Ruchir Sharma--Why Thaksin Is Tanking.(Thaksin Shinawatra )

Byline: Sharma is a co-head of global emerging markets at Morgan Stanley Investment Management.

In a world where populist backlashes against economic reform are now familiar from Asia to America, Thailand is witnessing a strange detour from the trend. It's in the midst of an elitist uprising, centered in Bangkok, home to 6 million of Thailand's 65 million people and most of its real wealth. There thousands of middle- and upper-class Thais are angered by, among other things, the economy's poor performance; Thailand has been among the worst performing emerging markets for two years running. They've taken to streets to demand that Prime Minister Thaksin Shinawatra leave office, even though he remains highly popular in the rest of the country. The irony is that the political uncertainty threatens to further undermine their wealth.

During his six years in office, Thaksin has never quite endeared himself to the Bangkok crowd. He is contemptuous of the old-style politicians who long courted the capital's elite, only to see their power base crumble time and again. In the last 75 years Thailand has seen 18 coup attempts and 17 new constitutions. Thaksin came to power in 2001 focused on winning votes among the rural majority, inspiring hopes of stability. Following a decline in the military's role in government affairs and the drafting of a new constitution in the 1990s, there was a chance that real democracy would finally take hold.

The Bangkok elite was willing to give Thaksin a chance at the start, hoping that his impressive credentials as a businessman would help him deliver on reforms. But they've since come to view him as a leader with authoritarian impulses, willing to exploit loopholes in the law to unfairly cement his hold on power and benefit his family. The breaking point came in January, when Thaksin's son sold his family's personal stake in the conglomerate Shin Corp. for a huge profit, just days after the passage of a new law that allowed him to do so without paying taxes.

There was nothing illegal about the deal, but critics say it created the clear appearance of impropriety. The prime minister says he's willing to let voters judge by holding fresh polls on April 2. Thaksin is still popular enough to win, but the elite is not appeased. The common refrain of newspaper editors and academics is that rural voters don't know what's good for the country and that Thaksin has bought them off with subsidies, including $25,000 in general-purpose funds for every village, and treatment at state hospitals for $1 per ...