Introduction:
The Dutch began to colonize Indonesia in the early 17th century; the islands were occupied by Japan from 1942 to 1945. Indonesia declared its independence after Japan's surrender, but it required four years of intermittent negotiations, recurring hostilities, and UN mediation before the Netherlands agreed to relinquish its colony. Indonesia is the world's largest archipelagic state and home to the world's largest Muslim population. Current issues include: alleviating poverty, preventing terrorism, consolidating democracy after four decades of authoritarianism, implementing financial sector reforms, stemming corruption, and holding the military and police accountable for human rights violations. Indonesia was the nation worst hit by the December 2004 tsunami, which particularly affected Aceh province causing over 100,000 deaths and over $4 billion in damage. An additional earthquake in March 2005 created heavy destruction on the island of Nias. Reconstruction in these areas may take up to a decade. In 2005, Indonesia reached a historic peace agreement with armed separatists in Aceh, but it continues to face a low intensity separatist guerilla movement in Papua.

Location: Southeastern Asia, archipelago between the Indian Ocean and the Pacific Ocean

Population: 245,452,739 (July 2006 est.)

Languages: Bahasa Indonesia (official, modified form of Malay), English, Dutch, local dialects, the most widely spoken of which is Javanese

Country name: conventional long form: Republic of Indonesia
conventional short form: Indonesia
local long form: Republik Indonesia
local short form: Indonesia
former: Netherlands East Indies; Dutch East Indies

Capital: name: Jakarta
geographic coordinates: 6 10 S, 106 48 E
time difference: UTC+7 (12 hours ahead of Washington, DC during Standard Time)
note: Indonesia is divided into t

Economy - overview:
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.