Thailand’s gathering clouds: a ‘judicial coup’ in the offing?
The Shinawatra dynasty appears to be facing its most precarious moment since 2014, with Prime Minister Paetongtarn Shinawatra hanging by a political thread after a disastrous leaked phone call with former Cambodian strongman Hun Sen. It’s a familiar script for southeast Asia watchers: a border dispute with Cambodia, nationalist fervor, and mounting pressure that historically precedes military or judicial intervention against Shinawatra governments.
Thousands protested in Bangkok demanding Paetongtarn’s resignation, with her coalition government reeling from the departure of the Bhumjaithai party, leaving a razor-thin parliamentary majority
Constitutional Court proceedings and anti-corruption investigations are now underway that could remove the younger Shinawatra from office, echoing the judicial maneuvers that toppled both her father Thaksin (2006) and aunt Yingluck (2014). The word on the streets is that Paetongtarn is unlikely to survive, but the latest anti-Shinawatra coup will be judicial, not military. And why the acrimony? The most compelling rumor is that Thai parliamentary proposals to legalize casinos is one bridge too far for the Cambodian government, for which legalized gambling is a major source of income and doesn’t want Thai money spinners staying home.
Political theater in Cambodia
The Cambodia-Thailand border crisis is arguably a masterclass in former prime minister Hun Sen’s political theater, with the strongman – father of the current prime minister Hun Manet – deliberately leaking his phone conversation with Thai Prime Minister Paetongtarn Shinawatra to damage Thailand’s government while burnishing his nationalist credentials at home.
Cambodia has escalated with economic warfare, suspending all fuel and gas imports from Thailand and threatening further boycotts – an interesting reversal given the historically warm Hun Sen-Shinawatra family ties.
The dispute centers on contested border territory where a Cambodian soldier was killed in May, but Hun Sen has transformed this into domestic political capital while pursuing International Court of Justice intervention. The timing serves multiple purposes: distracting from Cambodia’s own economic vulnerabilities vis-à-vis Vietnam and demonstrating strength to his domestic audience.
Tariff negotiations at critical juncture
Since US President Donald Trump threatened his wide-ranging “Liberation Day” tariffs on April 2, before pausing most of them for 90 days on April 9, Vietnam has for emerged as the most proactive ASEAN negotiator with Washington, securing multiple rounds of high-level trade talks aimed at reducing the devastating 46% tariff threat
Recent reports suggest the Trump administration is driving an exceptionally hard bargain, demanding Vietnam essentially decouple from Chinese supply chains – a potentially impossible ask given the structural integration of the two economies.
For context, Vietnam has nearly tripled its exports to the US since the start of the US-China trade war in 2018, but as exports to the US boomed, Vietnam also vastly expanded imports from China, with their inflow almost exactly matching the value and swings of exports to the US over the years, each totaling around $140 billion in 2024.
Vietnam enacts banking reforms
Vietnam’s National Assembly approved sweeping banking reforms late last week, expanding the central bank’s crisis intervention powers as part of moves to streamline bad debt recovery mechanisms, according to a Bloomberg report.
The revised credit institutions law, effective October 15, transfers emergency lending authority from the prime minister to the State Bank of Vietnam, enabling zero-interest emergency loans to distressed financial institutions.
“This enables faster and stronger responses in crisis cases that could lead to systemic damage,” Nguyen Anh Duc of SBB Securities told Bloomberg.
The legislation addresses a bottleneck in Vietnam’s banking sector, allowing commercial lenders to directly seize collateral assets from defaulting borrowers, eliminating lengthy court procedures. It’s regarded as a “long-awaited decision” that particularly benefits real-estate-backed lending, where prolonged legal processes have stood in the way of debt recovery in the past.
The reforms reflect Vietnam’s ongoing efforts to strengthen financial stability. The banking sector is still managing non-performing loans from previous economic cycles. The new enhanced powers provide regulators and commercial banks with better tools to deal with potential systemic risks.