The ruling Pheu Thai Party on 27 October appointed Paetongtarn Shinawatra, daughter of former prime minister Thaksin Shinawatra (2001-06), as its new party leader.
- Paetongtarn’s appointment strengthens her prospects for becoming the next prime minister if or when incumbent Srettha Thavisin steps down from his role.
- Although there are no signs that Srettha’s position is being threatened, his failure to manage discontent over Pheu Thai’s economic policies could undermine his position in 2024.
- Thaksin has so far kept a low profile. However, signs that he may reassert himself through Paetongtarn will raise political instability risks in 2024 and worry foreign investors.
Pheu Thai members on 27 October convened to select a new executive board, following the resignation of Dr Cholnan Srikaew as party leader after the formation of a new Pheu Thai-led government in August. Paetongtarn’s appointment as party leader underscores the enduring influence of the Shinawatra clan in Pheu Thai, particularly Thaksin, who is the de facto leader.
Paetongtarn’s ascension did not come as a surprise, as she had adopted a prominent party role as chief adviser and was selected as one of three prime ministerial candidates for Pheu Thai ahead of the May general election. Although there was speculation that she would land the prime ministerial role in August, Pheu Thai ultimately decided to support Srettha. Paetongtarn’s familial ties to Thaksin ran the risk of undermining conservative support in the Senate for Pheu Thai’s bid to form the government.
Nevertheless, her appointment as Pheu Thai leader puts her in a leading position to succeed Srettha sometime in the future. Unlike Paetongtarn, former property tycoon Srettha has no strong political base within the party and therefore has to rely on the goodwill of party factions, and especially that of Thaksin, to remain as prime minister.
Risks to political stability
There are no signs that Pheu Thai is thinking of replacing Srettha, though this is only because he has held the job for only two months. Replacing him with Paetongtarn might be premature and raise political instability risks, as it could signal Pheu Thai’s impatience to propel the Shinawatra clan’s interests to the top of the government agenda. This could undermine the rapport that Pheu Thai has been trying to build with its former enemies in the conservative camp. It is more likely that Pheu Thai will continue to give Srettha the time and space to govern and build up some credibility for the party, before activating a leadership change as necessary further down the road.
Srettha is currently facing public and bureaucratic backlash over Pheu Thai’s digital currency handout scheme. The digital currency handout scheme is a central part of the Pheu Thai Party’s policy platform. Every Thai national who is 16 and older will receive THB 10,000 (USD 277) in a government-designed digital wallet mobile application, to be spent within six months on goods and services offered by shops within a 2.5-mile (4km) radius of their residence. The scheme has triggered criticism from the Bank of Thailand (BOT; central bank), two former BOT governors, three former BOT deputies and some academics. They signed an open letter in mid-October opposing the scheme, asserting that it was not necessary because the economy was already recovering and that the scheme would strain the country’s fiscal resources.
Opposition parties have also questioned the feasibility of the scheme. The Thai Pakdee Party in mid-October asked the ombudsman to request the Administrative Court to suspend the scheme due to its likely impact on the financial system. A former senator has asked the Election Commission (EC) to investigate the legality of the scheme. The National Anti-Corruption Commission (NACC) is also studying the scheme for potential vulnerabilities in relation to graft.
Srettha remains unfazed and has continued to strike a defiant tone, announcing that the scheme will proceed and that the government would soon clarify the issues raised. It is unlikely that the current level of backlash would threaten Srettha’s position, given that he is only two months into the job and the fact that his ruling coalition partners have refrained from questioning the scheme. Pheu Thai is also striving to accommodate the conservatives’ interests in its plans to amend the constitution and to review military procurement deals.
Pheu Thai is likely to go ahead with the scheme as it was a very prominent policy pledge ahead of the May 2023 general elections. A recent poll indicated that more than half of respondents wanted it implemented and felt that Pheu Thai’s popularity would decline if the scheme were abandoned.
If he fails to manage the extent of public and bureaucratic discontent in the coming months, Pheu Thai may consider replacing him with Paetongtarn before any controversy begins to threaten the party’s own ability to remain in power. Alternatively, independent institutions could force Pheu Thai’s hand if they go after Srettha on the back of petitions and complaints over the digital currency handout scheme.
Thaksin is also expected to finish serving his one-year jail term this year. Although he has been tight-lipped on what his plans are after his release, any signs that he is seeking to reassert Pheu Thai’s influence vis-à-vis the military and state institutions will raise risks of infighting in the ruling coalition. This would in turn undermine foreign investor confidence and their willingness to commit to long-term investments.
This article is based on a research note originally published in Seerist Core. Find out more about how Seerist’s adaptive artificial intelligence combined with localised geopolitical risk expertise can help you identify, monitor and mitigate risks.