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In any event, has Thaksin really disappeared from the political scene? Though he handed over the reins of government for now to police general Chidchai Wannasathit, a close associate, Thaksin has said that he'll remain a Member of Parliament and the leader of TRT. Chidchai, who is now interim Prime Minister, is considered little more than a caretaker, and top TRT leaders are already jockeying for the job. But given his dominance over the party he founded, it's not hard to envision Thaksin as the power behind any new leader, or even a new Prime Minister in a future TRT-led government. "It's quite clear the Prime Minister has decided to stay," says Panitan Watanayagorn, a political analyst at the Institute of Security and International Studies at Chulalongkorn University. "We are heading toward another confrontation."
One crisis has just passed and another is possibly looming. Yet Thailand's economy has hardly blinked. The Thai stock market never dipped more than 4.5% from the start of the most intense protests in February, and investors greeted Thaksin's exit with a strong rally, pushing the market up to its highest level in more than two years. Usara Wilaipich, senior economist for Standard Chartered Bank in Bangkok, points out that foreign investors logged a net buy of $55 million on the Thai stock exchange on April 5. "This reflects that foreign investors continue to be confident in Thailand's fundamentals," she says.
Thailand's economy expanded at an average of 5% per year during Thaksin's time. Economists debate just how much credit he deserves for Thailand's decisive recovery from the Asian financial crisis of the late 1990s, but the country's strong economic performance was the main reason Thaksin in 2005 became the first Thai Prime Minister ever elected to a second term. His Keynesian agenda, dubbed "Thaksinomics," poured vast amounts of money into pump-priming infrastructure programs, defended local big business from bankruptcy, and engineered cheap national health care and discounted loans for farmers and small businesses. Those policies helped stimulate domestic demand and earned him staunch support in rural areas, but proved a drain on the national budget and inadvertently led many Thais into debt. "A lot of farmers who were lent money thought they were basically not going to have to pay it back," says Sanyalak Manibhandu, manager of institutional research at Kim Eng Securities, Thailand's largest stockbroker.
In the immediate future, whoever runs the country is likely to continue a version of Thaksinomics, though perhaps with less emphasis on privatization, after a senior court last month blocked the planned sale of Thailand's biggest electricity generator. Exports will remain the key pillar of Thai growth, but lengthy political paralysis could endanger free-trade pacts, including negotiations with the U.S. that have been put on hold by the current crisis.
THE SOUTHERN FRONT
If Thaksin's economic legacy is a mixed success, his heavy-handed policy in Thailand's troubled south was a disaster. When Thaksin took over in 2001, violence in the south was on the wane, as Muslim-separatist groups who had been fighting Bangkok for decades were losing support among the local populace. But Thaksin took a hard line from the start with the south, avoiding compromise while seeking to wipe out the separatistsa policy that has helped turn a low-level dispute into an active and bloody rebellion. Assaults on policemen and Buddhist civilians began to escalate, culminating in a January 2004 attack by more than 100 Muslim youths on a Thai army camp. Thaksin responded by declaring martial law and flooding the region with security forces.