In Thailand, cries of 'Singapore, go home'

Five months after seizing power, Thailand's military rulers have a lot on their plate: battling an escalating insurgency in the Muslim-dominated south, keeping tabs on political troublemakers, and writing a new Constitution.

That's work aplenty, but in recent weeks, their gaze has also lifted toward the heavens, where a cluster of commercial satellites are orbiting. The satellites were part of the telecommunications empire of ousted Prime Minister Thaksin Shinawatra until they were sold last year to Temasek Holdings, an arm of Singapore's government.

Now, the generals want them back.

The satellites have been sucked into an increasingly prickly row over national security and foreign capital in Thailand, fueled by the 1997 Thai economic collapse and the rush by foreigners to buy Thai assets on the cheap in the years since. Thailand's allies are now watching to see how far the military will go to back up its rising tide of nationalist rhetoric with action.

"A lot of foreigners have underestimated the strength of economic nationalism in Thailand,'' says Michael Montesano, an assistant professor of Southeast Asian studies at the National University of Singapore. "Since 1997 Thailand has learned what it feels like to be a South American economy with multinational capital controlling an outsized share of the economy."

Of course the threats to seize Shin Corp., the conglomerate Mr. Thaksin founded, aren't just about economic nationalism. They're also a measure of how consumed the military is by the desire to bury the political career of Thaksin himself, whose $4 billion sale of Shin – which was set up so they didn't have to pay any tax on the proceeds – set the stage for the bloodless military coup that drove him from power. Analysts say the military's attitude appears to be that if they have to alienate a few foreign investors to destroy Thaksin, then so be it.

"The project of this regime is political [and] the political actors behind the project are going to take care of their own self-interesta," says Mr. Montesano.

Much of the heat has been generated by Gen. Sonthi Boonyaratglin, Army chief and coup leader. In mid-February, he vowed to reclaim Shin Satellite, Shin Corp.'s telecommunications subsidiary in order to "salvage the country and its assets." He has also accused the Singaporean government of using the cell phone network to spy on Thailand, a charge they've denied.

Such bellicose talk is galling for Temasek, which bought Shin Corp. in January 2005. Their investment backfired when mass protests against Thaksin led to his removal Sept. 19 and strengthened the hand of those who want to keep national assets in Thai hands.

A criminal investigation is under way into Temasek's use of nominees to skirt limits on foreign ownership. The value of its investment has dropped by about half as investors have dumped Shin-related stocks. In another setback, Thailand's military-installed government said Tuesday it would probably take over iTV, a struggling television station also owned by Shin Corp.

Foreign investors in Thailand are already digesting a series of fumbles by policymakers.

Last December, the government triggered a stock-market collapse by imposing capital controls that were later reversed. Revisions to rules on foreign ownership have proven controversial. Western pharmaceutical companies also protested Thailand's recent suspension of patents on drugs used to treat HIV/AIDS and heart disease.

Government officials have sought to downplay General Sondhi's apparent threat to seize private assets, saying they won't expropriate Shin Satellite. Instead, they say, they might buy it back.

A cabinet minister said he would poll the public to see if they wanted to buy back the satellites. But analysts say the damage done to Thailand's image among foreign investors may be hard to repair, even if they conclude that domestic politics is at play.

"If they had done this on Sept. 19, people would have said, well, you can't make an omelet without breaking eggs. But five months later, it's not possible to make that argument," says Laurent Malespine, an independent political-risk consultant in Bangkok.

Behind the broadsides, say analysts, is a bid to vilify Thaksin for selling strategic assets to foreigners.

Having seized power alleging widespread government corruption, the regime has struggled to build a strong legal case against Thaksin, a billionaire businessman who won landslide election victories in 2001 and 2005. Going after Shin Satellite on patriotic grounds offers a way to tarnish the legacy of Thaksin and his political party, which is trying to revive its fortunes.

But picking a fight with Singapore, an old cold war ally, carries a price. Thailand and Singapore are strong proponents of welding the sluggish Association of Southeast Asian Nations, a 10-nation regional bloc, into a free-trade zone with China by 2010.

That ambitious goal seems even more distant amid the wrangling between two influential member-states.

Last week, hundreds of protesters besieged a military base in northeast Thailand where Singapore Air Force pilots train, calling for Thailand to revoke its agreement with Singapore. This went beyond the rhetorical jabs of Sondhi, suggesting the nationalist genie was out of the bottle.

Many Thai observers contend that the row with Temasek isn't so much economic protectionism as a backlash against Thaksin's brand of capitalism that prized profits over social outreach. Thailand's export-driven economy will remain open to foreign investors, they say, even if domestic politics take precedence for now.

"The mood against Thaksin is gripping the country, but it will go away. You get angry, then you cool down. That's the only way to explain the irrationality of what's happening in Thailand today," says Narongchai Akrasanee, former commerce minister and a lawmaker in the interim legislature.

The maneuvers over Shin aren't the only effort going on to remove Thaksin's vestiges of influence from the country. Last week, a Thaksin economic aide who had been appointed by the new military government to reassure domestic and foreign investors was forced to quit amid anger at his ties to Thaksin and signs that some of the generals who backed the September coups were mobilizing street protesters to force him out.

Seemingly lost in the patriotic fervor is the actual ownership status of Shin Satellite, which operates four satellites that serve telecommunications customers in neighboring Cambodia and Laos and provide broadband access in China, India and across the region. Temasek only holds an indirect 41-percent stake in the company, with the remaining shares held by mostly Thai investors.

Shin Satellite's customers may also wonder at the fuss over ownership, says Richard Moe, a telecommunications analyst at Macquarie Securities in Bangkok, since most of them are non-Thais. Nor are they likely to take seriously the accusations of phone tapping.

"I don't think this is terribly well thought out.... I think what [the government] will do is encourage some kind of voluntary sale by Temasek. But Temasek realizes that it won't be easy if the government wants to take it away," says Mr. Moe.