Thaksin Shinawatra

FORMER Thai leader Thaksin Shinawatra was cleared of royal defamation charges, a major reprieve for the politician whose family-backed parties have held sway over the nation’s politics for more than two decades.

A criminal court in Bangkok on Friday cleared 76-year-old Thaksin of allegations that he had violated the royal insult law over comments he made to a South Korean media outlet in 2015, according to his lawyer Winyat Chatmontree.

The court decided to drop the case as the prosecution couldn’t prove Thaksin had made the remarks alleged in the evidence and whether they referred to the king, Winyat said. Thaksin was also cleared of associated cyber crimes charges.

The former premier was formally charged last year under the lese majeste law, also known as Article 112 of Thailand’s Penal Code, which protects the royal family from criticism, almost a year after his return from 15 years of self-exile.

The case highlighted Thailand’s enduring power struggle. Thaksin’s populist appeal has long posed a challenge to the Bangkok establishment of military and business elites. Central to the conflict is the kingdom’s lese majeste law that carries penalties including up to 15 years in prison, which Thaksin says his rivals wielded against him following his 2006 ouster.

Thailand’s benchmark stock index jumped as much as 0.9% while the baht held steady after the ruling.

Easing Concerns

The acquittal should ease concerns of renewed tensions in a country that has a long history of political instability marked by ousters of multiple prime ministers through either court rulings or military coups. The royal insult case was the first in a string of legal cases against members of the Shinawatra clan.

Thaksin also faces a decision by the Supreme Court next month over whether he actually served a one-year prison sentence for a corruption conviction, when he spent time in a police hospital after returning to Thailand. An unfavorable ruling could potentially send him back to jail.

Prime Minister Paetongtarn Shinawatra, Thaksin’s youngest daughter, has been suspended from office by a court for alleged ethical misconduct in handling a border conflict with Cambodia. The 39-year-old leader will learn on Aug. 29 if she can return to office, or is permanently disqualified.

A guilty verdict for Paetongtarn would make her the second Thai leader to be ousted by the court in two years, and trigger a parliamentary vote for a new leader. The ruling coalition helmed by Pheu Thai is already teetering following the exit of a key ally in the wake of a controversy over a leaked telephone call, forcing it to go slow on some major economic legislation.

History of Instability

The past two decades have seen multiple prime ministers linked to Thaksin removed either by court rulings or military coups. Paetongtarn’s immediate predecessor, Srettha Thavisin, was dismissed by the Constitutional Court over similar allegations of an ethics violation last year for a cabinet appointment.

The frequent bouts of political turmoil have dented Thailand’s growth prospects in recent years, which is now further threatened by a punitive US tariff and tourism downturn. Foreign investors have shunned Thai equities, the worst performer in Asia this year, as companies struggle to boost earnings in an economy forecast to expand just 2%, less than half the pace of regional peers such as Indonesia, Vietnam and the Philippines.

Moody’s Ratings warned last week of weakening growth potential, citing the limited progress on long-term reforms, domestic political uncertainty and heightened global trade instability. It said Thailand’s polarized politics — characterized by frequent government changes and fragile coalitions — has held back investment and stalled reforms needed to fix structural issues.

“We expect the political uncertainty in Thailand to persist over the medium term, which will continue to drag on the country’s growth potential and add to its vulnerability to shocks,” Moody’s said in a report.

The case against Thaksin was revived after his homecoming, following a messy election that saw his family-backed Pheu Thai Party come back to power. His return and the government formation with the support of several pro-royalist parties were widely viewed as part of a deal with the conservative establishment.

Thailand’s lese majeste law carries penalties for anyone who “defames, insults or threatens” the king, queen, heir-apparent or regent. While protests have at times called for changes to the law, a court ruling branding such actions as seditious — along with lengthy jail terms for reform advocates — has largely stifled those efforts. According to Thai Lawyers for Human Rights, at least 280 people have faced lese majeste charges since November 2020.

The Shinawatras have seen a steady decline in their popularity over the government’s handling of the deadliest border clash with Cambodia in decades, while a lackluster economy fuels public anger. Two large demonstrations in Bangkok in late June and earlier this month were held to demand Paetongtarn’s resignation, fueling concerns over more such protests. –BLOOMBERG