THE BLOG

The Oracle of Thailand

BANGKOK--Imagine for a minute that Hillary Clinton is elected president of the United States in 2016. Imagine that within days of being sworn into office, there are widespread rumors that her husband, former President Bill Clinton, is actually running the government. Imagine friends of the First Couple being quoted at dinner parties as saying, "Hillary cuts the ribbons, but Bill calls the shots." Imagine that one cabinet minister is so brazen with this information that he goes on record as saying, "If we've got any problem, we give Bill a call."

It sounds like a crazy way to lead a country. Well, not to most people here in Thailand, America's oldest ally in Asia. Remote leadership is currently its preferred form of government. As journalist Thomas Fuller has written, "For the past year and a half, by the party's own admission, the most important political decisions in this country of 65 million have been made from abroad, by a former prime minister who has been in self-imposed exile since 2008 to escape corruption charges."

Here, it's not a husband and wife story -- but rather, brother and sister. Officially, Yingluck Shinawatra -- who very publicly charmed President Barack Obama during an official visit here last fall -- is the prime minister. But it is her brother, exiled former prime minister and Thai billionaire Thaksin Shinawatra, who calls the shots via Skype and cell phone from his homes in Dubai and London. Part of the reason the power-sharing works is that the same brilliant advisor is close to both.

His name is Pansak Vinyaratn. Dubbed "Thaksin's Oracle" in U.S. diplomatic dispatches revealed by the website "Wikileaks," Pansak served as chief political advisor to Thaksin and serves as chief policy advisor to Yingluck. He has been at the heart of a strategy that has transformed rural East Thailand into an economic powerhouse -- a transformation that U.S. businesses, almost entirely absent here, would do well to learn about.

When I speak with him in his office, he's quick to explain the secret of Thaksin's success.

"A famous Cornell professor once lived in Northeast Thailand and came up with a term to describe the people there: cosmopolitan villagers," Pansak tells me. "When the Thai party first started 11 years or so with Thaksin, we researched the northeast and found a net positive income -- not from rice, but from other activities. Thai people in the northeast have more passports than Bangkok Chinese. They work in Gulf States and are cosmopolitan. We found that info and no one else cared."

When Thaksin first took office in 2001, northeast Thailand was considered a remote and arrested part of the country, with half of the population below the poverty line.

The great innovation of Thaksin and Pansak (along with U.S.-trained academic Somkid Jatusripitak) was "the increased role of government in the allocation of credit," as Chulalongkorn University Professor Pasuk Phongpaichit writes. But not just anywhere: "Thaksinomics" focused the government's attention on the poor and rural areas of Thailand. Arguing that "a country is a company and a company is a country," the self-described "CEO Prime Minister" approached the national economy like a business, looking for ways, as Pasuk explains, to "mobilize any dormant or unexploited assets including unused natural resources and neglected human resources."

Tapping unused reserves of credit in the state banking system, the team created one rural credit fund after another. To lower household expenses, they offered low-cost housing and health insurance; provided subsidized credit for buying taxis and provided loans for children to get to school.

As a result, the northeast corridor is one of the fastest-growing economies in the world. An investment banker based in the area tells me incredulously, "I went to the northeast and stayed at the Pullman Hotel and out front there were a bunch of Lamborghinis -- all owned by locals there."

"The northeast keeps developing," says Pansak. "They have a more independent structure and exports are going straight to airfields. And VAT (tax) collection there has gone up by double digits. It's a huge success story."

"But," he adds, "The Thai elite refuse to admit this success."

Indeed, while becoming the first Prime Minister in history to focus on the needs of the poor, Thaksin alienated the Bangkok elite, the judiciary and the military -- who ousted him in 2006 in a bloodless coup. It sparked four years of increasingly hostile confrontations between supporters ("red shirts") and critics ("yellow shirts") that saw four changes of government and street protests that left nearly 100 dead. Self-exiled to Dubai, Thaksin was sentenced in absentia for graft. Five years later, his party reformed with Yingluck at the top of the ticket. With the formerly poor of the rural northeast making up the country's largest voting bloc, the party rolled to victory.

Now that the poor and rural populations have awakened, there may be no turning back. "Thaksin let the genie out of the bottle," a senior Western official tells me. "The northeast is tapped in and now awakened."

The only ones seemingly not tapped in to that success is the United States.

"The U.S. Chamber here is about 700 members, but most of them aren't U.S. companies," said a retired navy man who works on local development projects. "The Thais wanted to buy from a U.S. firm and we set up a call. They called back with their lawyer and I told them that this isn't how you do business here -- you need to come here and talk, not start by talking about legal things. The Thais have the money and will spend it now. Americans aren't ready to compete here."

One Western reporter thinks America should focus on a different kind of export. "Obama should hire Pansak to help create jobs in America," he says. "He's the brain trust of the government. A lot of Thaksin's successful policies came from him. We could use an oracle in Washington."

Maybe he can take a page from his old boss and Skype his ideas to the White House.

Stanley Weiss is founding chairman of Business Executives for National Security (a non-partisan organization of senior executives who contribute their expertise in the best practices of business to strengthening national security). This article is a personal comment.

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