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Turmoil in Thailand
China Won't Play Rice with Thailand's Shinawatra

In a huge blow to the embattled government of Thailand’s prime minister Yingluck Shinawatra, China abandoned a plan to buy a massive amount of rice from Thai farmers today.

Under a costly plan set up by Yingluck shortly after she entered office in 2011, the Thai government pledged to buy rice from farmers at an above-market price. The plan is backfiring. Rice is piling up in warehouses, unsold, and the government is running out of money to pay what it owes to the farmers, who are growing increasingly irritated. The deal with China, had it gone through, could have been a lifesaver for Yingluck, and the fact that China pulled out is being seen as a message of support for the opposition “yellow shirts” who are trying to bring her down.

China had planned to buy 1.2 million tons of Thai rice, about 14 percent of the country’s annual exports, the FT reports. But Thailand’s national anti-corruption agency is involved in an ongoing investigation into Yingluck’s rice-buying scheme, and Beijing got cold feet. A Thai bank also announced that it would no longer offer new funding to help the government pay the farmers. The farmers are starting to get angry. According to the Bangkok Post, which calls the whole thing a “rotten harvest,” it has put Yingluck’s government more than $21 billion in debt.

The pressure is building on Yingluck’s embattled government. Widespread protests in Bangkok led by the opposition party are still ongoing, despite hasty elections held over the weekend. Yingluck can expect to win those elections based on strong support for her and her brother Thaksin in north and northeast Thailand. Rural farmers in this part of Thailand are the Shinawatras’ most reliable supporters. Part of that support results from the generous rice-buying scheme. But if Yingluck’s government can’t pay the farmers as it promised, that support may collapse.

Even if it doesn’t, Yingluck’s problems won’t end with an election victory. The rice-buying scheme has very nearly bankrupted the government, so she has a serious financial problem on her hands. The opposition is challenging the scheme—and the election—in court. Thailand’s judiciary has helped the opposition bring down Shinawatra governments in the past. Adding to the turmoil is the failing health of the beloved King and the uncertainty swirling around his successor.

There is a risk that Thailand’s political troubles could turn into an international geopolitical competition, with China and the United States supporting different sides. Indeed, just as China was abandoning Yingluck and her costly rice scheme, the United States stepped up its support of her government. “We certainly do not want to see a coup,” said a State Department spokeswoman. “We remain concerned that political tensions in Thailand are posing challenges to the democratic institutions and processes of Thailand.”

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  • Andrew Allison

    I’m shocked, SHOCKED to learn that China is supporting Thailand’s proletariat rather than the Bangkok elite trying to take over the country.

  • michaelj68

    Thailand another example validating Thatcher’s quote:”The problem with socialism is that you eventually run out of other people’s money”.

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