Almost one year after the latest military coup and a few days after the lifting of martial law, the new Constitution draft confirms fears of democratic regression in Thailand. In the current text, the military-appointed Constitutional Drafting Committee reduces the power of democratically elected institutions, namely the Senate, Parliament and future elected governments by excluding the possibility of a strong single party and leader – thereby targeting any former PM Thaksin-related government – to dominate the political system. It also provides for a mandatory deputy PM from the opposition, offers the military and other non-elected players the power to block government initiatives and even rule the country if backed by 2/3 of Parliament. The final text is due to be amended by July before the junta will (probably) approve it in August. Legislative elections are expected to follow possibly in the spring of 2016 as the junta is keen on normalising relations with foreign partners.

Impact on country risk

This umpteenth revision of the Constitution meets the junta’s pro-royal goal of restricting the Senate’s – ex-PM Yingluck Shinawatra wanted it fully elected – elected proportion and government powers, and avoiding populist governments as under Shinawatra family. If endorsed, that would imply less democracy, favour weak coalition governments and potentially constrain passing new laws. In consequence, the junta would eventually fail in reconciling a polarised Thaï society, paving the way to renewed political instability. Under the draft new rules, post-election violent protests and a new coup are real risks if a party wins an absolute majority at the polls. Though it is unclear whether a public referendum will be held to endorse the new Constitution, public criticism emanating from the majority Shinawatra side could convince interim PM General Prayuth Chan-ocha to abandon the idea. The prospect of enduring political instability is not likely to restore investor confidence which would continue to harm Thailand’s future political risk outlook.

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