Thai Military Declares Martial Law, Seeks to Quell Protests

Bloomberg News

Thailand's army imposed martial law nationwide after months of political turmoil that brought down an elected government and tipped the economy into a contraction.

The move is not a coup and people should not be concerned, Army Chief Prayuth Chan-Ocha said on local television. The military is seeking to restore order and asks political groups to end their protests, Prayuth said.

'There will be a center to control order, headed by the army chief,' he said. 'The center will prevent and solve problems that will affect peace and order nationwide. The center can enforce any law under the martial law act to control the situation effectively.'

The latest move is the army's most direct involvement in the Southeast Asian nation's politics since 2006, when then-premier Thaksin Shinawatra was removed in a coup. Martial law already is in place in parts of southern Thailand, and the-prime Minister Abhisit Vejjajiva briefly declared it over Bangkok in 2010 to quell anti-government protests.

Political polarization has escalated in the past decade and a half over the role of Thaksin and his allies in a nation that's seen 11 coups since the end of direct rule by kings in 1932. Thailand has been without a fully functioning government since December, when then-premier Yingluck Shinawatra, Thaksin's sister, called snap elections in a bid to ease the unrest.

'There are many protests in Bangkok and many areas of the country, and there are those who want to incite violence by using war weapons on innocent people,' Prayuth said. 'The situation can escalate into riots and unrest in many areas which will affect national security and people's lives.'

Central Command

All security agencies, including the police, army, navy and interior ministry must send their forces when ordered to by the central military command, Prayuth said.

The baht slid 0.6 percent to 32.639 against the dollar as of 7:10 a.m. in Bangkok, headed for its biggest decline since March 20. Thailand's five-year credit default swaps were steady.

'Some foreign investors will dislike the martial law because it shows the situation is out of hand,' Prapas Tonpibulsak, chief investment officer at Krungsri Asset Management Co., which oversees about $7 billion in assets, said by phone. 'The military's intervention may force politicians to be more willing to go to the negotiating table now. Power may be in the military's hands longer than people expect if they can't solve this political deadlock among themselves.'

Economy Contracts

The army acted a day after government data showed gross domestic product shrank 0.6 percent in the first three months of 2014 compared with a year earlier. Thai production and tourism were hurt by unrest that began in November against Yingluck's government.

'The political divisions run so deep the risks are to the downside' for the economy, Sarah Fowler, an economist at Oxford Economics in Oxford, U.K., wrote in a note yesterday. An end to political disruptions could unleash investment plans that have been on hold amid the turmoil, she wrote. Some $15 billion of domestic and foreign investment plans have been held up, according to Oxford Economics.

On Ramkhamhaeng Road, which links the major highway that is a gateway to the eastern and central provinces on the outskirts of Bangkok, at least 20 armed soldiers set up a checkpoint. They used a military truck to block half he four-lane road, with two Humvees also in the area.

Political Protests

Protest leaders on both sides of the political divide have vowed to bring the latest chapter of unrest to an end this month.

A February poll was disrupted by anti-government protest leader Suthep Thaugsuban's followers and the government and election officials were unable to schedule a new one before Yingluck was removed on May 7 after a court ruled she abused her power in office. Suthep's protesters have derailed plans for a July 20 election and the army had said previously it may use force to counter any escalation of violence.

With his plan to replace the government with an appointed council no closer to reality, Suthep launched a campaign to harass remaining government ministers until they resigned. Jatuporn Prompan, leader of the pro-government Red Shirt movement, called Suthep's plan 'impossible' and said his group would ensure the government survived.

Red Shirts

The army's move deepens the uncertainty, according to Bob Herrera-Lim, a managing director at business advisory group Teneo Holdings.

'Prayuth is known to be anti-Thaksin and he is unlikely to enforce his own decree to favor the current government or the Red Shirt movement,' he said in a note. 'The Red Shirt movement, which believes the current government is properly elected and in place. The movement will likely see this as what they call 'the slow motion coup'.'

To contact the reporters on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net; Tony Jordan in Bangkok at tjordan3@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net Tony Jordan

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