The first speaker is right on some important things. The number of people on the planet is growing and the amount of additional land available to feed them is limited. He may even be right that many benefits will flow from GM food just as they have from GM healthcare. But those benefits are unlikely to flow without big changes in the behaviour of both companies and governments -- and an honest assessment of the risks.
There is no long-term safety test for foods in the way that there is for health. We need a tougher regulatory process. Companies should be the first to press for tighter regulations -- but instead they spend fortunes trying to persuade governments to impose the least demanding regulations. The second peril is environmental. Europeans put a much higher value on the agricultural environment than Americans: witness the gap between Gloucestershire and Iowa. The truth is that we do not know enough about the long-term impact of GM on the environment. GM 15 not merely a continuation of previous forms of selective breeding; it allows us to create combinations that could not possibly have occurred naturally
Poor people are already worried that seeds will become more expensive. Of particular concern is the so-called "terminator gene". Perhaps 1.4 billion people depend on re-using seeds. The idea that GM food will help feed the poor is something of a canard. A hundred thousand children under the age often die in Brazil every year because of lack of food. But Brazil is the fifth largest agricultural exporter in the world. Safer things such as sustainable agriculture and multi-cropping should be tried first.
The knock-on effect of getting it wrong could be huge. It could hit the promising pharmaceuticals side of biotechnology. It could further undermine faith in the authority of science. And it could seriously damage trade. There are many people who think that the unnatural reordering of the gene pool constitutes a grave form of human hubris. GM will be the lightning rod of all sorts of anxieties about the industrial world and man's arrogance.
The discussion began with two reminders of how important the subject has become. The moderator pointed out that America now wants to put biotechnology on the G7 Agenda. And a Swede described a recent shareholder meeting of a drug company with GM products, where the chairman was physically attacked by two women who had brought shares simply to protest. He argued that the situation with GM food is very similar to that with nuclear power twenty-five years ago -- a battle that business interests lost.
Some speakers argued that transparency is the best way to overcome the public's fears. A Swiss businessman argued that much of the solution lies in clear labelling. Provided labels clearly state the origin of food and consumers have a right to choose, then the issue will not be too explosive. In Switzerland's referendum on GM food, two-thirds of the population voted in favour. But the second panellist noted that up until a few years ago the food companies had fought hard against labelling. Labelling is also much harder than it sounds, he argued: GM and non-GM crops get mixed upon the way to market (because different farmers share the same grain elevators, for example) and even while they are growing (through cross-pollination).
Other speakers put their faith in science and regulation. A German businessman called for the creation of an objective panel, free from bias or vested interests, that would both calm the public's fears and make sure that science moves in the right direction. A Belgian supported the idea of a regulator, with the proviso that it should be as international and independent as possible. The first panellist thought there was some historical evidence to support this approach. The end of the nineteenth century was characterised by similar fears about food, and the response was to create expert bodies based on science. There are now regulatory bodies based on science in all the major regions of the world. But the second panellist was more sceptical. There is no such thing as perfectly objective science, he argued, and there is no way of avoiding making political judgements. Governments need to make sure that scientists are truly independent from vested interests like the GM companies; and they need to listen carefully to consumers. In the end, if consumers think that the regulatory process is inadequate, then it is inadequate.
An American financier wondered about the justification for a "terminator gene", particularly given that one of the arguments in favour of GM foods is that they will help to feed the world's poor. The first panellist pointed out that "terminator" genes are still five years down the road. He argued that the justification for these products is the same as the justification for any protection of intellectual property rights. Nobody will invest the money and effort that it takes to make a new gene unless they can get a return on their investment.
Another American participant wondered whether the GM companies were being as sensitive to the property rights of the developing world: the bulk of the science may be done in the rich world, but 95% of the genes that they work on come from the developing world. She also worried that the GM revolution will increase inequality, just as the green revolution did, because it rewards people who can afford higher quality crops. The first panellist responded that the GM revolution is not as capital intensive as the green revolution: the only thing that changes is what is in the seed not the way that it is farmed. He pointed out that GM foods could hugely decrease inequality by stopping crops from being destroyed by pests and pestilence.
Redesigning the International Financial Architecture
THERE was a general sense that the global capital markets have run a little ahead of their regulators. Nobody disputed the idea that the recent crises in emerging markets should be blamed primarily on the countries concerned. But many people thought that the recent series of dramatic upsets also seemed to highlight failings within the international financial system. The regulators present insisted that these failings were now being addressed. But many of the other participants remained sceptical.
The recent crises were different from previous ones. Capital flows are both bigger and quicker than before. The current crises tend to involve the Capital Account rather than the Current Account. Such crises do not happen in more developed markets. The basic response has thus been built around two ideas: to strengthen domestic regulation in the countries concerned; and to improve the monitoring of emerging markets
In practice, that means six steps. The first is to create standards of international behaviour for countries: in most cases (accounting is the obvious exception) these standards are easy to create, but they have been hard to implement. The second Step is the G7's Financial Stability Forum which brings together all the main regulators and international institutions: it has set up committees to look at short-term capital flows, hedge funds and offshore banking centres. The third push is for greater transparency: more of the IMF's dealings are now being made public. The fourth is an attempt to "bail in" the private sector. The fifth is the establishment of contingency credit lines.
The sixth is less a step than an observation: the spread of flexible exchange rate systems. Every crisis has involved a failed attempt to defend a pegged exchange rate. However, flexible countries have tended to do much better. Countries are now much more likely to let their exchange rates float freely -- though a few may follow Argentina down the road to extremely firm currency board systems. Either way, artificial pegs seem to be out of fashion.
It is worth noting that this is the first Bilderberg meeting where the Euro is a fact rather than the topic of a discussion. The redesign of the financial system, which is now under way, also needs to be set in context. From 1944-73, there was a system of fixed exchange rates. Since then, there has been only piecemeal reform. In the 1970s there was good deal of talk about whether the IMF should exist at all; in fact it has increased and changed its role. But the basic trend has been very unsystematic. Each crisis has called for a "special facility" of one set or another.
Why do we need to change? The globalisation of capital markets has happened much more quickly than the globalisation of their regulatory systems. The advances in electronic data processing combined with financial liberalisation have made capital flows much swifter and also more uniform: all the big investors are following the same benchmarks and being judged on the same quarterly performance, so they tend to act in an even more herd-like than usual.
The IMF should look at these flows, but it should be aware of its limitations. It is very difficult to be right in a world where money moves so quickly. The IMF should set standards for transparency. But perhaps it should leave the job of assessing them to the private sector. If the IMF says that a country is in good shape, it gets into trouble if that country crashes. But if it says that it the country is unhealthy, it gets accused of starting the crash.THIRD PANELLIST
There are grounds for being cynical about financial reform. Fear, greed and ignorance remain as ever the main motors of markets. A leading cen- tral banker has dismissed the attempts to rebuild the financial architecture as a little interior decoration. There have always been crises -- and by many standards the 1980 debt crisis was much worse than what we now...