Rule of Law and Political Risk: A Tale of Two Countries

TL;DR: The Philippines and Thailand are undergoing dramatic political changes that threaten to further undermine the rule of law. 


Photo: Philippine Star


The Economist captured it best:

“Many believed the Philippines had outgrown such strongman rule. He may have convinced a plurality of ordinary voters that he’s on their side, but he shows scant respect for the rule of law and democratic institutions—two things the Philippines needs more of, not less.”

The article, of course, refers to the spectacle that is the Philippine elections, coming up on May 9th. The tough-talking mayor of Davao City in the southern Philippines, Rodrigo Duterte, is leading the polls and has the highest chance of becoming the next Philippine president. Much has been written about Duterte, although both local and international  media have been critical. Duterte is obviously riding on his success in making Davao City one of the safest cities in the country, never mind that it was a record achieved through a long 22-year rule and more importantly, an open tolerance for vigilante groups and extrajudicial executions. Duterte has captured the imagination of a significant number of supporters, through tough, but empty rhetoric on crime and corruption. But the leading contender is also the one who poses the highest political risk because of his professed willingness to resort to extrajudicial measures to achieve lofty objectives. His so-called success rate as mayor as well as public pronouncements as a candidate actually undermine the rule of law and  the country’s fragile democratic institutions.

In Thailand, the exact opposite has happened. Since September 2006, the Thai military has ruled the country either directly or thru proxies after ousting a democratically elected but corrupt prime minister, Thaksin Shinawatra. In August 2006, Thailand will vote on a new constitution that provides significant opportunity for the military to participate in the country’s political life through the reconstituted Senate. The military’s direct intervention in a civilian government subsumes all civilian institutions under military authority, and stunts the growth and development of democratic institutions.




The Risks of Weak Rule of Law 

In developing countries such as Thailand and the Philippines, weak rule of law make the private sector uneasy and rightly so. It magnifies all the other political and social problems. Corruption becomes part of the operating environment of most businesses, nothing gets done without facilitation payments. In such an environment, continuity becomes uncertain. Opening a business becomes more of a gamble than an opportunity.

In the Philippines and in Thailand, weak institutions have fueled long-running insurgencies in the southern part of both countries. Military rule in Thailand has certainly not put an end to the Muslim insurgency in five southern provinces. Southern Philippines and southern Thailand carry high security risks for businesses and their staff. In the Philippines, mining campsites are routinely attacked by communist insurgents if companies refuse to give in to extortion demands, while business people and tourists alike face high kidnap risks.

In both countries, perhaps the most concerning is the risk of frequent and rapid political changes. Duterte’s public pronouncements, if carried out, are unconstitutional and can spiral into a political crisis. In Thailand, a civilian government faces continuing risk of being overthrown by the military. Political crises put policy implementation on a standstill, wasting private sector time and increasing opportunity costs. And if a new government is installed, there is a risk that it would get rid of its predecessor’s policies and create its own, if only to mark its territory.

“It’s more fun in the Philippines”, so goes the Philippines’ tourism campaign. The Philippines and Thailand certainly do not disappoint in the fun department but too much fun at the expense of strong democratic institutions and economic growth is never a good thing.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s