Thailand is Not Argentina

One of the various justifications put forward by the Bangkok elite and its military spearhead for ousting elected, Thaksin-aligned governments is that they are saving Thailand from a fate similar to Argentina, as quoted on June 30 in an Asia Sentinel story.

There are few parallels. Nonetheless, they see former Premier Thaksin Shinawatra, who was ousted in a 2006 coup, as a reincarnation of populist Juan Peron whom they claim was largely responsible for making Argentina, once as rich as Australia, into a middle income basket case with a long history of debt default.

That is, to be polite, a simplistic view of Peron’s role. But the one thing that does unite the Thai elite to its former conservative counterpart in Argentina was a contempt for the lower income groups, dismissed as descamisados (shirtless) and worse and unfit to have any influence in deciding their country’s government.

Peron was a military man himself who came to prominence as Minister of Labor during military rule in the 1940s. It was then that he introduced a minimum wage, encouraged unionization and tried to promote mass health care. This saw him popularly elected as president in 1946 and again in 1952 before he was overthrown in a military coup which sent him into exile until a very brief return to power in 1973 whereupon he died of cancer the following year.

The military soon returned in even more brutal form – the regime of General Jorge Rafael Videla with mass extrajudicial killings of alleged leftists, followed by successor generals Viola and Galtieri which lasted until their failed attempt to seize the Falkland /Malvina Islands from Britain in 1982.

Peron’s legacy lives on in a country deeply divided not by religion or ethnicity but by class – again a parallel with Thailand.

Argentina had a period of rapid, investment-led growth under Peron before falling into debt problems partly caused by over-investment and a sharp fall in its terms of trade. Peron’s mistake was not to make an effort to reduce inequalities among Argentinians but to pursue a nationalist policy, nationalizing foreign owned companies, annoying the US, and building an industrial base behind tariff walls.

But these policies of self-sufficiency have their origin in the 1930s Great Depression and Argentina’s lack of trade access during World War II. They have been a feature of Argentina for decades and at one time were favored by such institutions as the UN Conference on Trade and Development. They were part of a “third world” non-aligned agenda which was globally popular (if unsuccessful) in the 70s and 80s.

Attempts at self-sufficiency and antipathy to foreign capital, following more of the Mussolini or Franco formulas for development, was the damage that Peron, and his successors, did to Argentina – not his espousal of wages and welfare for workers. There is absolutely no parallel between Peron and Thaksin, himself an accomplished capitalist, on issues of open markets, trade and capital flows.

Indeed, in the Thai context it has been predecessors like Phibul Songkhram [1938-1957] and Sarit Thanarat [1958-1963] who have come closest to the nationalist model promoted by Peron.

But more important than Argentina’s economic policy lurches and failure of the last six decades stands the political system. Here lies the explanation for why Argentina, which 100 years ago was at the same rich level as Australia, also a large land newly populated by hard-working immigrants from Europe. Argentina was born in revolution against Spain and has been in a state of semi-revolution ever since, with a multiplicity of coups punctuated by populist democratic politics and lurches to brief periods of extremely liberal economics, as under Economics minister Domingo Cavallo, 1991-2001, in when the currency was pegged to the US dollar.

Unfortunately for Argentina, there were little in the way of liberal or democratic institutions to be inherited from the colonizer, Spain. There was none of the gradual transition from colony to independent state, none of the inherited institutions of government which Australia acquired from Britain, none of the emotional as well as economic ties which linked Australia to Britain and later to the US – and tempered nationalism.

Argentina’s nationalism was raw, its friends few and far away – Chile an enemy, Brazil a rival, Spain too preoccupied with its own internal fights. Australia developed institutions for dispersing power among elected bodies, of an independent bureaucracy, of a civilian military which served with honor in two world wars, democracy which was founded on the need to serve the “common man” to find an egalitarian path better than that in old, aristocratic Europe. Politics was about compromises, not winner take all, the spoils of office seldom measured in pecuniary terms.

Argentina was at the opposite pole, a nation of great landed estates and dire poverty, of state power which rewarded the politically-connected, not the entrepreneur. Both were highly unionized nations but Australia had institutions that could achieve compromise. Australia could be equally protectionist – as it was in the 1960s and 1970s – but this was more pragmatic than ideological and could be and was easily discarded.

For sure there is no reason to expect the Thai junta to engage in self-defeating economic nationalism given how well embedded Thailand is in the global manufacturing system and with Japan in particular.

And there is good reason to believe it will try to follow some of Thaksin’s populist policies. They hate the man more than his policies. However, the underlying politics of Thailand continues to look like Argentina not Australia. The problem is not the threat Peronism but Bangkok’s lack of the institutions and attitudes which make for stable government and democratic compromise. If Thaksin is Peron, Prayuth is Videla.