Interview with Danish Ambassador Niels Kaas Dyrlund
by
Ambassador Niels Kaas Dyrlund
Please give us your assessment of the Thai economic recovery so far.
There is a general consensus that Thailand has done quite well with its macro-economic recovery. The baht has stabilized, some even think its to strong because of the problems of export lead recovery. Inflation is down, interest rates are down, foreign reserves are up to pre-crisis levels, the balance-of-payments seem pretty good and foreign investment is beginning to come in again. All these macro-economic tendencies look quite good and the Thais seem to have adapted to the IMF agreements very well.
What is left of course is the important restructuring in the financial and the private sectors, as both are influenced by the non-performing loans. Both inside and outside the country, there is a consensus that if these problems are not resolved Thailand will not have sustainable recovery.
The Thai Government has done three things to promote recovery. First, it has tried to promote demand, both externally (which has not been as promising as first thought), and internally. It is trying to expand domestic demand with its Bt130 billion baht assistance package announced in March. This focuses on tax reductions, public programs and it is now in the process of being injected into the economy.
Second, the Government is trying to reduce the debt with the recently passed bankruptcy and foreclosure laws. Now, it is in the process of putting this legal machinery in place. Interest rate reduction will help but it's a slow moving process which is led by the market.
Third, there is the issue of bank restructuring, as the government has taken over certain banks which it hopes to re-privatize later this year. It has encouraged those banks which are relatively healthy to get capital from the outside. For those that aren't, last August it implemented a two-tier system which unfortunately has not worked as efficiently as the Government would have hoped.
Remember, the situation in Asia is much different from when Thailand had the highest growth rate in the region. There are strong competitive forces now in China, India, Vietnam and soon Cambodia in terms of cheap labor and cheap real estate so Thailand has to make additional reforms in the educational system and technology development in order to gain a competitive edge. Thus, it is essential that the government institutionalize reforms for the future.
But the government must also be careful politically because it cannot just abandon the so-called "sunset industries" - which are very labor intensive - because if would create further unemployment and risk social unrest and political disagreement within the coalition. So the government must meet a delicate balance of fulfilling its immediate tasks but also looking to the future as well.
Please fill us in on Denmark's role in the recent NATO war with Yugoslavia?
We supported the campaign all the way through by providing surveillance planes and fighter pilots in support positions. We will also be part of the Kosovo force as we will probably send a battalion of 850 soldiers. We are also supporting the refugee camps with quite a lot of money and we will be heavily involved in the repatriation project. Our only reservation was that the UN was not as involved as it could have been, so we are very involved in getting the UN re-involved in the process as it does have a huge role to play in the maintenance of global peace.
What is Denmark's status within the EU today?
When we adopted the Maastricht Treaty we held a referendum where the Danish people by a narrow margin voted not to join the EU. So the government had to find a way to get the people behind the Treaty, and it did so by making three reservations towards adopting Maastricht: a.) on common currency; b.) on defense co-operation and c.) on legal and judicial cross-border issues. So until these issues are cleared up, we will not be a full-fledged member of the EU.
Those opposed to the Euro fear it would limit our ability to manage our welfare state because basically what the Euro does is it requires you to follow specific monetary and fiscal policies. People were instinctively afraid that if there were demands from a Central European Bank or a Council of Ministers that they will affect our domestic policies.
So now the government wants to demonstrate to the population that if a common currency can work in Germany, in Finland and in Spain, then it can work in Denmark too. And as Danes like to travel a lot they will get a chance to see it at work in neighboring countries. There is nothing like seeing things work in other places to encourage people to implement similar policies in its own lands. However, our Prime Minister, Poul Erik Rasmussen, does not want to do this in a theoretical way, he wants to show people it can work before it implements a common currency.
We have traditionally been strong supporters of NATO, and trans-Atlantic defense cooperation. But it took a very long time to reach that point, as we were always neutral until we were invaded by Germany in 1940, so joining NATO was a very big decision for us. The Danish Government is therefore reluctant to break up that North Atlantic consensus and focus on a European Defense Force as it is something that people are very reluctant about. Nowadays, however, Europe is becoming more and more active in areas such as Kosovo and the Balkans. And it's not the issue of defending yourself anymore- which was what NATO was originally set up to do - now it has become an issue of crisis management and the upholding of human rights, and that may change the population's view of European Defense Cooperation. I think what has happened in Kosovo and the Balkans will have an important impact on people's opinion on this issue, but again the government is careful and it does not want to rush the people and upset the consensus.
Regarding legal co-operation, again there is a lot of emotion involved. Can police forces work across borders? You see, again, you are touching on very strong sovereignty issues. As this cooperation develops though we must learn how to combat international crime together as well as how to manage common borders as people will be coming in and traveling freely within all EU countries, so it is essential that we have strong external controls like they do within the United States. Therefore as this co-operation develops, you will probably see more of an acceptance from the Danish people.
Tell us a little about Danish-Thai relations and what is it like for a Dane to be here in Thailand?
It's an extremely interesting and favorable place to work as Danes have been coming here since 1621 and we have developed strong links with Thailand and our Royal Families are very close as well.
After King Chulalongkorn made his trip to Europe he brought in a number of Danes to work here as he was very interested in getting European technology and know-how for his country. Thailand realized that if it wasn't going to be dominated from the outside, it had to develop from the inside.
Danes feel very comfortable here and they travel to Thailand in great numbers. Indeed, wherever you go in Thailand you find someone who has some link with Denmark; many Thais have gone to our colleges to study agricultural methods and environmental policies. There are really very few Thais that you meet who do not have some knowledge of Denmark. And my job is to maintain that great relationship that our two countries share.
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