RI economy to suffer should U.S. attack Iraq

The Jakarta Post Jakarta

Indonesia's economy, still struggling to recover from the economic crisis in the late 1990s, would experience another major setback if the U.S. launched a military strike on Iraq, a foreign-based economist said.

Hal Hill, an economics professor at the Australian National University, told Antara that the attack would severely damage the country's economy and the rest of the world, with the risk of a stock market crash and global economic recession looming large.

He said that this would further hurt Indonesia's exports.

Hill explained that the war would not only discourage foreign investors from coming to the country but could also cause existing ones to flee on fear of a possible backlash from Muslim radicals here.

"I don't think they (foreign investors) would dare to come to Indonesia because a war might cause radicalism to develop in the country," Hill said on Friday, adding that the scope of anti- Western sentiment would depend on whether the attack were perceived as unilateral action by the U.S. or carried the approval of the UN Security Council.

"In the latter case (attack without UN approval), I'm very worried that friction between the West and Islam would be more intense."

He said that even though not all of Iraq's population were Muslims, a U.S.-led attack would create solidarity between Muslim people worldwide, including those in Indonesia.

Commenting on some remarks that a war would benefit Indonesia in that it would send the oil price rocketing, Hill quickly brushed aside such a possibility, saying that in the longer term, it would be a blow to the local economy.

Indonesia is an oil exporting nation and the only member of the Organization of Petroleum Exporting Countries (OPEC) in the region.