Making a World Safe for Development: Indonesia and the Revival of the New International Economic Order

Once dismissed as a dead utopia from the mid-1970s, the New International Economic Order (NIEO) – a radical vision to dismantle an unequal international economic order and empower the interests of developing nations in the Global South, is rising from its ashes. In December 2022, the UN General Assembly formally adopted the resolution 77/174 ‘Towards a New International Economic Order,’ which envisioned the improvement of the financial conditions for developing countries and the realisation of the NIEO Programme of Action. Similarly, progressive organisations like the Tricontinental Institute and Progressive International are attempting to resurrect the NIEO to articulate a bold vision of justice, equality, and radical reform of the existing global order.

In my new research, reflecting on the fiftieth anniversary of the NIEO, I examine the factors driving its resurgence in the twenty-first century by looking at the case of Indonesia, a key proponent of the NIEO since its very inception. I argue that Indonesia is trying to revive a vision based on the NIEO to reaffirm its right to development and sovereignty over natural resources, especially in response to accusations of trade discrimination by the European Union.

Under former president Joko Widodo, and his successor Prabowo Subianto, Indonesia has attempted to increase extractive benefits from its massive natural resources industries, varying from coal to nickel, and particularly amid the current battles between the US and China over the future of those minerals critical for the world’s energy transition. Reviving the NIEO has been an essential strategy for Indonesia, not only to develop its rich natural resources industries but also to enable more equal economic relations – particularly with the West, amid the threat of US president Trump’s new tariff and trade wars.

The New International Economic Order

The original call in the 1970s for a new international economic order was, in essence, a call for development. After the Second World War, the world order was divided and hierarchized ideologically and economically. The Western bloc, led by the United States, championed a vision of the ‘free world’ instituted by liberal visions, such as democracy and free trade. The Communist bloc, led by the Soviet Union, set a starkly different vision that emphasised economic equality, worker’s liberation, and a world free from capitalism.

The newly-independent countries in Asia and Africa, many of which gained their independence after the Second World War, aimed to advance the interests of the Third World while championing a broader vision of decolonisation – in the roams of economics, politics, law, and so on. At the 1955 Asian and African Conference in Bandung, Indonesia, these nations recognised ‘the urgency of promoting economic development in the Asian and African region’ as a key recommendation in their Final Communique. The conference proposed a bold agenda of economic development, emphasising economic sovereignty, enhanced cooperation among Asian and African countries, and the establishment of more fair economic relations in areas such as trade, monetary systems, and natural resources’ management.

The central aim of this radical economic development agenda was to complete decolonisation – not only in terms of achieving self-determination, but also by realizing a more just and equitable economic order. According to the famous Algerian diplomat and lawyer Mohammed Bedjaoui, this agenda was crucial for addressing the growing economic inequalities between the former colonial powers in the Global North and the newly-independent countries in the South. In his view, resolving global economic inequalities necessitated a fundamental restructuring of the international economic order, including the dismantling of unequal regimes governing trade, development, and monetary relations.

This aspiration was taken up by Global South states after the Bandung Conference. In 1961, these actors supported the UN General Assembly Resolution 1707 (XVI) that established international trade as a primary institution for economic development, emphasising the removal of trade barriers and protectionist practices that constrained the development agenda of the Global South. This resolution became the basis for the broader aspiration for reforming international economic order. Three years later, a group of Asian, African, and Latin American states declared a new ‘Group of 77’ to intensify economic cooperation among developing economies and advance a shared economic agenda within the United Nations.

Pivotal to the establishment of the Group of 77 was a famous report from 1964 prepared by Raúl Prebisch, the then Secretary-General of UNCTAD (the United Nations Conference on Trade and Development). In his report, the Argentinian dependency economist highlighted the unequal relationship in the world economy between ‘centres,’ the industrialised nations, and ‘peripheries,’ developing countries whose economies were primarily based on primary resources for economic production, but wished to develop their own industries while being unable to find sufficient investment for them. The report laid the foundation for further initiatives to lessen the gap between these centres and peripheries, primarily by encouraging import-substituting industrialisation in developing countries to replace import with domestic products, and utilize trade to support economic development projects in the Global South.

The momentum to realise these aspirations came in the 1970s. The world witnessed an unprecedented economic crisis in the 1970s, including the collapse of the Bretton Woods agreements, the 1972-1973 oil embargo, and an ensuing global economic recession. At the UNCTAD meeting in Santiago, Chile (1972), a vision to restructure this crumbling international economic order were developed with several key demands, including increasing the respect for postcolonial sovereignty over natural resources, promoting just and equitable prices of raw materials between the Global North and the Global South, and protect postcolonial states from the threat of ‘neo-colonialism.’

The UNCTAD meeting was followed by a consolidated effort from the ‘Group of 77’ at the UN General Assembly special session in 1974 to establish what would become known as the NIEO. Led by Mexican President Luis Echeverria and Algerian President Houari Boumediene, leaders of the Group of 77 proposed a special declaration calling for major reforms of the existing international economic order. These demands included: a fair trade rule that facilitated development for countries from the Global South, a reform of the international monetary system, permanent sovereignty over natural resources, and fairer prices of raw materials for the Global South. This unique declaration was passed unanimously by the UN General Assembly, with approval by both members from the Western and Soviet blocs.

Building ‘Genuine Interdependence’

A closer, bottom-up look at Indonesia’s underappreciated role in the making of the NIEO can provide a better insight into why this Southeast Asian regional hegemon demanded a new international economic order as such, from its inception in the 1970s to its renewed relevance for the region today. Indonesia’s vision of what the NIEO should be was, in some respects, distinctive to what other key proponents, such as Algeria and Mexico, proposed. In particular, Jakarta emphasised the right to development and interdependence between the North and South as the key objective of NIEO. Indonesia’s position supported the call for North-South economic equality, but did not express much enthusiasm to completely dismantling the existing rules of international economic order, as Algeria and Mexico aspired.

Most crucially, Indonesia had a key role in the formulation of NIEO by hosting the foundational Bandung Conference. Under President Sukarno, Indonesia became a leading voice of the Third World, facilitating the emergence of the Non-Aligned Movement (NAM). On various occasions, it also took a confrontational approach with many Western countries.

However, from 1966 onward, Indonesia moved to a more pro-Western direction under President Soeharto. Unlike Sukarno, his successor emphasised the importance of development and the need to increase Western foreign investments as a more opportune strategy to advance Indonesia’s economic modernisation. Since the 1970s, Indonesia has changed course by embracing foreign investment. This shift coincided with the oil and resource commodity booms around this period. The oil boom enabled Indonesia to pursue more ambitious development projects, such as agricultural modernisation and infrastructural development.

This development agenda laid the basis for Indonesia’s more moderate vision of the NIEO: supporting its call for global economic equality, but without compromising the global economic rules that benefitted its own developmentalist project. This view was best articulated by then Foreign Minister, Adam Malik, a politician and diplomat with a pro-Western outlook who was trusted by President Soeharto after his power grab. In a remarkable speech he gave at the UN General Assembly session in 1973, Malik maintained Indonesia’s support for the NIEO. In his eyes, the NIEO’s main goal was to raise the standard of living and welfare of the people of the developing world.

However, Malik’s position was neither a full-fledged defence of the NIEO nor an attempt to fully dismantle the ‘old’ international economic order. Instead, in his UNGA speech a year later, he proposed to strengthen economic interdependence between the Global North and Global South. For Malik, who believed more in non-alignment and cooperation than radical Third World confrontation, the call for a new international order illustrated the importance of ‘interdependence among nations.’ The world’s economic problems were inherently interconnected and required joint and concerted action to solve them. The global crisis could not be resolved only by a select group of nations, he argued. In his view, it required a joint effort between the North and South to realise what he called ‘global interdependence.’

Malik’s non-aligned position exemplified Indonesia’s ‘moderate’ support for NIEO, emphasising developmentalism without entirely giving up existing global economic rules. In his memoir, he wrote that he envisioned his own role as a ‘bridge’ between the North and South, rather than merely a vocal representative of a front of developing countries. At the same time, he also admitted that creating a world safe for development also necessitated radical economic equality. In Malik’s words, ‘no nation can enjoy the fruits of material abundance or social welfare as long as other nations remain destitute, for the economic fabric of the world is like an indivisible chain that is only as strong as its weakest link.’

Malik’s moderate position illustrates Indonesia’s broader vision of a global economy in the mid-1970s, which emphasised what President Soeharto considered a ‘shared responsibility and genuine interdependence’: a vision for a new international economic order based on reciprocity between the Global North and the Global South, which in turn would enable the latter to fund its own development agenda. Instead of confronting the Western or Communist blocs and demanding economic decolonisation, Indonesia – along with other non-aligned countries – wanted to create a bridge with the North in order to promote their own development projects.

In the end, Western countries, as well as the Soviet Union, were reluctant to accommodate the NIEO’s demands, especially since the former’s turn to neoliberalism from the 1980s onwards. The North-South dialogue, which was hoped to build a bridge between different economic agendas, was effectively in disarray by the late 1980s. The end of the Cold War saw the adoption of various neoliberal economic policies by numerous Global South countries, effectively spelling the end of the ‘old’ NIEO proposal.

The Twenty-First Century Revival: Responding to US-China Competition

Yet, the aspiration for a more just and equal international economic order never lost support even after the NIEO’s collapse. Fifty years later, its call for a fair global economic system has taken directions that its original proposers could hardly have envisioned: to defend the Global South’s economic policies amid fierce US-China competition.

Indonesia’s call to revive the NIEO in a new form is linked with its ongoing efforts to reform its extractive industry regime in the early twenty-first century. President Soeharto’s regime collapsed after the Asian financial crisis in 1997-1998; since then, Indonesia has embarked on a series of economic reforms that would lead to economic deregulation, institutionalisation of free trade, and fiscal stabilisation, followed by democratisation. From the start of the twenty-first century, Indonesia’s economy has significantly recovered and economic growth has returned, mainly due to a surge in commodity exports.

To maximise benefits from new resource commodity booms, Indonesia began to refine its regulation of mining and mineral industries. Indonesia started to revise the Mineral and Coal Bill in 2009 to refine mineral processing system; this was followed by a set of policies dubbed as ‘industrial downstreaming’, including ban on the export of raw materials, particularly critical minerals, and a set of obligation for mining companies to build facilities for raw materials’ processing and contribute to Indonesia’s domestic market. Unsurprisingly, given Indonesia’s membership in the World Trade Organization, these export bans were challenged by the European Union, which said that they constituted illegal trade protectionism. A dispute at the World Trade Organisation ensued. The WTO ruled in 2022 that the prohibition of nickel exports were in tension with free trade rules, and required the government to reverse such policies.

This particular WTO ruling has revived Indonesia’s interest into resurrecting a new international economic order. At the 2022 UN General Assembly debate, Indonesia’s Foreign Minister Retno Marsudi, who is an experienced career diplomat, revived the call by proposing a ‘new world order’ (defined primarily in economic terms) based on three key paradigms: win-win solutions (as opposed to zero-sum games), engagement (instead of containment), and collaboration (not competition).

By proposing these three concepts, Marsudi tried to revive the long-standing call from the UN General Assembly for a new international economic order that would eliminate economic development gaps and access to finance for states in the Global South. What is distinctive to this new call was its framing. While calling for a NIEO 2.0, Marsudi strongly criticised trade discrimination, the Western monopoly in international trade, and the Western abuse of global economic governance to justify the rules of the strong. She argued that these practices have led to injustices and widening global economic inequalities, whereby ‘the weak stand small and the mighty take all.’

But despite this assertive advocacy for a new international economic order, it does not aim to foster enmity with Western countries – at least not from Jakarta’s perspective. Indonesia still maintains a position of non-alignment in its foreign policy. Under the new President Prabowo Subianto, who is touted in Western media as having a more nationalistic and militaristic approach than his predecessor, Indonesia attempts to maintain constructive relationship to both China and the United States.

Since assuming presidency, Prabowo has repeatedly criticised the Western-led financial institutions as perpetuating injustice. Prabowo has formally joined BRICS in early 2025 and vowed to continue the industrial downstreaming policies. But Prabowo also engaged with the United States. Shortly after assuming presidency, he went to the US and met with President Joe Biden, reiterating Indonesia’s commitment to improving relations with the West. As new Foreign Minister Sugiono noted, Indonesia aims to give the West, ‘equal access to Indonesia’s critical minerals’ while ensuring the same opportunities for Indonesian businesses.

Indonesia’s embrace of the NIEO, therefore, has been always guided by a deep level of pragmatism in order to navigate changing global political and economic contexts, most recently that of US-China economic competition. Indonesia wants to obtain even more benefits from its vast natural resources, particularly in relation to those minerals critical for the world’s energy transition. But Indonesia also fears the adverse impacts of US-China competition. Indonesia’s leaders especially fear that Donald Trump’s call for tariffs and renewed trade wars with China could damage its development agenda in various ways.

To mitigate the adverse impacts of the US-China competition, Indonesia envisions a new international economic order for the twenty-first century. For Indonesians, the central global political economy question is less about maintaining a ‘rules-based international order,’ as advocated by the Western countries, and more about reasserting sovereignty over their natural resources. Realising economic sovereignty requires fairer North-South relations, creating a world that is safe for development in the Global South.

The views and opinions expressed in the CGO blog posts are those of the authors and do not necessarily reflect those of the programme and its partners.