The military-led National Council for Peace and Order (NCPO) is slowly implementing political reforms and strengthening its grip on power as it is maintaining strict controls on opposition and allies, on civil liberties, censoring free press and stifling any critical opinion of the NCPO. The transitional constitution, approved by the king and granting full power to the NCPO, is expected to designate General Prayuth Chan-ocha as interim PM in charge of drafting a new constitution before legislative elections are held possibly around end 2015. Meanwhile, hurdles are multiplying in front of Thaksin family, supporters and system. Among other things, the parliament would have a stronger right to vet economic policies judged populist, parties would be required to provide assessment of economic plans made during electoral campaigns (targeting the rice pledging scheme), and penalties would target politicians allegedly acting as puppets of other leaders (a frequent criticism of former PM Yingluck Shinawatra seen as her brother’s proxy).

Impact on country risk

Under martial law, the army is consolidating power and could be tempted to take a bigger role in Thailand’s political system when power is handed over to a civilian government. The NCPO’s key reform goals are geared at avoiding that Thaksin and its allies ever return to power, and at limiting future powers from an elected government and the Parliament. The military should be able to ensure stability in the short term. However, absence of addressing roots of Thai society and political polarisation, and absence of legitimacy of a new constitution should only fuel more frequent instability from Thaksin supporters in the medium to long term, with lasting negative economic consequences notably on tourism and investments.

Analyst: Raphaël Cecchi, r.cecchi@credendogroup.com