nerals and
offshore placer deposits are actively exploited by bordering
countries, particularly India, South Africa, Indonesia, Sri Lanka,
and Thailand.

Indonesia
Indonesia, a vast polyglot nation, faces economic
development problems stemming from recent acts of terrorism, unequal
resource distribution among regions, endemic corruption, the lack of
reliable legal recourse in contract disputes, weaknesses in the
banking system, and a generally poor climate for foreign investment.
Indonesia withdrew from its IMF program at the end of 2003, but
issued a "White Paper" that commits the government to maintaining
fundamentally sound macroeconomic policies previously established
under IMF guidelines. Investors, however, continued to face a host
of on-the-ground microeconomic problems and an inadequate judicial
system. Keys to future growth remain internal reform, building up
the confidence of international and domestic investors, and strong
global economic growth.

Iran
Iran's economy is marked by a bloated, inefficient state
sector, over reliance on the oil sector, and statist policies that
create major distortions throughout. Most economic activity is
controlled by the state. Private sector activity is typically
small-scale - workshops, farming, and services. President KHATAMI
has continued to follow the market reform plans of former President
RAFSANJANI, with limited progress. Relatively high oil prices in
recent years have enabled Iran to amass some $22 billion in foreign
exchange reserves, but have not eased economic hardships such as
high unemployment and inflation. In December 2003 a major earthquake
devastated the city of Bam in southeastern Iran, killing more than
30,000 people.

Iraq
Iraq's economy is dominated by the oil sector, which has
traditionally provided about 95% of foreign exchange earnings. In
the 1980s financial problems caused by massive expenditures in the
eight-year war with Iran and damage to oil export facilities by Iran
led the government to implement austerity measures, borrow heavily,
and later reschedule foreign debt payments; Iraq suffered economic
losses from that war of at least $100 billion. After hostilities
ended in 1988, oil exports gradually increased with the construction
of new pipelines and restoration of damaged facilities. Iraq's
seizure of Kuwait in August 1990, subsequent international economic
sa