ntries, particularly India, South Africa, Indonesia, Sri Lanka,
and Thailand.

Indonesia
Indonesia, a vast polyglot nation, has struggled to
overcome the Asian financial crisis, and still grapples with high
poverty and unemployment, inadequate infrastructure, endemic
corruption, a fragile banking sector, a poor investment climate, and
unequal resource distribution among regions. The country continues
the slow work of rebuilding from the devastating December 2004
tsunami and from an earthquake in central Java in May 2006 that
caused over $3 billion in damage and losses. Declining oil
production and lack of new exploration investment turned Indonesia
into a net oil importer in 2004. The cost of subsidizing domestic
fuel placed increasing strain on the budget in 2005, and combined
with indecisive monetary policy, contributed to a run on the
currency in August, prompting the government to enact a 126% average
fuel price hike in October. The resulting inflation and interest
rate hikes dampened growth through mid-2006, while large increases
in rice prices pushed millions more people under the national
poverty line. Economic reformers introduced three policy packages in
2006 to improve the investment climate, infrastructure, and the
financial sector, but translating them into reality has not been
easy. 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 Mahmud
AHMADI-NEJAD 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 nearly $60
billion in foreign exchange reserves, but have not eased economic
hardships such as high unemployment and inflation. The proportion of
the economy devoted to the development of weapons of mass
destruction remains a contentious issue with leading Western nations.

Iraq
Iraq's economy is dominated by the oil sector, which has
traditionally provided about 95% of foreign exchange earnings.
Iraq's s