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Cablegate: The End of Ceo Budgets: An Example of Post-Coup

VZCZCXRO9288
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #3623 1800919
ZNR UUUUU ZZH
R 290919Z JUN 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 8008
INFO RUCNASE/ASEAN MEMBER COLLECTIVE

UNCLAS BANGKOK 003623

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON TH
SUBJECT: THE END OF CEO BUDGETS: AN EXAMPLE OF POST-COUP
RECENTRALIZATION


1. Summary: The Thaksin-era CEO budget program provided
Thailand with a limited degree of budgetary decentralization.
By providing provincial-level officials discretion to
allocate a portion of development funds the program helped
strengthen the provincial governors and contributed to moving
decision making out of Bangkok. With the end of the program
following the September 2006 coup, the authority of the
central government in Bangkok has been reasserted, perhaps
stronger than ever. End summary.

2. As part of a broader effort to empower provincial
governors, the Thaksin administration introduced the 'CEO
budget' program, setting aside roughly 10 percent of the
national development budget to be allocated by provincial
level authorities. Under the program a general meeting of
provincial authorities, including local members of
parliament, would propose a range of programs in support of
the provincial development plan for funding. The proposals
usually involved projects included in the development plan,
but could include new ideas as well. The list would be
reviewed by a selection board composed of the provincial
governor, the vice governor, and the chiefs of the various
agencies operating in the province (about 20 officials
including finance, agriculture, labor, education and police),
which would consider whether the proposals matched the
provincial priorities for the development plan and decide on
which projects to fund. Examples of funded projects included
programs for poverty reduction, education, SME support, canal
digging, road construction, erosion control and tourism
promotion.

3. The amount of decentralization involved in the CEO budget
program should not be overstated. The budget available was
limited, the projects considered had to follow the centrally
approved development plan, and the selection board members
were themselves representatives of central government
ministries. The provincial governors themselves are
appointed by the Ministry of Interior for 2-3 year terms.
The program nevertheless is believed by some to have
increased respect for the governors from officials from other
agencies who report to their parent ministries in Bangkok and
typically pay little regard for the governor. Much of the
success or failure of the program ultimately depended on the
personal quality of the governor. The program also served as
a vehicle for local MPs to promote pet projects (and dispense
pork), replacing the 'MP's development fund' that had existed
previously. Indeed, in practice roughly half of the projects
funded under the program were proposals from Bangkok
politicians. The program also increased the ability of local
authorities to determine priorities within the development
plan.

4. The demise of the CEO budget program with the September
2007 coup is unlikely to have any significant effect on
provincial development or infrastructure funding. Local road
maintenance, for example, had always been the responsibility
of the tambon (local), not the provincial, administration,
and construction and maintenance of main highways was the
responsibility of the National Highway Department. The
development funds lost with the elimination of the CEO budget
are expected to be made up by increases in funding received
through ministerial channels.

5. The main effect of the elimination of the CEO budget
program is that now all decisions on funding allocations will
be made at the central level, and will be viewed through the
prism of individual ministries, not the multi-disciplinary
provincial boards. This reasserts the traditional dominance
of the central government in Thailand. Indeed, with the MP's
development fund having been superseded by the CEO budget
program, the end of that initiative tends to make the central
bureaucracy even more powerful than before.

6. Comment. The CEO budget program represented another way
in which the Thaksin regime sought to promote the economic
empowerment of the regions outside of Bangkok. For all the
hoopla, the impact of the program was limited, varied
according to the personnel involved, and even drew criticism
for its appropriateness. The end of the program is unlikely
to have any profound effect, or even be noticed by most, but
it provides another example of the reassertion of traditional
authority from the center that is characteristic of much of
Thailand's modern history.
BOYCE

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