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February 4, 2014 1:13 pm
China has scrapped a deal to buy 1.2m tonnes of Thai rice, about 14 per cent of annual exports, because of a corruption probe into Bangkok’s troubled agricultural subsidies scheme, dealing a huge blow to the embattled government.
Beijing was spooked by the Thai national anti-graft agency’s probe into the rice price support programme, Thailand’s commerce minister said. A Thai bank also pulled its support for the project, whose funding shortages are triggering protests from unpaid farmers.
The rice scheme’s growing problems are piling pressure on Yingluck Shinawatra, prime minister, as she tries to stave off renewed efforts by the opposition to unseat her after it boycotted and disrupted elections at the weekend.
Niwatthamrong Bunsongphaisan, commerce minister, said China pulled out of the rice deal because it “lacks confidence to do business with us”, after the anti-corruption commission opened an investigation last month into a subsidy scheme that is soaking up $4bn a year officially and much more by other estimates. Public details on the probe are vague.
Mr Niwatthamrong said the government would start the process next week to sell 400,000 tonnes of rice from massive stockpiles that have built up because falling rice prices globally mean disposing of it would crystallise a huge loss.
State-owned Krung Thai Bank added to the government’s rice woes by refusing to issue further funding for the scheme, which has not paid some farmers since October. Officials are scrambling to secure bond issues and bank loans to prevent more protests by farmers, who voted for Ms Yingluck in droves in 2011 because of the generosity of the subsidies, which have since been criticised as wasteful by the International Monetary Fund and other organisations.
The anti-corruption commission investigation – Ms Yingluck is embroiled as head of the policy making National Rice Committee – is one of a volley of court and regulatory actions government supporters say form an opposition effort to launch a “judicial coup”.
The opposition is rooted in the country’s traditional elite and has not won an election in more than 20 years, but it is widely seen as enjoying the backing of powerful institutions – such as the military and the courts – that have ousted past elected administrations.
The main opposition Democrat party said it would launch a legal challenge to Sunday’s national election, on the grounds that it represented an attempt by the government to seize power by unconstitutional means. The Democrats said they would also petition for Ms Yingluck’s Puea Thai party to be dissolved because it imposed a state of emergency in the run-up to the poll, meaning that voting couldn’t take place under normal conditions.
The Democrats boycotted the poll and threw their weight instead behind the People’s Democratic Reform Committee street protest movement, whose members prevented millions of Thais from casting their ballots by stopping candidate registration, blockading polling centres and in some cases physically assaulting voters.
The current political crisis is the latest explosion of a more than seven-year battle between supporters and opponents of Thaksin Shinawatra, a former prime minister and Ms Yingluck’s brother, whom demonstrators say has corrupted the political system and controls Thailand from peripatetic self-exile.
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