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06BANGKOK6002 CENTRAL BANK GOVERNOR EMERGES AS TOP ECONOMIC ADVISER TO CDR, PUSHES ACTIVIST AGENDA FOR SOON TO BE APPOINTED GOVERNMENT

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“80128”,”9/29/2006 10:03″,”06BANGKOK6002″,

 

“Embassy Bangkok”,”CONFIDENTIAL”,””,”VZCZCXRO4557

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SIPDIS

 

SIPDIS

 

DEPARTMENT PASS USTR FOR BWEISEL AND JJENSEN

 

E.O. 12958: DECL: 09/29/2016

TAGS: ECON, PGOV, PINS, PHUM, MOPS, ASEC, TH

SUBJECT: CENTRAL BANK GOVERNOR EMERGES AS TOP ECONOMIC

ADVISER TO CDR, PUSHES ACTIVIST AGENDA FOR SOON TO BE

APPOINTED GOVERNMENT

 

Classified By: Ambassador Ralph Boyce, Reason 1.4 (b) (d)

 

1. (C) Summary: In a September 28 meeting with the

Ambassador, Bank of Thailand Governor Pridiyathorn Devakula

stated his intention to be the prime economic adviser to the

soon to be appointed interim Prime Minister (reportedly,

General Surayud Chulanond). He confirmed the CDR\’s

commitment to stick to the announced timetable for a return

to a democratically elected government. The BOT Governor

affirmed the military\’s plans to remain politically active

during the interim governing period, arguing that the

situation in the Muslim south and the possibility of a

Thaksin-inspired countercoup warrant this. In contrast to

some, he advocates an activist agenda for the interim

government, with the priorities being reform of the

government\’s rice export program; mass transit; an

anti-corruption drive; and energy efficiency.

 

2. Pridiyathorn is joined at the hip with the CDR; in

speaking of the coup leaders, he repeatedly used the word

\”we.\” For the next year or so, Pridiyathorn looks to be

Thailand\’s economic supremo and effective Number Two in the

government. The BOT Governor\’s activist agenda is markedly

different from the views of others who have been appointed to

the CDR\’s economic advisory council, who counsel a minimalist

approach that would allow a future democratically elected

government maximum flexibility in choosing its priorities.

End Summary.

 

3. (C) On September 28 the Ambassador (accompanied by

Embassy Economic Counselor) met with Pridiyathorn Devakula,

Governor of the Bank of Thailand. Pridiyathorn has emerged

as the principal economic adviser to the military government

(CDR) and has been named as the chair of an economic advisory

panel appointed by the CDR. Thai media earlier had tipped

the BOT Governor as a leading candidate for appointment by

the CDR as Prime Minister.

 

\”I Expected A Coup\”

 

3. (C) Pridiyathorn said that he had expected a coup: \”The

situation had developed to an advanced stage, and I along

with everyone else was relieved when it (the coup) happened.\”

Even his U.S.-educated son, he said, was relieved (\”after we

had a talk\”) that the military had stepped in.

 

4. (C) The Ambassador said that it was important that a

Prime Minister be appointed as soon as possible (\”preferably

now\”), and certainly no later than the within two weeks

timeframe pledged by the CDR. Pridiyathorn replied that the

drafting of the new interim constitution, primarily by

prominent legal expert Meechai Ruchupan, is just about

complete. This document will be sent to the King for

signature \”maybe on Saturday (September 30), and then we will

appoint a PM.\”

 

\”I Won\’t Be PM\”, (But Surayud Will Be)

 

5. (C) Pridiyathorn told the Ambassador, \”I won\’t be the

PM.\” He added, however, \”I\’ll be part of the interim

government.\” Pridiyathorn admitted that he had spoken with

the military leaders before the coup: \”They came to me and

said, \’You\’re neutral, we want your help.\’ I don\’t belong to

any political party; I am working for the country.\” He

predicted that Privy Councilor Surayut Chulanond (a retired

Army General) would be appointed PM on Sunday (October 1).

The Ambassador noted the likely perception and skepticism of

the international community in reaction to the appointment by

the coup leaders of a retired army general as the new

civilian PM. He also stressed the importance of adhering to

the 180-day deadline for the drafting of a new constitution

and early elections. Pridiyathorn agreed, and stated that

the CDR was committed to this timetable.

 

\”A Fighter, Not a Thinker\”

 

6. (C) The Ambassador noted that everyone he had spoken

with regards (coup leader) General Sonthi as a good, honest,

straightforward person. Pridiyathorn replied, \”Sonthi is a

fighter, not a thinker. He sees this as a mission to be

accomplished, and then he returns to the barracks.\” The

Ambassador said that he had spoken with former Thai Prime

 

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Minister Anand Panyarachun about his experiences when he was

appointed as a civilian PM by a military government in the

early 1990\’s: Anand told the Ambassador that the two biggest

mistakes that were made during that period were 1) the

military appointed Anand but remained in place, and 2) the

military, and not Anand, appointed the national assembly.

Both of these mistakes, said the Ambassador, now are being

repeated by the CDR. Pridiyathorn replied that the

appointment of the national assembly will be a joint effort

between the CDR and the new PM. As for the military

remaining in place, Pridiyathorn said that the CDR \”doesn\’t

trust the situation; we are still worried about a

countercoup.\” The Ambassador suggested that the new PM could

improve Thailand\’s image by lifting martial law; Pridiyathorn

replied that \”Our intelligence shows that the TRT is trying

to organize resistance.\”

 

7. (C) In response to a question from the Ambassador,

Pridiyathorn said that the best way to portray the new PM to

Washington is that his background and relationship with the

CDR will hasten the military\’s return to the barracks. \”This

departure from politics,\” he said, \”is everyone\’s intention.\”

 

Priorities of the Interim Government

 

8. (C) Pridiyathorn said that he had discussed the

possibility of being appointed as PM, but priorities argued

against this action: \”The economy is easy — we can grow GDP

at 4-5 percent without too much trouble. The main challenges

to the interim government will be 1) the risk of a

pro-Thaksin countercoup; and 2) the security situation in the

Muslim south. I spoke with someone higher than the CDR

(Embassy Comment: Privy Councilor Prem?) and told him that

it is not right to put an economist at the top. I can be

Number Two.\” Pridiyathorn added that his exact title in the

interim government has not been finalized. He will not

remain as BOT Governor, but will be replaced by BOT Deputy

Governor Tarisa Watanagase. After serving with the interim

government for one year, Pridiyathorn said that he planned to

retire.

 

9. (C) The BOT Governor outlined a fairly activist agenda

for the incoming interim government. He rated four issues as

priorities: reform of the rice export program; mass transit;

corruption; and energy efficiency.

 

Reform of the Rice Export Program

 

10. (C) Pridiyathorn charged that the previous government\’s

rice export program was rife with corruption, and had been

used to buy rural votes. The pre-TRT government had a policy

of taking delivery of farmers\’ rice and paying them 80

percent of the anticipated market value immediately, with the

remainder paid when the rice was sold. Under Thaksin\’s TRT

government, the initial payment price was increased, first to

90 percent in 2002, then to 100 percent in 2003, then to 120

percent in 2004, and 130 percent in 2005. According to

Pridiyathorn, the payments above 100 percent were used to pay

off TRT campaign workers. The BOT Governor said that the

highly lucrative terms offered by the government had diverted

rice away from export-oriented private buyers, causing Thai

rice exports to fall by 25 percent in 2005. Vietnam, he

said, now exports almost as much rice as Thailand. The

policy had also created a huge (nine million tons) stockpile

of rice in government storage facilities. \”Now,\” said

Pridiyathorn, \”we have to get rid of it before the quality

deteriorates, by selling it at a loss.\” (Comment: While we

cannot vouch for the accuracy of Pridiyathorn\’s specific

charges, farm credit experts here acknowledge serious

problems and lack of transparency in the government\’s rice

credit payments program. End Comment.)

 

Mass Transit

 

11. (C) Pridiyathorn thinks the interim government must

commit to large scale mass transit projects. He acknowledged

that the Democrat Party (which controls the Bangkok city

government) is opposed, but maintained that \”we must convince

the public of the need to do this.\”

 

Corruption

 

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12. (C) The BOT Governor said that the interim government

will vigorously investigate and prosecute corruption in

government dealings, particularly procurements.

 

Energy Efficiency

 

13. (C) Pridiyathorn said that although he had not had a

chance to talk with PM-to-be Surayut about the subject, he

thinks \”he (Sirayud) will agree with me that we have to

address energy efficiency.\” Noting that Thailand ranks by

some measures as the most energy inefficient country in the

world, Pridiyathorn vowed to reduce Thailand\’s excessive

dependence on trucks and move to multi-modal transport

involving trains and containers. While admitting that

conversion to a less truck-intensive transport system is a

long term project, Pridiyathorn said that a good start could

be made in the next 12 months by building container yards

next to railroads: \”By starting this and other big projects

now, we can dictate the future course of Thailand\’s

development.\”

 

Comment

 

14. (C) Pridiyathorn obviously is joined at the hip with the

CDR; in speaking of the coup leaders and their plans, he

repeatedly used the word \”we.\” For the next year or so,

Pridiyathorn looks to be Thailand\’s economic supremo. The

BOT Governor\’s activist agenda for the interim government is

markedly different from the views of other economic advisory

council appointees, who counsel a minimalist approach that

would allow a future democratically elected government

maximum flexibility in choosing its priorities.

 

BOYCE

Written by thaicables

July 13, 2011 at 6:16 am

Posted in Confidential, Coup 2006

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