THE BLOG
06/03/2014 04:59 pm ET | Updated Aug 03, 2014

My Heart Breaks for Thailand

As somebody who has a close kinship with the people and business leaders of Thailand, I'm heartbroken by the recent military coup. Over the past couple of years, I have spent a great deal of time in Bangkok on speaking tours and working with the emerging professional class.

To be clear the coup represents a big step backwards. The title from a recent article in Time Magazine gets it right when it says that "Thailand Is Doing a Great Job of Screwing Up Its Potential."

I agree.

I take no sides in the current political debate that led up to the military coup. Since 1932, when Thailand moved from an absolute to a constitutional monarch, there have been twelve military coups and none of them have been pretty. For a country that is the second largest economy in south East Asia, the inability to get its political house in order represents a red flag in the first magnitude.

The larger issue remains that Thailand's political leadership, regardless of its shirt color, needs to work for the larger national interest as opposed to one's narrow political constituency. Why? In a country where investor confidence can be undermined overnight through a military coup, it is the easiest way to sideline Thailand's long-term hopes for growth especially when neighboring countries are moving at a faster pace.

While there might have been some initial hope that the military would soon return the keys of authority to civilian hands, it does not appear that this will happen anytime soon. The current Army Chief of Staff may say that the current elected officials are still in charge but nobody is buying that nonsense. Just recently, the military banned all protests against the coup.

Like in the past, the new military junta not only threw out the current caretaker government, but it also suspended the current constitution, closed a number of television stations, clamped down on the internet, established dusk to dawn curfews, and jailed the political elites. However, the section regarding the constitutional monarch remains in force.

Irrespective of Thailand's political turmoil over the last year, the job of a modern military is to remain politically neutral and organizationally subservient to the civilian leadership. There is no getting around that fact. That allows you to sit at the geopolitical adult table. When the military strays from that role, they become part of the problem -- not part of the solution.

For over the past year, Thailand has been racked by a political impasse between two feuding factions -- best known by the colors of their shirts. The resentments reflect the rural and urban split within Thailand. These divisions are real but both sides need to listen to each other.

Back in 2011, Yingluck Shinawatra and the Pheu Thai Party who won in a substantial landslide and was allied with those who wore red shirts with more of a populist approach. Her brother served as a Prime Minister and had been forced out of Thailand after an earlier military coup in 2006. On the other side of the fence, Suthep Thaugsuban created the People's Democratic Reform Committee to oppose Shinawatra and they can be found wearing the yellow shirts. They are a collection of urban elites and those who -- in large part -- would like to see a greater role for the Thai royal family in national affairs.

Yet the real problem here is that whole world is watching. Instead of seeing a nation that was poised to move forward, they see a failing political system where an accommodation could not be constructed. They also see a military that unwisely chose to disband a democratically elected government, regardless of its political stripe.

Thailand is the classic example of where the business community lives in the 21st century but the political class remains stuck in the 20th. Long ago, Thailand was seen as an exotic locale where Yul Brenner portrayed its wise and sagacious leader, a forbearer of the current monarch. During the Vietnam War, Thailand was a weekend spot for American soldiers on a 72-hour pass. However, today we see a country that is the South East Asian headquarters and production centers for a number of global brands. Downtown Bangkok has transformed itself over the last generation. However, Thailand is being hampered by a political class that cannot seem to get its act together.

Worse, Thailand's military have taken a 19th century approach to resolving the political impasse. There was a time when faraway military coups barely caused a ripple when the tanks hit the streets. Those days are long gone. Investors in New York, London or even Beijing will look to Thailand as an opportunity lost and will take their money elsewhere. Investment slated for expansion will languish on the sidelines until the dust settles. I don't think that the military junta has thought through the economic ramifications that result in a military takeover.

In a recent article in Nate Silver's 538 blog, he notes that it takes roughly three years for the after-effects of a military coup to cycle through an economy. So in an economy that is already faltering due to political dithering, the net result of a military coup will move the economy from stagnation to recession.

While heavy industrial investments cannot be packed into flatbed cars and moved overnight, Thailand's tourist industry, which was sagging as the political impasse worsened, will only bottom out now that the military is running things. Having spent time in Central America during a political coup, I can tell you that nothing puts the brakes on a vacation when a group of generals announce that they are in charge.

The great story of the 20th century was about how democratic movements swept the globe. They usually emerged after wars, when autocratic regimes imploded, or when social media plugged a nation to the outside world. Former enemies who once waged war against each other in places like Iwo Jima or Okinawa are now close political and economic allies. When the Eastern bloc countries emerged from the depths of the Cold War after the collapse of the Soviet Union, countries like Germany were united and families that had been separated for generations were finally reunited.

However democracy means more than just having elections. It's all about creating democratic institutions that allow different factions to find consensus or accommodation. It means that those in power need to listen to those out of power. It also means that the political party on the "outs" needs to understand their current situation and organize for the next election, not nullify the will of the people.

Even during Watergate, the worst constitutional crisis in the United States since the Civil War, there were no tanks on the streets. Nobody was arrested or detained. Nobody was tortured or killed. Life moved on.

It's clear that political elements that manage Thailand clearly dropped the ball. The decision to order a military coup has only made things worse. In these situations, it will be unclear for many months to understand who will be the winner in all of this.

However, we already know the loser -- it's the people and the economic future of Thailand.