Last week, Thailand and the U.S. held another somewhat scaled-down version of the annual Cobra Gold military exercises. Although the exercises proceeded smoothly, there were no signs of a change in temperature in the frosty Washington–Bangkok relationship. This dynamic doesn’t look good for the United States, as Thailand continues to move into Beijing’s orbit. The latest: China’s Asian Infrastructure Investment Bank (AIIB) could take a dominant position in financing major Thai projects. East By Southeast reports:
Since seizing power, Thailand’s military generals have instead sought to deepen political and economic ties to China, which is now the country’s largest trading partner. “It has been analyzed that any related projects that could benefit the supply chain network and trading routes between the ASEAN region and China would receive great attention from the AIIB,” assesses Nithi Kaveevivitchai.
The Sino-Thai railway link, which aims to transform Bangkok into the hub of China’s ambitious Pan-Asia Railway Network, appears to be a particularly likely candidate for an AIIB infrastructure loan. After months of bumpy negotiations – during which Beijing insisted on downgrading the railway from high-speed to medium-speed – the project saw a breakthrough in January 2016 when China agreed to Thailand’s demand that it slash its interest rate from 2.5% to 2%.
As always, these investments are complicated and the loans may never even be offered. But, for now, it’s clear that Thailand sees Beijing as a plausible alternative to the United States and its allies—particularly Japan, which has been China’s big financial rival in the region. It’s looking more and more likely that a China-allied Thailand will be yet another problem President Obama leaves behind for his successor.