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General Motors Corp announced in February that it will spend $455 million over the next two years on new vehicle production lines and a new diesel-engine factory.

But even such encouraging signs that Thailand remains an important regional economic player belie deeper worries about the long-term impact of the current political impasse.

Former thai premier thaksin Shinawatra (Photo: AFP)

“It’s the cycle of dislocation that is so damaging to the economy. The continuous pro- and anti-Thaksin infighting at the political and the street-mob levels has a cumulative effect,” a senior political economist at Bangkok University, who did not wish to be named because of the sensitivity of the issue, told The Irrawaddy.

“There is a perceived reluctance to invest in new business with all the uncertainty. We have been living under the shadow of coup rumors since the end of 2009 and this is just no good for investment.

“Add to that the constant threats of street demonstrations by yellow-shirted and red-shirted protesters and you have an undercurrent of anxiety permeating the whole of Bangkok life,” said the academic.

Of course, Bangkok isn’t the whole country, but in a nation as politically and economically centralized as Thailand, what happens in the capital is bound to send wide ripples, dampening hopes of a full recovery from the turmoil of the past few years.  

Before the Supreme Court assets seizure judgment against Thaksin in early March, the government had forecast that the economy could grow 4.5 percent this year after contracting 2.3 percent in 2009. Now the Thaksin-funded United Front for Democracy Against Dictatorship—the Redshirts—are threatening mayhem in revenge, prompting Finance Minister Korn Chatikavanij to warn that any further political unrest would hurt investor confidence and disrupt the economic recovery.

There is an almost comical irony in the fact that thousands of people with no wealth, power or influence are prepared to confront police and the army in defense of a man accused of colossal, self-enriching corruption while holding the highest office in the land.

Whatever the immediate effects of the March Redshirt protests, Thaksin’s specter looks certain to continue casting a shadow over Thailand, whether or not he returns to face his sentence and claim the $918 million the court says he can keep.

Love him or hate him, there is a view among some—and a fear among others—that the former police officer with a doctorate in criminal justice from the United States has changed the country forever, and that there is no going back.

Thitinan Pongsudhirak, a professor at Bangkok’s Chulalongkorn University, says Thaksin let the genie out of the bottle with his populist social policies, which for the first time in Thailand’s history spoke to the millions of rural poor.

“They [the Bangkok political and business leaders] should see this as a wake-up call instead of smearing or demonizing Thaksin,” Thitinan was recently quoted by London’s Financial Times as saying. “Thaksin was a catalyst for what needs to happen.”

But with the energies of the country still consumed by a seemingly endless standoff between the two sides in this conflict, many other things that need to happen, especially on the economic front, seem set to remain on hold for the foreseeable future.