From a US perspective, Indonesia is an attractive alternative to Russia, which recently has vied with Venezuela for leadership of the “America in decline” cheering section.
Indonesia, moreover, has shown resilience not only economically, but also as a nation. In spite of its diverse ethnic makeup and far-flung island territory, the country has made a quick transition from military dictatorship and has recovered from myriad challenges and setbacks, including the 1997 Asian financial crisis, the tsunami in 2004, the emergence of radical Islam and domestic unrest. While its per capita GDP remains low, it is a country’s potential that matters in economic affairs, and here Indonesia shines.
Indonesia depends less on exports than its Asian peers (let alone Russia), and its asset markets (timber, palm oil and coal, in particular) have attracted major foreign investment. The government in Jakarta, meanwhile, has taken a strong stand against corruption and moved to address structural problems.
Even demographic trends favor Indonesia, which, with 230 million people, is already the fourth-largest country in the world by population — a full Germany (80-plus million) larger than Russia.
But catchy ideas die hard, and Russia has moved to cement the BRIC concept into an irreversible reality. Its ossification into a de facto global institution moved forward dramatically in June, when the four countries’ leaders met (in Russia, of course) for the first “BRIC Summit.”
That meeting produced a notable broadside against the US, as each member declared its desire to unseat the dollar as the global reserve currency. A few months earlier, the four issued a joint communique ahead of the G20 summit in April noting their shared determination to change the rules of the global economic system.
In the private sector, BRIC index funds have proliferated, though Goldman Sachs has radically hedged its own BRIC bet by introducing a second term — the “Next 11,” or N11 — into the debate. This grouping adds Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam to the economic radar, and, together with the four BRIC countries, probably comprises a more logical and defensible “first tier” of emerging economies.
Russia sniffs at the idea of demotion and US officials appear to be steering clear of the semantic debate. Still, it should surprise no one that Russia lobbied hard for the Yekaterinburg BRIC summit and footed the bill for much of it as well. Why risk exposure too soon?
Nouriel Roubini is chairman of RGE Monitor and professor at the Stern School of Business, New York University.
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