Foreign Relations of the United States, 1977–1980, Volume XXII, Southeast Asia and the Pacific

183. Intelligence Assessment Prepared in the Central Intelligence Agency¹

PA 80–10195

April 1980

Thailand: New Government, Old Problems [portion marking not declassified]

Key Judgments

General Prem Tinsulanon assumed power on 12 March with a broad mandate from civilian and military power centers, but already there are signs of internal disagreement and confusion within his coalition government. Some important military officers believe he is not sufficiently sensitive to their interests. Prem’s lack of experience in civilian politics and administration will also work against him. [portion marking not declassified]

The new government will have a grace period of several months before its policies are implemented and in turn can be assessed. Prem will probably be able to muddle through in the short term because there currently is no obvious alternative to him with the stature and public respect that he enjoys. [portion marking not declassified]

The most serious problem facing the new government is the deteriorating economy. Prem has assembled an impressive array of economists and technocrats, but their solutions differ little from those of the discredited government of former Prime Minister Kriangsak. The new Cabinet hopes to win public confidence through better implementation of programs and more competent administration; for now, they are trying to buy time through limited price rollbacks and government subsidies. [portion marking not declassified]

Prem is expected to follow the same general foreign policy as Kriangsak, particularly toward Indochina. Over time, however, he probably will seek more balance in Thai relations with Vietnam and China; he sees Beijing as the more serious long-term threat to Thai security. [portion marking not declassified]

If Prem fails to provide the necessary leadership, the country could enter a period of instability paving the way for yet another new government, undoubtedly under the military. A military government probably would not significantly alter Thailand’s domestic policies or relationship with the United States and would face the same problems governing as its predecessors. [portion marking not declassified]

The smooth transition from the government of former Prime Minister Kriangsak Chomanan to that of General Prem Tinsulanon assures continued political stability in Thailand over the short term. Nevertheless, Prem faces the challenge of trying to remedy Thailand’s deteriorating economic situation while coping with the consequences of Vietnamese activities in Indochina. His task is complicated by a coalition Cabinet, many of whose civilian members are from the major opposition parties. [portion marking not declassified]

Out of the Shadows

Prem is a widely respected career military officer with considerable command experience but little political background. He made his reputation introducing innovative counterinsurgency techniques in northern Thailand between 1974 and 1977; most of his military colleagues give him high marks for professionalism and honesty. [portion marking not declassified]

[1 paragraph (8 lines) not declassified]

Former Prime Minister Kriangsak brought Prem into the government in 1977 as Deputy Minister of the Interior in charge of narcotics suppression, police reform, and refugee affairs. Prem subsequently assumed the more politically sensitive posts of Commander in Chief of the Army and Minister of Defense—posts he held concurrently prior to becoming Prime Minister. Prem’s loyalty to Kriangsak guaranteed the support of the military and assured a period of political stability. Although not considered politically ambitious, Prem evidently decided to step in when popular opposition to the Kriangsak government intensified in early 1980 and convinced Kriangsak to resign in order to avoid civil unrest. [portion marking not declassified]

The succession process was smooth because Prem was supported by the royal family, the military, and parliament. This orderly transition which prevented direct military action against Thailand’s fragile parliamentary democracy, nevertheless, underscored the fact that the military still wields the real power. Political parties may challenge the government but military interests rather than parliamentary procedures still determine government changes. [portion marking not declassified]

A Coalition Government

Unlike Kriangsak, Prem has succeeded in attracting members of opposition parties into the government. In particular, he has recruited several highly respected economists and technocrats who opposed Kriangsak. He has given them substantial control over economic affairs, which also makes them vulnerable to criticism if the situation deteriorates. [portion marking not declassified]

Overall, Prem’s government offers the best possible leadership to address the nation’s economic problems, while providing continued competence in foreign affairs, defense, and security matters. Nonetheless, like most coalition governments, the wide range of political interests it represents is not only a source of its strength but also potentially its undoing; Prem may not have the requisite political skills to keep his fractious coalition partners united. [portion marking not declassified]

The new 37-man Cabinet includes 11 members from the Social Action Party, six from the Democratic Party, and five from the Thai Nation Party; none of these three major political parties participated in the Kriangsak government. Prem also has established a 26-man group of military officers, academics, and businessmen to advise him on domestic and foreign policy. Deputy Army Commander San Chitpatima will head this group that will have a direct link to Prem and will be used to provide an independent assessment of policies or disagreements within the Cabinet. [portion marking not declassified]

The economic portfolios are divided between two major political parties, and this may cause more conflict than cooperation once debates over economic policies begin. Prem appointed former Finance Minister and deputy leader of the Social Action Party Bunchu Rotchanasathian as Deputy Prime Minister in charge of economic affairs and named other party members to key jobs in the Ministries of Finance and Commerce. [4 lines not declassified]

[1½ lines not declassified] He apparently intends to give Bunchu considerable authority to carry out needed economic reforms that should assuage Social Action Party concerns about government willingness to adopt its economic programs. Thai Nation Party leader and former Deputy Prime Minister Praman Adireksan was named Deputy Prime Minister responsible for administrative matters, and other party members were named Ministers of Industry and Agriculture. [2 lines not declassified]

The appointment of Democratic Party leader and former Foreign Minister Thanat Khoman as Deputy Prime Minister in charge of foreign affairs led to almost immediate and public conflict with Foreign Minister, and Prem’s close confidant, Air Marshal Sitthi Sawetsila. A public disagreement over future Thai refugee policy, on which Thanat took a much harder line, led Prem officially to restrict Thanat’s responsibilities to legal, scientific, and technological matters. This may ultimately cost Prem the support of Thanat’s party. [portion marking not declassified]

Prem retained the Defense portfolio for himself. He named former Army Commander and leader of a rival military faction Soem na Nakhon as Deputy Prime Minister responsible for narcotics affairs. Prathuang Kiratibut was retained as Minister of Interior. Surprisingly, Prem did not name either of his close military advisers, former police director General Prachuap Suntharankun and former 2nd Army Commander Han Leelanon, to Cabinet posts; both probably will continue in their present jobs at the Internal Security Operations Command and may be in line for senior Army positions later. [portion marking not declassified]

Intractable Economic Problems

The success of the Prem government will be measured largely by its ability to handle Thailand’s economic problems—the immediate cause of Kriangsak’s departure. The international energy situation has caused oil shortages, aggravated inflation, widened the trade deficit, and contributed to a deterioration of the standard of living of the average Thai citizen. Former Prime Minister Kriangsak’s attempts to address these problems by implementing an energy conservation program and raising energy prices sparked widespread demonstrations and strikes by labor and student groups that eventually brought down his government. [portion marking not declassified]

Prem’s economic team is certainly competent to address Thailand’s economic problems but will have difficulty in resolving them. The Prem government has not proposed any radical changes in economic policy, but rather hopes to implement it more comprehensively and competently. Indeed, Bunchu plans to accelerate and/or expand many of Kriangsak’s economic programs and to introduce stricter austerity measures designed to reduce inflation. He also will attempt to improve management throughout the government bureaucracy; ineffective management as much as poor economic leadership undermined the previous government. [portion marking not declassified]

Bunchu’s first move was to reduce the high prices for diesel fuel and kerosene established under the former government. The reductions—18 percent for kerosene and 13 percent for diesel—are a minor rollback of the 50 and 60 percent increases, respectively, imposed by Kriangsak just before his government fell. Bunchu, however, is counting on this action to appease labor and student groups and to buy time. Bunchu also will temporarily subsidize the prices of sugar and rice in a further effort to cushion the Thai consumer from inflation. [portion marking not declassified]

The new government will have to convince the public, however, that austerity measures are necessary and that higher fuel and food prices are inevitable. Previous governments have used subsidies and tax rebates since 1973 to alleviate the burden of high energy prices. Bunchu plans eventually to end such government subsidies because they divert funds from important economic development projects—the same dilemma Kriangsak faced. [portion marking not declassified]

Bunchu hopes to reduce Thailand’s need for imported oil in the short run by implementing an energy conservation program and by substituting coal for oil for domestic electric power plants. Imported oil now accounts for about 80 percent of Thailand’s energy needs. The government is counting on such stop-gap measures to gain some time until offshore natural gas production begins in 1981, which is expected to reduce Thailand’s dependence on imports an estimated one-third by the mid-1980s. [portion marking not declassified]

Thailand’s poor balance of payments position is another major and related problem. Bangkok had a $2.3 billion trade deficit last year, and could surpass $3 billion next year. The new government will seek to correct this by slowing import growth, particularly oil, and promoting exports. It will probably borrow more heavily from commercial and international banks and try to encourage greater foreign investment, especially in energy and agriculture. All of these measures are designed to encourage the growth of private industry in order to expand production for export markets. [portion marking not declassified]

The government plans to spur rural development by bolstering full price support programs for crops as well as encouraging greater private investment. It will resuscitate the Tambon Development Fund—a program introduced by former Prime Minister Khukrit Pramot—which allots revenue to local government committees for their own use. This is as much a political as an economic policy and is intended to bolster the government’s image among provincial constituents. The new government will find it difficult, however, to expand funds for rural development as long as competing sectors such as energy absorb so much revenue. [portion marking not declassified]

Prem’s government, like Kriangsak’s, will be hard pressed to cope with Thailand’s economic problems in the short run, particularly as the key determinant, international energy prices, is beyond Thai control. If Prem cannot convince the public that his government can do the job, student and labor unrest may quickly revive. In particular, the government must avoid a fatal misstep like Kriangsak’s decision to raise energy prices in one large increment, which sealed his government’s doom. A resurgence of public dissatisfaction would cause disagreements among the members of Prem’s coalition Cabinet, particularly between the two political parties holding the key economic portfolios. [portion marking not declassified]

Foreign Policy Concerns

Prem is likely to continue Thailand’s present foreign policy course. Over the long term, however, he will probably seek to redress the balance in Bangkok’s relations with Communist states, which favored China during Kriangsak’s regime. Prem’s past military experience in counterinsurgency operations against Chinese-supported Communist guerrillas makes him more wary of Beijing’s long-term intentions in Southeast Asia, although he recognizes the present confluence of Thai and Chinese interests in opposing Vietnam in Kampuchea. [portion marking not declassified]

Although he believes Vietnamese military action in Kampuchea poses a potential threat to Thai security, Prem reportedly does not believe Vietnam will invade Thailand. Moreover, he does not believe that a pro-Vietnamese regime in Phnom Penh necessarily represents a permanent security problem for Thailand, but does want to see the withdrawal of Vietnamese troops from the Thai-Kampuchean border. Under Prem, Thailand may be more receptive to a dialogue with Hanoi in an effort to reduce tensions. Vietnamese Foreign Minister Nguyen Co Thach is expected to visit Bangkok in April or May in response to an invitation from the Prem government. Whether Prem intends to redress the balance in Thailand’s relations with Vietnam and China will probably become more evident at that time. [portion marking not declassified]

In any event, Thailand in concert with the other members of the Association of Southeast Asian Nations (ASEAN) will continue to recognize the Democratic Kampuchea regime as the legitimate government of Kampuchea because it still represents the only effective anti-Vietnamese resistance force and because the UN continues to recognize it. Prem’s government, however, probably will continue to try to create a united front of Khmer resistance forces and to bolster the non-Communist groups, particularly Son Sann’s Khmer Serika. [portion marking not declassified]

Unlike Kriangsak, Prem seems more receptive to a possible political role for former Kampuchean leader Prince Sihanouk. Foreign Minister Sitthi in particular reportedly favors a role for Sihanouk in any future united front because of the prince’s popularity among the Kampuchean people. It is possible that over time the Prem government may shift its support away from the Pol Pot forces to some non-Communist group, but thus far it sees no viable alternative. [portion marking not declassified]

Although Prem wants to maintain correct relations with the USSR, he is concerned about the potential long-term threat to stability in Southeast Asia posed by the Soviet-Vietnamese alliance. Such concerns would intensify considerably if Moscow obtained permanent military facilities or established a large military presence in Indochina. [portion marking not declassified]

Confusion Over Refugees

Prem has said publicly that Thailand will continue its “humanitarian policy” toward refugees, but his past actions and statements indicate he will take a harder line on refugee policy than Kriangsak.² He hopes to prevent any more refugees from entering permanent camps in Thailand, and the Army already has begun refusing admittance of refugees into holding centers north of Aranyaprathet. [portion marking not declassified]

Along with other senior Thai officials, Prem worries about the potential security threat and economic burden posed by large permanent refugee encampments. Last January, in his capacity as Army Commander and Defense Minister, Prem approved an Army plan to repatriate gradually all Khmer refugees to areas in Kampuchea under the control of anti-Vietnamese/Heng Samrin resistance forces. He prefers to keep most of the refugees near the border to facilitate eventual repatriation. [portion marking not declassified]

Thailand will keep pressure on the UN and third countries to prevent the international community from taking Thai cooperation for granted. Prem wants the UN to convene an international conference on Kampuchea to try to force Vietnam to agree to the creation of UN-sponsored safe havens for refugees on the Kampuchean side of the border. Prem and his closest advisers are upset by what they perceive as UN unwillingness to support Thai refugee efforts. They have implied they might repatriate the refugees forcibly if the international community does not act soon.³ Thailand considered the UN-sponsored donors conference convened on 26 March merely a token response to Thai demands.⁴ [portion marking not declassified]

Conflicting statements on refugees by Prem’s foreign affairs advisers Thanat and Sitthi in the first days of the new government caused considerable confusion about Prem’s likely policy. Thanat publicly espoused a hard line and argued for forced repatriation; while Sitthi assured US officials that Bangkok would continue the “open door” policy of the former government. The contradiction reflected the ambiguity over which man had authority to speak for government foreign policy—a situation eventually resolved in Sitthi’s favor. The incident nonetheless demonstrates the sentiment within the new Cabinet in favor of a harder line, and both Sitthi and Thanat warned that Thailand expects continued effective support and understanding from the international community in handling the refugee burden. [portion marking not declassified]

Prem’s government will probably discuss the refugee issue with the Vietnamese Foreign Minister during his expected visit. The Heng Samrin regime recently publicly offered to negotiate the refugee issue with Bangkok but the Thai will not follow this up because it would imply recognition of the regime. [portion marking not declassified]

Military Politics

To ensure his national political position, Prem must continue to consolidate his control over the Army. In part, this entails promoting to top posts his own proteges, who share Prem’s desire to make the armed forces more professional. During the October 1979 annual military appointments, Prem placed his supporters in key command and staff positions and is likely to do the same after he retires as Army Commander next October. [portion marking not declassified]

Prem enjoys high standing with the military, but factionalism, particularly the growing power of the so-called “Young Turks”—an amorphous group of field grade officers—could well undermine his efforts and even his own political position over the longer term. The Young Turks do not yet represent a unified political/military faction of their own but rather constitute cliques within the major military factions. They share similar views, however, and could act as a pivotal element in a political crisis. [portion marking not declassified]

As Prime Minister, Prem can be expected to continue efforts that he began as Army Commander in Chief to modernize the military. Prem also has indicated he would like to intensify the counterinsurgency effort against guerrillas of the Communist Party of Thailand. As Army Commander, he expanded and improved the paramilitary units engaged in this campaign, but he also believed economic and social programs must be expanded in rural areas to undercut the Communists’ appeal. To expand counterinsurgency programs, and modernize the Army, however, the government would need to divert financial resources already badly needed in the civilian economic sector. Prem hopes to resolve this dilemma in part by obtaining equipment with more lenient repayment terms through US foreign military sales provisions. [portion marking not declassified]

Continued military support is crucial to the survival of the Prem government. Prem’s ability to maintain his power and influence in the military will depend in large part on how he manages growing factionalism within the Army. [11½ lines not declassified]

[2 paragraphs (26 lines) not declassified]

Outlook

Prem faces considerable challenges but probably will be able to muddle through in the short term since there is currently no obvious alternative to him. [portion marking not declassified]

Over time, however, Prem will find it difficult to control factionalism, both among the diverse civilian groups in the Cabinet and within the military, and to avoid domestic unrest. Prem’s economic advisers face the difficult task of alleviating the burden of high energy costs and inflation on the average Thai citizen, but they will probably be able to carry on as long as they avoid a fatal misstep. [portion marking not declassified]

Prem assumed control with a strong mandate to govern; but public conflicts and private bickering already have appeared over his choice of officials and over the division of authority among them. [2½ lines not declassified] [portion marking not declassified]

Prem’s limited political experience may be his Achilles heel. [12 lines not declassified] [portion marking not declassified]

If Prem fails to provide the necessary leadership, the country could enter a period of chronic instability paving the way for a new government, undoubtedly under military tutelage. A new military government, however, probably would not alter significantly Thailand’s domestic policies or relationship with the United States and would face the same problems governing Thailand as its predecessors. [portion marking not declassified]

1. Source: Central Intelligence Agency, Office of Support Services, Job 81T00208R: Production Case Files, Box 3, Folder 17: Thailand: New Government, Old Problems, An Intelligence Assessment. Secret; [handling restriction not declassified]. A map of Thailand is not printed.
2. As of mid-March, there were about 162,000 Kampuchean refugees in Thailand, plus 178,000 Lao and 75,000 Vietnamese. In addition, there were an estimated 520,000 displaced Khmer along the Thai-Kampuchean border. [Footnote in the original.]
3. The Thai Army forcibly repatriated about 40,000 Khmer refugees in June 1979 because Bangkok believed that the international community was ignoring its pleas for refugee assistance. [Footnote in the original.]
4. The conference was held in New York.