A Poor Excuse?

By JIM ANDREWS JUNE, 2010 - VOLUME 18 NO.6

Anti-government slogans fail to resonate in a typical northern Thai village.

International media coverage of last month’s Bangkok bloodshed often reduced the crisis to a struggle between Thailand’s “rural poor” and the country’s “elite.”

The privileged upper tenth of Thailand’s population of 62 million, who own more than 30 percent of the country’s wealth, are easy enough to identify because of the high-profile emblems of their materialistic clout— the glittering shopping malls, for instance, that were looted and set on fire by rampaging Redshirts.

Portraits of ousted premier thaksin Shinawatra are a common sight in homes in the Redshirt heartland.

But who are the “rural poor?” And how is poverty in Thailand measured?

In regional comparisons based on per capita disposable income, Thailand is a relatively wealthy country, ahead of Indonesia, Vietnam, Cambodia, Laos—and far richer, of course, than Burma.

When the gap between rich and poor is measured, however, Thailand’s record is not so good.

According to a United Nations study, “poverty in Thailand is not so much a problem of an increasing number of families being unable to provide for their most basic needs, as it is a problem of the huge difference in income between the upper 30 percent and the rest of the population.”

This privileged 30 percent enjoys more than 80 percent of the country’s wealth—an undeniable injustice that is widely blamed for the anger that ignited the Redshirts, and yet largely the result of dynamic economic forces that even their renegade hero, ousted Prime Minister Thaksin Shinawatra, was unable to control.

For many outsiders, Thailand is a country of paradoxes. One of these is the huge popularity commanded by Thaksin, who is accused by his enemies of bankrolling the Redshirts in a bid to bring down the current government and pave the way for his unchallenged return from exile and the recovery of his seized assets.

Thaksin, his family and their business cronies were the country’s most famous representatives of the wealthy “elite” so hated by the very people who now declared themselves willing to die for the Redshirt cause.

“Ah, yes, he’s wealthy,” I was told by a northern Thailand villager. “But Thaksin was really one of us. He gave us hope, and he gave us money.”

So why, Thaksin’s critics ask, was hope so absent after five years of Thaksin’s premiership, from 2001 until his downfall in 2006? Why were so many villages worse off? And what happened to the money that he undeniably pumped into rural economies?

By the time Thaksin took office after a general election in 2001, the proportion of Thailand’s population classed as “poor” had dropped in 40 years from 57 percent to around 12 percent. A determined effort to push the national poverty level below 10 percent was one of the priorities of the 1997 Constitution.

Another main aim of the Constitution, and adopted by the present government headed by Abhisit Vejjajiva, was to work for greater decentralization, shifting more responsibility for local government in rural regions away from Bangkok and its cumbersome bureaucracy.

Until the late 1990s, the foundations of Thailand’s system of local government hadn’t changed greatly in 100 years. There was a semblance of democracy, with most essential services provided by elected district councils. But the councils are ultimately answerable to provincial authorities ruled by governors nominated by the central government—an arrangement that critics say is prone to cronyism and corruption.

In 1999, the government enacted a Decentralization Plan and Procedures Act intended to give local councils greater financial autonomy by increasing their share of the national budget to 35 percent by the end of 2006. Thaksin’s government failed dismally to meet that target.

Instead, Thaksin launched his famous Village and Urban Revolving Fund, handing out 1 million baht (US $30,000) to each of Thailand’s 74,000 villages and 4,500 towns, with the ostensible purpose of promoting business ideas that would generate cash and jobs.

Thaksin’s scheme was immensely popular and solidified his rural support base. In most cases, the money was distributed equitably on a revolving credit basis, recycling repaid loans.

The scheme lacked suitable supervision, however, and frequently led to bitter feuding over how best to distribute and invest the money.

In one typical northern Thai village, an ambitious project to create a fish-breeding center was literally washed away in monsoon season flooding because of bad planning. Today, the village is again a community of rice farmers, dependent on market forces beyond their control and with nothing at all to show for the investment of Thaksin’s cash injection.

A 2004 study found that less than half the village fund’s money was being spent on new, income-generating projects.

More than 3 percent was being used by rural families to pay school bills. An unknown number of borrowers were suspected of diverting their loans to put down payments on new vehicles, plunging them into years of hire-purchase debt—more than 16 percent of the villagers questioned for the survey said they were paying up to 40 percent annual interest to loan sharks.

Yet the consequences of a badly-conceived and populist policy such as the Village and Urban Revolving Fund go largely unrecognized in villages that are staunch Redshirt territory and where Thaksin remains a local hero.

Despite his enormous wealth, he commands wide sympathy in rural communities that instinctively root for the underdog.

A local elder and patron of two village temples told me: “Thaksin was treated unfairly. The government should not have taken his money.”

Ironically, this elderly man and his wife had benefited very little from Thaksin’s rule—yet were now 1,000 baht ($30) a month better off because of the pension scheme launched by Abhisit’s government. Their grandchildren were assured of at least 11 years of free education because of new social policies instituted by Abhisit.

Walking through their tidy village, I looked for signs of visible poverty—and found none. A new playground for the local children had been laid out since my last visit, two handsome new houses had been built, the local policeman had finished work on the pretty garden of his ranch-style home and a new car appeared to be parked in his double garage.

That night a wake was held before the funeral the following day of a 74-year-old retired rice farmer. The funeral was a three-day affair that cost the family more than 100,000 baht ($3,000), much of the bill covered by a house-to-house collection that occurs whenever any villager dies in this self-help community.

Scores of local people defied the 9 p.m. curfew and gathered at the family farmhouse, chatting far into the night over glasses of beer and home-distilled rice whiskey.

“So what did they all talk about?” I asked one mourner the next day. “The events in Bangkok, the political crisis?”

“I didn’t hear a word about it,” was the reply. “It was just the usual gossip. But what did you expect? We’ve got other things to worry about—the heat wave has destroyed several of my fruit trees, there’s a water shortage and it will soon be time to prepare the rice paddies.

“Nobody from this village joined the Bangkok rally, anyway,” she said. “Bangkok is such a long way away.”