Singapore's Failed Coup?

So much has happened in Thailand ever since former premier Thaksin Shinawatra sold his flagship Shin Corp to Singapore government investment arm Temasek Holdings last year.

The deal sparked widespread protest over the non-payment of capital gains tax by Thaksin although it was a common practice in Thailand. Bangkok saw widespread protests and the unprecedented burning of effigies of Singapore PM Lee Hsien Loong and wife Ho Ching, who also heads Temasek. Incidentally, Temasek reports to the Finance Ministry, which is headed by PM Lee. The entire Singapore government machinery backed the Temasek deal despite the disastrous outcome.

That's not the end of the saga. The ageing Thai King backed the military in ousting Thaksin in yet another coup d'etat in the country's history. The military-backed government was incensed when Thaksin made a private visit to Singapore last week. Singapore defended its right to host Thaksin although it's highly questionable whether it was indeed a private visit.

While the saga unfolds, the basic question remains unanswered: Why did Temasek buy Shin in the first place? Although Singapore politicians have said ad nauseam that it was simply a commercial deal, nobody was convinced. Why did the Singapore government arm rush into a badly structured deal with the former Thai premier?

One sexy theory has since surfaced that could help explain the whole saga. According to the theory, the payment of $3 billion to Thaksin for his holding company was part of a quid pro quo to abandon Thailand's long-cherished dream to build the Kra Canal.

According to one wit, Thaksin had wanted to build the canal to resolve two issues at one go -- turn Thailand into a major shipping hub, and isolate the Islamic separatist movement in southern Thailand. A canal will literally divide Thailand into two distinct regions.

The canal project, which has been on the drawing board for more than 300 years, will have major impact on Singapore and even Malaysia should it take off. This is because ships can sail from South China Sea to Andaman Sea and Indian Ocean straight, bypassing Singapore and the Straits of Malacca. The role of Singapore as a shipping hub will be greatly diminished should the Thais finally build the canal.

But not everyone buys the theory. One counter argument: The costs outweigh the benefits of such a project. Furthermore, the time saved for shippers and liners is minimal, unlike the more crucial Panama Canal. Another counter argument: It would have been cheaper for Temasek's port operating arm PSA International to take a stake in the Kra Canal project should it materialise.

Whatever the truth is, events in Thailand are truly fascinating. It's got all the right ingredients for a Hollywood movie!