Virabongsa facing a now in position

Firing central bank gover¬nor Tarisa Watanagase is seen as imminent as Deputy Finance Minister Suchat Tadatamrongvej made clear yesterday that the govern¬ment has to stand up against the governor, who holds a dif¬ferent point of view on the state of the economy.

Indeed, efforts to oust Tarisa recently intensified shortly before Virabongsa accepted PM Samak Sunderavej's offer. Virabongsa has attacked the Bank of Thailand governor on several occasions. He has strongly supported fiscal and mone¬tary expansionist policies to boost economic growth.

Virabongsa has expressed his strong opposition to rate hikes to fight inflation, fearing it would dampen consumer spending and investment. Neither does he agree with the central bank implementing tough international account¬ing standards on commercial banks.

If Virabongsa succeeds in Tarisa's removal, will his image as a renowned econo¬mist boost confi¬dence in the gov¬ernment's econom¬ic management?

It may or may not.

Virabongsa would be putting his credibility at risk over an issue of conflict of interest and his academic integrity.

He has vested interests in a number of private firms. In particular, he is chairman of Finansa, a merchant banking group that is under the super¬vision of the central bank. The public may suspect that he could be acting in the interests of the firm.

Next, there is no consensus about interestrate policy. There are a few independent economists on Virabongsa's side. Most of them have thrown their support behind the central bank governor. Virabongsa has long been absent from serious econom¬ic research.

"Economics is not a com¬plicated subject - people only have to use common sense to understand it. What I am studying [astrology] now is much more complicated," Virabongsa recently told a press conference.

Some economists have argued that the local press has given Virabongsa too much credit due to his connections with the elite. His popularity may partly come from his pre¬vious research work.

"This time Virabongsa is wrong," said one economist who asked not to be named.

The poor image of the gov¬ernment, and Finance Minister Surapong Suebwonglee in particular, could also damage Virabongsa's credibility.

Surapong was accused of appointing people with tar¬nished reputations as BOT board members and to the Securities and Exchange Commission.

Growing demands for transparency and accounta¬bility in public policy man¬agement would handicap Virabongsa, who views the growing civic movement as "mob rule" in contrast to many who see the phenomenon as the growth of "participatory democracy".

Virabongsa has already been closely scruti¬nised and many have called for him to resign from pri¬vate companies.

The judiciary might also put a brake on Virabongsa. Economists may embrace economic liberalisation and implement policies that they deemed appropriate and in line with the law. Judges and other profession¬als may think otherwise.

As political tensions remain high, this delicate sit¬uation could easily lead to dif¬ferent views in legal interpre¬tations or misunderstandings.

Virabongsa may have every good intention to work for the public interest. However, given the political instability coupled with market volatili¬ty, it may turn out that he is unable to achieve anything very much.