“Welcome to the Republic of Thaksin.” You won’t see these words displayed in the customs hall when arriving in Thailand, but the Land of Smiles has indeed morphed into the land of Thaksin Shinawatra.

That should be giving Southeast Asia’s second-biggest economy plenty to frown about. Seven years after the former prime minister was ousted in a coup, Thaksin’s long shadow continues to dominate Thai politics. Since then, the country has seen six prime ministers, the most recent one being Thaksin’s baby sister, Yingluck Shinawatra.

Like many loving siblings, Yingluck looks out for her kin. Recently she tried to ram a get-out-of-jail-free card for Thaksin and other politicians through the parliament — as big a political blunder as Asia has seen in years. Markets plunged and more than 32,000 people joined demonstrations in the capital and 17 other provinces. This week, Yingluck backed down and agreed to scrap the bill for now.

But anyone who thinks that’s the end of Thailand’s Thaksin nightmare is wrong. The proud and acerbic billionaire, Asia’s answer to Italy’s Silvio Berlusconi, isn’t about to shelve his obsession with returning home, reclaiming the portion of his telecommunications fortune frozen by the state and succeeding his sister. Many fear Yingluck is little more than a placeholder for big bro.

With his ambitions thwarted for now, the focus has turned to how much money this setback will cost Thaksin. Thais should be worrying instead about how much this political circus is hurting their $366 billion economy.

Every day that politicians and policy makers in Bangkok spend obsessing over Thaksin’s return is one that’s not being used to modernize the economy, increase competitiveness and avoid the “middle-income trap” that befalls many developing nations and may soon ensnare Thailand.

The politics of personality aren’t confined to Thailand. Asia is awash with larger-than-life populists bigger on charisma and spin than concrete reforms: leaders like Shinzo Abe in Japan, Xi Jinping in China and, in some ways, Benigno Aquino in the Philippines.

The same problem afflicts several figures who have yet to take the helm, including India’s Rahul Gandhi. All have neglected tough policy work in hopes that a strong personality will be enough to carry them through and bolster their approval ratings.

But Thaksin raised the strategy to an art form, essentially making an entire nation about him. His tenure from February 2001 to September 2006 saw nothing less than the wholesale bastardization of Thai democracy. He neutered its institutions and enriched his family members and cronies in ways that would have made a Russian oligarch blush.

Like former Italian Prime Minister Berlusconi, Thaksin was a powerful tycoon who leveraged his business success to become leader. Thaksin, like Berlusconi, was later accused of bending the government to his will and in alignment with his business interests.

He got away with it by literally bribing the rural communities that formed his power base. His “Thaksinomics” program of flooding the hinterlands with cheap loans was never more than Tammany Hall-like doling out of cash for support. The money did nothing to improve the economy’s fundamentals or capacity for innovation.

It’s a strategy Yingluck copied early and often after becoming prime minister in 2011. Take her disastrous rice-subsidy plan, which by the latest estimate has cost $19 billion since October 2011 and over time has recorded losses equivalent to 59 percent of that figure.

Thailand is now sitting on two years of export production, which has distorted rice markets in the Mekong River region and cost Thailand the title of world’s biggest rice exporter. What’s depressing is that in that time Thailand could have, say, built a new state-of-the-art airport. Instead Suvarnabhumi Airport, opened the same month in 2006 in which Thaksin was ousted, continues to struggle with capacity constraints that are impeding the all-important tourism market.

Why champion such a debacle? The rice program is sure to pay huge dividends for Yingluck, and by extension Thaksin, come early 2014 when her government may call a snap poll. The hope would be for Yingluck’s party to demonstrate enough of a mandate to resurrect the amnesty bill. To do that, they will need the farmers. Hence the linear focus on boosting rice prices.

It’s frustrating to think where Thailand might be today had the nation not squandered the last seven years on all things Thaksin. By overreaching so spectacularly with the amnesty bill, Yingluck displayed a level of cluelessness that will further hobble her ability to govern.

The bill might have gotten further if it had also applied to people charged with lese-majeste, which mandates prison sentences as long as 15 years for defaming or insulting the king, queen, heir apparent or regent.

Instead the bill would have allowed Yingluck’s brother, army officers and former Prime Minister Abhisit Vejjajiva, who faces murder charges for authorizing soldiers to use weapons during unrest in 2010, to walk free — not average Thais. It left the pro-Thaksin Red Shirts and opponents known as the Yellow Shirts wondering who, or what, they had been fighting for.

It’s time that the Republic of Thaksin became less about one man and more about the aspirations and needs of Thais.

William Pesek is a Bloomberg View columnist based in Tokyo.

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