corporations used in the sale of his Shin Corp conglomerate 
to Singaporean investment firm Temasek.  Attempts to patch 
loopholes that Thaksin exploited have led to draft 
legislation that would amend Thailand's Foreign Business Act 
in ways that would force many foreign firms (although few 
American companies) to divest at least a portion of existing 
operations.  Both foreign and domestic investment have dried 
up, domestic consumption is very slow (auto sales down 16 
percent this year), and exports are growing but with much 
thinner margins due to the appreciation of the Baht -- due to 
a large current account surplus caused by a low level of 
imports because of the decline in domestic demand and slowed 
imports of capital goods.  This is further exacerbated by 
recent Thai polices, such as the imposition of capital 
controls and proposed restrictions on foreign investment 
whose retroactive nature would apparently require companies 
in the services sector to divest majority control of their 
Thai operations.  This reflects the regime's desire to exert 
greater control and project a nationalist line. 
 
RECONCILIATION POLICY DOESN'T HELP DOWN SOUTH 
--------------------------------------------- 
 
¶9. (SBU) The Surayud government continues to pursue a 
publicly conciliatory policy towards southern Malay-Muslims 
which contrasts sharply with the approach of former PM 
Thaksin.  Surayud apologized for past abuses, said he would 
talk with separatists, and reconstituted key security 
coordination centers.  Unfortunately, these positive gestures 
are having little impact on the violence.  After a brief 
hiatus following the coup, attacks in the far South have 
continued apace, and appear to be getting more brutal.  In a 
recent attack in March, eight van passengers -- all Buddhist 
-- were killed execution-style.  These and other horrific 
attacks have triggered reprisal acts of violence, raising the 
specter of communal violence. 
 
MIL-MIL TIES 
------------ 
 
¶10. (SBU) We have made our concerns over the coup clear to 
the full range of senior military and civilian contacts and 
continue to highlight this message at every opportunity. 
Despite some initial frustration in the senior Thai ranks 
over our suspension of military assistance, many of our 
interlocutors appear to understand our position and look 
forward to a return both to democracy and the full extent of 
our long partnership.  Thailand is a treaty ally, has been 
firmly supportive of our fight against terrorism, and has 
participated in Operation Enduring Freedom (OEF) and 
Operation Iraqi Freedom (OIF).  It is a key partner in our 
efforts to assist refugees and counter narcotics.  Despite 
increasing overtures by China and India, the Thai military 
still looks to the U.S. as a partner without peer. 
 
¶11. (SBU) Thailand remains important to U.S. strategic 
interests in the region as a unique platform for exercises 
 
BANGKOK 00002749  004.2 OF 004 
 
 
and engagement.  Thailand offers good base infrastructure, 
large areas in which our aircraft and ground forces can 
conduct unrestricted operations, and access to bombing ranges 
-- all in short supply in Asia.  Thailand's willingness to 
allow the United States to use Utapao Naval Air Station as 
the hub for our regional tsunami assistance program was 
crucial.  Cobra Gold -- which recently concluded its 26th 
running -- is America's largest annual training exercise in 
the region and includes the active participation of Japan, 
Singapore and Indonesia, as well as observers from the PRC, 
Australia, France, Germany, the Philippines and Korea. 
 
FINAL WORD 
---------- 
 
¶12. (U) Your visit will be most useful in reinforcing our 
position and promoting our interests.  I look forward to your 
arrival. 
 
BOYCE