In an attempt to end the deadlock between the Red-Shirts and the government, Prime Minister Abhisit Vejjajiva appears to have conceded some ground to the Reds with his offer to dissolve the House in September, as long as there was an adherence to his five-point plan or ‘pathway to elections’, saying “I think that if the reconciliation process (is accepted by all sides) and the situation returns to normal, the election will be held on November 14, a goal that the government is ready to achieve.”

    These five points are: firstly, respect for the monarchy and not attempting to involve the institution in politics; secondly, reforms to solve socio-economic injustices; thirdly, free but responsible media to be overseen by an independent watchdog agency; fourthly, independent investigations of violence connected with the protests that caused 27 deaths and almost 1,000 injuries, including those at Silom and Don Muang; finally, an amendment of the constitution to make it fairer to all political parties. Some political commentators regarded these proposals as too far reaching and somewhat impractical in such a short time, considering the Red-Shirt’s intransigence toward the Abhisit government and the complexity of the Thai political scenario. Bao Erwen, a senior Chinese political observer said “ the root of the (five –year) long crisis is unlikely to be eradicated, that is the conflict of interest will not disappear in a short time between the low class on one side, and middle and upper classes on the other,” Others, like Bangkok Post’s Atiya Achakulwisut consider “it embraces a good spirit and marks a step in the right direction.”

    The premier realistically stated “Of course, not all parties will be satisfied with this proposal. The Red Shirts want a dissolution in 15 or 30 days, but this cannot be done. Other groups who are against the protests and support the government may not agree to cut this government short by one year, but I want you to have confidence in the process. I am confident that this offer will protect democracy.”

    Certainly some form of resolution must occur. When the Red-Shirt protests in Bangkok started in mid-March, the economy (SE Asia’s 2nd largest at US$264 billion) was recovering well from a brief recession and the government confidently expected GDP to rise 4.5 percent this year. Now, eight weeks later, 63,000 jobs, mainly in the hotel and tourist industries have lost, and while the tourism sector constitutes only 6% of the economy, it employs 15% of the workforce.  Arrivals at Suvarnabhumi Airport dropped by a third in April, which if prolonged is likely to reduce the official target of 15.5 million to 14.5 million this year.

    Nandor von der Luehe, Chairman of the Joint Foreign Chambers of Commerce in Thailand, states “The Thais are throwing away their opportunities through this political standoff,” with reports of attacks on power stations and fuel tanks helping create ‘an environment of fear’. He further said “It’s very difficult to go out and tell people to invest in Thailand when you have these pictures going around the world.” There are also reports that top-class talent from Singapore, London and the U.S. , for instance, is reluctant to come and settle here, as well as some of Thailand’s biggest investors, Japanese companies, closing early, relocating offices and moving employees who live near the protests. Toyota Motot Corp, for example, and others have expressed concern and might even consider relocating elsewhere if the turmoil continues. That would inevitably have an impact on vehicle and electronics exports, hitting the trade and current account surpluses and depressing the baht, as well as radically increasing unemployment.

    The finance ministry has predicted that economic growth could be reduced 1.8 percentage points if the unrest continued until the fourth quarter and led to a dissolution of parliament. In that eventuality, Thailand’s credit ratings could be downgraded and, of most concern, the government’s stimulus spending of Bt1.43 trillion over three years would be severely disrupted.

    On the other hand, a political compromise would increase confidence and push the baht and stocks higher. Pent-up demand would be released as tension reduced. Full-year economic growth could shift towards the high end of the wide 2.8-6% range forecast by economists.

    Christopher Bruton, an analyst at Dataconsult Ltd., Bangkok states confidently “I think it is going to happen, but like so many of these deals, there’s a lot going on behind the scenes. I think there’s a long way to go yet.”