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Will the farmers who put Yingluck in power bring her down?
Publication Date : 21-02-2014
The caretaker government of Prime Minister Yingluck Shinawatra is reeling from the problems stemming from its inability to pay 130 billion baht (US$4 billion) to farmers who joined the rice-pledging scheme.
Yingluck and her government did not know how to react when farmers in several provinces announced they would launch all-out protests to demand the money they should have received months ago. The farmers have rallied at district and provincial offices and on roads to demand their money after the government repeatedly postponed the payments.
With no more love to be lost between themselves and the government, the angry farmers gave the government an ultimatum: Pay them by February 17 or face massive protests. But the government could not find sources of money for the payments, as no financial institutions wanted to help a caretaker administration.
The Pheu Thai-led government has created a huge debt under the rice programme, and since it now is a caretaker administration, it is hard to find a bank that is willing to provide loans to finance the scheme.
So far, the government has simply tried to survive day by day, blaming its opponents for its cash-strapped situation while insisting the rice-pledging scheme is a good policy that could really help poor farmers.
The government claims the problems are caused by politics, but the actual problems have existed and been damaging the government's reputation for years. The problems have simply worsened and are now easier to see.
The problem has affected not only the economic system in provinces, but also the country's economy as a whole, disrupting several economic mechanisms, mainly because the purchasing power of more than a million farmers has disappeared.
The rice scheme's problems have affected the economy in cities, because many young working people in urban areas come from rural families. When their parents have problems, these working people have to send cash to help their rural families, so their purchasing power is reduced.
The government has been rushing to try to sell its stockpiled rice to try to earn money to pay farmers, but it will not be able to raise enough to pay for all the debt in one go.
The government's struggle to find sources of money to pay farmers has affected the Government Savings Bank, which saw net withdrawals of 20 billion baht ($613 million) in just one day on February 17, by depositors who were uneasy with the scheme. The problem prompted Woravit Chalimpamontri to resign as GSB president.
Reacting to the crisis, Yingluck went on TV to make a statement, in which she insisted that the rice-pledging scheme is a good policy that really helps farmers to tackle poverty. She claimed that the programme's cash crisis was caused by her political opponents, who she said pressured banks not to grant loans to the scheme. But Yingluck declined to admit that the cause of the problem stemmed from the government itself.
Worse still, her statement didn't answer several questions on the minds of members of society. For example, she didn't explain why the government did not move earlier to sell all the rice in its stocks to raise money to pay to the farmers.
If the government lets the problem remain unsolved, it will affect the country's economy severely and affect other sectors in a chain reaction.
The Pheu Thai Party won the election - propelling Yingluck to become Thailand's first female prime minister - because of its populist policies, especially the rice scheme, which helped the party win a lot of votes from farmers nationwide.
Yingluck and Pheu Thai won power mainly because of farmers. So will they be removed from power by farmers as well?