It was expected that any instability that followed last September’s coup in Thailand would be short-lived. Supporters even hoped that the military-led government would lessen uncertainty, end corruption and soothe the tensions that fuel a Muslim insurgency in the country’s southern provinces. Those hopes have gone unanswered. Instead, the government has mishandled the economy and the unrest has intensified. The situation in Thailand is only growing worse.

On Sept. 19, Thai generals ousted then Prime Minister Thaksin Shinawatra, alleging that he was corrupt and that his mishandling of affairs of state — particularly in regard to the Muslim insurgency in the south — endangered national security. Most of the country’s elites and middle classes welcomed the step: They considered Mr. Thaksin a populist upstart. Rural Thais and members of the lower classes backed the ousted prime minister, but they have accepted the new government just as the foreign governments that demand respect for democracy have.

Gen. Surayud Chulanont serves as prime minister in the military government that took office. It was anticipated that his rule would be short: A new constitution would be written and power handed over to a democratically elected government. The transition process is proving longer than expected. It took several months for the government to name the new committee that would draft the new constitution and elections are not even scheduled until later this year.

In the meantime, the new government has proven to be fumble fingered. Although it alleged that Mr. Thaksin was corrupt, no charges have been filed nor proof offered. Its competence was called into question when the government imposed capital controls that terrified foreign investors and triggered a huge sell off in the market (the measures were partially revoked 24 hours later) and on New Years Eve when a series of bombs went off in Bangkok, killing two people and wounding 38 others. The government asserted the attacks were the work of the former prime minister’s supporters, although evidence suggests the real instigators were Islamic militants.

In recent weeks, the troubles have intensified. Muslims are the majority in Thailand’s three southern provinces, despite being a minority elsewhere in the country. They have long claimed to have been discriminated against and treated as second-class citizens. Their frustrations have mounted and increasingly spill over into violence. More than 2,000 lives have been lost as a result of such incidents since 2004. During the Lunar New Year celebrations, 28 bombs went off in southern Thailand, leaving 9 dead and injuring 44 others. The military government has reversed the policies of the Thaksin government, preferring a softer approach to the iron-fist that inflamed Muslim opinion and accelerated the insurgency. Unfortunately, the new line is not having results and many Thais are losing faith in the government’s ability to deal with this problem. Perhaps in response, security forces raided a suspected hideout for militants last week, killing five militants.

Mistrust is also growing when it comes to economic policy. Investor confidence, shaky after the imposition and partial reversal of the foreign investment measures, took another blow with last Wednesday’s sudden resignation of Finance Minister Pridiyathorn Devakula. Mr. Pridiyathorn, who also served as deputy prime minister, complained that he did not have the full support of the government. Mr. Virabongsa Ramangkura also resigned as chairman of the Export-Import Bank of Thailand.

As a result, the Thai economy is growing at its slowest pace in two years. In the last quarter of 2006, the economy expanded 3.9 percent, a drop from the 4.7 percent recorded before the coup. Applications to build new factories and other facilities dropped 24 percent last year and economists warn that a lack of confidence among consumers and foreign investors — the product of political uncertainty, the threat of terrorism, and even floods — will continue to act as a drag on the economy. It is no wonder then that Mr. Surayud’s popularity has fallen nearly in half since he took office and is now at 35 percent according to one poll.

Some worry that things will get worse still. With a Cabinet reshuffle, the prime minister is trying to improve the situation, but it may take more than new faces to restore the confidence that it so badly needed. There are fears that Islamic militants will step up their attacks when the U.S. holds its annual Cobra Gold military exercise in Thailand — both to strike against Washington and to embarrass the Bangkok government for its support of the U.S. While some of the new government’s troubles have been inherited, some are of its own making. Both must be solved and soon.

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