The Kingdom of Thailand is a country which is rapidly evolving. It has compressed 150 years of industrialisation into 40 years and several lifetimes of democratic development into the last 35 years. Indeed, for the 30 years prior to the economic crisis of 1997, Thailand was one of the three fastest-growing economies in the world. And today, Thailand is the 35th largest economy in the world.

Such a rapid rate of change would test the cohesiveness of any society. But Thailand has been remarkably fortunate in that it has deep cultural roots. It has existed as a sovereign nation for some 800 years, and for the last 60 years it has had the same remarkable monarch, His Majesty King Bhumibol Adulyadej, who is the world's current longest-reigning monarch. Although these assets do not appear on any balance sheet, recognition of them is essential for an understanding of Thailand's capacity to successfully manage rapid change.

In terms of Thailand's modern democratic development, two watershed moments stand out - October, 1973 and May, 1992. Both times the Kingdom emerged with strengthened democratic credentials, although we did not follow traditional democratic norms.

The events of 1991-1992 led to the promulgation in 1997 of Thailand's most liberal and progressive constitution, known as the "Peoples' Constitution", which created an elected Upper House, made voting mandatory and established numerous independent agencies as a system of checks and balances against abuse of state power by politicians.

The promulgation of the "Peoples' Constitution" coincided with one of the most traumatic events in Thailand's modern history, the financial crisis of 1997, which cost our country nearly a decade of socio-economic development.

Together, these two coincidental events set the stage for nine years of political and economic developments, which culminated in last September's peaceful military intervention.

In a nutshell, the triggers for the military's intervention were the unprecedented consolidation of political and financial power by Thaksin Shinawatra during his five years as prime minister, his alleged abuse of state power, widespread corruption, curtailment of media freedom and a disastrous human rights record.

For the first nine months of last year Thailand was without an effective government. A general election was boycotted by the opposition, and later ruled invalid by the courts. Bangkok witnessed almost daily demonstrations against Thaksin. The system of checks and balances had been subverted and we seemed to have exhausted all constitutional means to end the political impasse.

So the military called a "Time Out" of very limited duration with very specific goals. And within 30 days, Thailand had an interim constitution and an interim government with a clear policy agenda. I believe this intervention was in the public interest and certainly it met with widespread public approval, as indicated by public opinion polls undertaken shortly after the event.

It is now almost six months since my appointment as prime minister and I would like to report to you our progress to date. The interim constitution set a very tough timeline for the restoration of democracy, and so far we have kept to this timeline. The draft constitution is nearing completion and being subject to broad public scrutiny and debate.

Preparations are underway for the national referendum, which will be held in September, and both the interim government and the Council for National Security are absolutely committed to a general election in December, on either the 16th or 23rd, as I announced last week in Bangkok.

In the meantime Thailand's interim government has set itself a punishing reform agenda, comprising four major themes, all of which are designed to help Thailand become a more transparent, more efficient, more productive, more equitable and more sustainable society. They are:

l Successful political reforms

l The restoration of national unity

l Closing the income gap between the rural majority and the urban middle class

l Strengthening the rule of law.

The first of these four themes - successful political reform - I have already touched upon ... In addition, we are establishing institutions for ongoing political reform and democratic development. They will better equip our citizens with an understanding of the rights and responsibilities of citizenship, and provide them with [what] they need to make informed choices.

The second theme - the restoration of national unity - relates to healing the political divide and bringing reconciliation and justice to our three deep South provinces which account for some 2.5 per cent of Thailand's population. The ongoing violence in the three deep South provinces is deeply troubling to all Thais and I am under no illusion that this issue will be susceptible to quick solutions. If we consider this area's long history of neglect and coercion, exacerbated by today's global geo-political realities which have nurtured a resurgence of fundamentalist religious thinking as a defence against perceived threats against religious beliefs, one begins to understand the difficulties we face. However, following on from my earlier apology to the citizens of this area, I intend to continue to pursue a policy of reconciliation, of increasing economic opportunities and of building ever closer relations with our neighbours, Malaysia and Indonesia.

My interim government's third major agenda - closing the income gap between the city and the rural poor - is really at the heart of the political challenges Thailand faces. In spite of the dynamic performance of the Thai economy over the last 40 years, the distribution of wealth has remained very unequal and this is the cause of the political divide. Indeed, it is a measure of Thailand's democratic maturity that this issue is being squarely confronted.

Our fourth major reform theme is strengthening the rule of law where we are making careful but solid progress.

In a recent interview in Time magazine, Thaksin told the world that "corruption in Thailand won't go away, it's in the system". If I thought that was true I wouldn't be here today. Without the rule of law nothing else matters. There can be no justice, no equality and certainly no democracy.

My interim government has been criticised for the slow progress being made into the allegations of corruption and abuse of state power by members of the previous government. Some people have urged the use of executive power to short circuit the judicial process. But if we adopt that approach, how will the rule of law ever be strengthened?

Concrete results are being produced from the investigations and I will continue to place my confidence in the integrity of our judicial system. At the same time, we are working hard to overhaul this system as it relates to transparency and good governance in the public sector, and embarking on the most radical reform of the police for many decades.

One final word. Many of you will be aware that Thailand's interim government has adopted His Majesty the King's "sufficiency economy" philosophy as a fundamental principle of national development. What this means is that we will focus on stable growth, sound macro-economic discipline and the equitable sharing of economic benefits as we compete in the globalised world. Growth with quality means greater concerns for good governance and management of risk. But such concerns do not impact on the market mechanism, nor do they influence the openness of the Thai economy.

Surayud Chulanont

Tokyo