Thailand’s Trifecta of Troubles

Between the global economic melt down, the political upheaval in Bangkok and the stand off with Cambodia over Preah Vihear Temple, Thailand is facing the trifecta of trouble this year.

Tourism and exports are the mainstay’s of the Thai economy and both are suffering  at this point in time. Exports make up 60% of the Thai economy and with what was thought would be a modest gain of 4%  to the GDP this year is steadily looking more like a 10% to 15%  drop heading into and possibly lasting until the second quarter of 2009.

Due to the strengthening of the baht earlier in the year and foreign exports dropping Thailand has had to reverse it’s estimates for the rest of the year and into 2009.  Exports to America in July alone dropped 13.6%. Since July the baht has again weakened to about 34 baht to the dollar. Add to this the global market melt down and this Spells the worst kind of trouble for tourism.

As if this wasn’t enough then Thailand has the second of the one two punches still going on in Bangkok. Since the newly elected government took charge late last year there have been nothing but problems. From the defunct Thai Rak Thai party resurfacing as the Peoples Power Party ( PPP ) to take control of the government to the charges of corruption again being leveled by the Peoples Alliance for Democracy ( PAD ) Thai political woes continue to plague the country.

The takeover of government buildings and the clash last month between DAAD and PAD coupled with his own legal problems was enough to see Prime Minister Samak Sundaravej finally step down but the election of Thaksin Shinawtra’s brother in law, Somchai Wongsawat, as Prime Minister has just fueled the fire more as he is also seen as ousted Prime Minister Thaksin’s puppet.

Now with the recent clash between PAD protesters and the police resulting in bloodshed and death and renewed calls for the newest Prime Minister to step down there doesn’t seem to be an end in sight. At this point it seems no one is in control and with every side holding their ground there won’t be a solution any time soon.

Lastly we have the Thailand and Cambodian border dispute which arose again earlier this year due to ownership rights to Preah Vihear temple. Preah Vihear temple was awarded world heritage status earlier this year by the United Nations cultural body UNESCO. The temple has been disputed land between the two countries since 1962 when fighting broke out. Eventually the matter was settled at the International Court of Justice in The Hague and ownership was awarded to Cambodia.

Time passed uneventfully until World Heritage Status was being looked at for the site which again sparked bitter ownership claims from Thailand. In July 1000 soldiers from both countries took up positions around the 900 year old temple with neither side backing down. There have been a few small skirmishes leaving a handful of men on both sides injured. Both sides declaring they were well within their border when fighting broke out.

There have been meetings between Thai foreign ministers and the Prime Minister of Cambodia but they have all but broken down. Today Cambodian Prime Minister warned that Thai troops should immediately withdraw from the border area or risk large scale armed conflict.

With everything else going on a war with Cambodia could be the knockout punch.

Tourists from the west don’t have the money to travel or are afraid of even more economic troubles while tourists from the East such as China and Korea are backing off plans to travel to the kingdom due to the political turmoil.

Any one of this troubles could spell disaster for the future outlook of Thailand but the three together could make for a perfect storm and a repeat of the 1997 economic crash. Let’s hope Thailand can get it’s political act together soon and find a peaceful solution for it’s border disputes. The economy, while bad, will eventually turn around.