Thais Clash While the Factories Keep Humming

It’s hard to tell which is the real Thailand: Is it the country whose politics are so divisive and violent that an army coup is possible? Or the country that hosts one of the biggest smoothly functioning carmaking hubs in the world? Thailand is both things—and that’s why the foreign and local business community greeted the latest chapter in its long political drama with a shrug. Upset about Prime Minister Yingluck Shinawatra’s proposed amnesty bill to allow her billionaire brother, former Premier Thaksin Shinawatra, to return from exile in Dubai and avoid prison for a corruption conviction, the anti-Thaksin Yellow Shirts took to the streets in August. Investors have grown accustomed to the contest between the Yellow Shirts and pro-Thaksin Red Shirts, so even as Yingluck’s opponents vowed to bring down her government, the markets stayed calm.

Now Thailand’s crisis is deepening. Ten Thais have died, including an opposition leader, and the government declared a state of emergency in Bangkok on Jan. 21. With the opposition Democrats (the Yellow Shirts) boycotting elections scheduled for Feb. 2, it’s uncertain whether voting will proceed without major disruptions. The military hasn’t taken sides but hasn’t ruled out another coup—there have been nine since 1946. This round of turmoil “is proving more durable than many of us thought,” says Tim Condon, head of Asia research in Singapore for ING Investment Management.