Source: AAP/EAF

Source: AAP/EAF

Subplots in Thailand’s submarine setback

12 August 2015

In June 2015, several announcements suggested that Thailand would acquire three Chinese submarines for 36 billion baht (US$1.03billion). But by mid-July, Thai Defence Minister Prawit Wongsuwon stated that the proposal would be deferred and subject to further review. While some commentators were quick to surmise that US diplomatic pressure had been applied, it is equally likely that the causes were conservative military spending and a longstanding bias toward land forces.

It is tempting to view a submarine purchase primarily through a geopolitical lens, given the interest in Southeast Asia’s trajectory in an era of great power rivalry. Thailand is of particular interest because of its close and longstanding cultural affiliations with China, its clear discomfort with US criticism since the 22 May 2014 coup and its absence of territorial disputes with China. But in matters of Thai defence spending and arms procurement, there are other forces — unrelated to geopolitical alignment — that also need to be considered.

Many would see any submarine purchase as the military government taking advantage of its position to increase defence spending. Historically, this is often correct. After the 2006 coup, the military’s budget jumped 47 per cent.

This would suggest that the 2014 coup d’etat is the navy’s best chance to obtain the submarines it has been proposing since the 1990s. It is waging a determined campaign to get the submarine purchase over the line. In response to the cabinet decision to defer the purchase, it released a nine page document explaining the need for submarines. The document cites Thailand’s reliance on maritime trade, significant maritime resources and the possession of subs by other ASEAN nations as reasons why the submarine purchase should occur.

But the Thai military can also be surprisingly tolerant of restraint in defence spending, especially during tough economic times. During the 1997 Asian financial crisis, Thailand was amongst the first to slash defence spending, which included cancelling a planned F/A-18 Hornet procurement. It was also one of the last countries to resume increasing its defence spending. One economic analysis some years later noted that Thailand’s defence budgets had fallen ‘disproportionately due to the slowdown in economic growth’.

And Thailand is facing a difficult economic outlook. Its competiveness in its traditional export strengths (such as rice) has been declining for some time, and it has suffered declining exports for three successive years. Tourism revenue has slumped since the 2014 coup. The economy is unlikely to grow by more than 3 per cent in 2015. This is forcing the government to consider increasing taxes, even to the point introducing a co-payment for the immensely popular 30 Baht health care policy introduced originally by the previous Thaksin government.

To read the entire article by Greg Raymond, visit the East Asia Forum.

Updated:  22 March 2016/Responsible Officer:  Su-Ann Tan/Page Contact:  CAP Web Team