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Date:

July 3, 2002

Subject:

EU Votes on GM Label Disappointing; Pew on Biotech; Using Big Bus

 

Today in AgBioView - July 4, 2002

* EU Parliament Votes for Tough GM Food Labelling
* Europe Tightens GM Labelling Rules
* European Parliament Vote is a Disappointment for Green Biotech
* Pew on Biotech? Pugh!
* Confidence Building Measures For Biotechnology
* Engelberg Dialogue on Science
* Environmental Safety and Benefits of Biotech Crops
* Workshop Considers Field Testing of Complex Genes
* Voices of The South and North: Alexandria Conference on Biotechnology
* Chemically Inducible Expression of Bt Genes
* How Biotech Crops Protect Water Quality
* The Corporate Key: Using Big Business To Fight Global Poverty

EU Parliament Votes for Tough GM Food Labelling

STRASBOURG, France, July 3 (Reuters) - The European Parliament voted on
Wednesday for a tough regulatory regime to ensure genetically modified
(GM) food is labelled and can be traced from farm to fork.

The draft regulation, which also requires the approval of European Union
governments, formed the last piece of EU rules designed to ease consumers'
concerns about GM organisms which sceptics fear could pose environmental
or health risks.

The bill would require all food and animal feed made from GM organisms
sold in the 15-nation bloc to be labelled even if they cannot be tested
for genetically altered materials.

The rules are likely to irk farmers in the United States where GM crops
are widely grown and treated in much the same ways as conventional
strains.

*****************

Europe Tightens GM Labelling Rules

- BBC News, July 3, 2002

The European Parliament has voted to introduce strict labelling on foods
containing genetically modified (GM) ingredients. Under current EU rules,
only food with more than 1% of GM ingredients has to be labelled. The new
proposals, which still need to be agreed by EU environment ministers,
would mean that food containing GM derivatives which do not necessarily
show up in testing, such as sugar and oils, would still have to be
labelled. But the parliament failed to agree on extra measures demanded by
some Members of the European Parliament (MEPs) to label milk, meat and
eggs from animals reared on GM feed.

Correspondents say the new rules are likely to cause a trade dispute with
the United States, where the export of GM crops is worth billions of
dollars. 'More clarity' Environmental campaign group Friends of the Earth
has welcomed the vote, saying it paved the way for new legislation giving
consumers and farmers the ability to avoid GM foods if they chose to do
so. "This is a major success for European consumers and a serious defeat
for the biotech industry which has lobbied hard to water down these
proposals," Friends of the Earth said. The European Commission hopes new
rules on tighter labelling will provide more clarity, both for consumers
and industry. But those involved in the industry say the proposed rules
would set them back by decades. For the last four years, there has been an
effective moratorium across the EU on the commercial growing of GM crops.
Public anxiety about the technology has meant research has come to a
virtual standstill. And many of Europe's supermarkets have taken GM
products off their shelves.

**********************************************

European Parliament Vote is a Disappointment for Green Biotechnology

- EuropaBio, Brussels, July 3, 2002; Adeline FARRELLY,
f.muylle@europabio.org, Communications Manager, http://www.europabio.org

During the plenary vote in Strasbourg today, MEPs confirmed the
unimplementable positions of the Environment Committee on two proposed
Regulations - GM Food and Feed (Scheele report) and GM Labelling and
Traceability (Trakatellis report).

The majority of MEPs followed the position of the PSE rapporteur Mrs
Scheele and the Green Party on Food/Feed and Traceability/Labelling that
will discriminate against the new technology, reduce consumer choice,
disrupt trade with third countries, while adding nothing to safety.

Simon Barber, of EuropaBio considers that "The arbitrary reduction to a
0.5% threshold instead of 1% as proposed by the Commission is
unrealistic." Cross pollination in the farming environment and some mixing
in the storage, distribution and processing stages will be inevitable, so
these low levels are impossible to achieve.

Parliament further failed to recognise that "adventitiously present" trace
levels of GM products assessed as safe by European Scientific Committees,
and approved and commercialised in third countries, might be
adventitiously present in seed and commodity in the EU. Because of the de
facto moratorium, the approval process in the EU has stopped, while the
rest of the world evaluates, authorises, and cultivates new products that
are bringing significant environmental and economic benefits.

Parliament also decided to add another layer of red tape by voting for
amendments that undermines the "one door one key" approach proposed by the
Commission. Such a procedure would provide excellence in safety assessment
and a uniform and transparent Community procedure for all applications - a
regulatory base that would provide a higher level of confidence for
European citizens.

The plenary supported the Commission's proposal to label GM derived
products that are identical to their non-GM counterparts. Since no DNA or
novel protein of GMO origin is present in these groups of products, no
scientific verification is possible and the system will be open to fraud.

"The ability of Green Biotech to contribute to the goal of Europe becoming
the world's most competitive knowedge-based economy, as set out in the
"Life Sciences and Biotechnology Action Plan" is now in question. It is
crucial that the Council of Ministers act to ensure that there is a future
for green biotechnology in Europe." said Barber.

**********************************************

Pew on Biotech? Pugh!

- Henry I. Miller and Gregory Conko, The Scientist 16[14]:12, Jul. 8,
2002

http://www.the-scientist.com/yr2002/jul/opin_020708.html

Controversies--or perhaps pseudocontroversies would be more apt--continue
to engulf recombinant DNA technology, the "new biotechnology," applied to
agriculture and food production. One theoretical concern is that consumers
might experience allergic reactions to foods made from recombinant
organisms. In a June 2002 report, the Pew Initiative on Food and
Biotechnology concluded that regulatory agencies might have difficulty
evaluating the potential for allergic reactions caused by foods from the
next generation of recombinant DNA-modified organisms.1

This report has garnered attention from government agencies and the
mainstream press, largely because the Pew Initiative touts itself as
occupying the thoughtful middle ground in the biotechnology debates. Pew's
PR machine makes this claim, but that doesn't make it so, and it isn't.

The Pew Initiative is different from other antibiotech players that show
their colors unambiguously--like political activist Jeremy Rifkin, who has
characterized biotechnology as threatening "a form of annihilation every
bit as deadly as nuclear holocaust," or Greenpeace, which demands
"complete elimination [of biotech products from] the food supply and the
environment." Greenpeace and similar groups advocate and have committed
vandalism of field trials at universities and on private and corporate
farms. Pew, on the other hand, commits only intellectual vandalism,
pretending to be what is it not.

While adopting a pretense of neutrality and scholarliness, the June report
from Pew inexplicably ignores the realities and history of the development
of new plant varieties. It wrings its hands about scientists understanding
"little about the fundamental mechanism by which people develop
allergies." It warns that "biotechnology may ... increase the potential
risk of food allergy," because "[t]he ability of biotechnology to move
genes from one organism into another creates the possibility of
introducing allergenic proteins into foods that would not ordinarily
contain them." It expresses concern about "the introduction of novel
proteins that previously have not been in the food supply," because
"[w]ithout prior exposure data, the ability to predict the potential of
the protein to cause an allergic reaction is very limited."

When considered in a vacuum--as though farmers, plant breeders, and others
had never before sought and wrought genetic improvement of food
plants--these seem like legitimate concerns. However, all types of plant
breeding, including more traditional techniques as well as the newer
molecular methods, routinely introduce new DNA, proteins, and other
substances into the food supply. Induced-mutation breeding, a technique in
use since the 1950s, involves exposing crop plants to ionizing radiation
or toxic chemicals to induce random, desirable genetic mutations.
Literally thousands of mutation-bred crops have been commercialized in
North America and Europe during the last half-century. And since the 1930s
plant breeders have performed "wide-cross" hybridizations in which large
numbers of "alien" genes are moved from one species or one genus to
another to create plant varieties that do not and cannot exist in nature.
Common commercial varieties derived from wide crosses include tomato,
potato, oat, rice, wheat, and corn, among others.

In all these examples, breeders and food producers have neither knowledge
of the exact genetic changes that produced the useful trait, nor knowledge
of what other changes have occurred concomitantly in the plant, including
those that could alter the ability to cause allergic reactions. Consider,
for example, the relatively new manmade "species," Triticum
agropyrotriticum, which resulted from the wide-cross combination of the
genomes of bread wheat and a grass sometimes called quackgrass or
couchgrass.2 Possessing all the chromosomes of wheat and one extra whole
genome from the quackgrass, T. agropyrotriticum has been independently
produced for both animal feed and human food in the former Soviet Union,
Canada, the United States, France, Germany, and China.

At least in theory, several kinds of problems could result from a genetic
construction that introduces tens of thousands of "alien" genes into an
established plant variety. These concerns include the potential for
increased invasiveness of the plant in the field, and the possibility that
quackgrass-derived proteins could be toxic or allergenic. Yet dozens of
new varieties are produced each year through these imprecise traditional
methods of genetic improvement, and they enter the marketplace and food
supply without any governmental review or special labeling. Only the
molecular methods of the new biotechnology allow breeders to identify and
characterize the exact changes that have been made in the progeny. This
increased precision and predictability make biotech-derived foods safer
than conventional ones--but paradoxically, they are far more intensively
regulated. Neither government regulators nor the minions at Pew have shown
the slightest interest in or concern about the real risks of plant
breeding.

Anti-innovation, proregulation bias is found consistently, but often
subtly, in Pew's biotechnology-related activities, including workshops,
conferences, and literature. Commonly, Pew attempts to create a kind of
moral equivalence between those who hold ideological, antibiotechnology
views and those who are committed to sound science as the basis for public
policy-- not unlike equating creation theory with Darwinian theory.

A variation on incongruous moral equivalence is the sophistry that is
transparent in the membership of the Initiative's "stakeholder forum,"
whose purpose is ostensibly to "develop consensus recommendations that
will enhance" the regulation of agricultural biotechnology. That it
includes such uncompromising, hard-core, antibiotechnology activists as
Rebecca Goldburg, Carol Tucker Foreman, and Margaret Mellon offers an
indication of the direction in which "consensus" is intended to go.

The outside speakers invited to address public events sponsored by the Pew
Initiative have tended to be cut from the same cloth. A recent workshop on
recombinant DNA-modified plants that produce pharmaceuticals, for example,
featured Jane Henney, a former Food and Drug Administration commissioner
who was relentlessly antagonistic to biotechnology during her tenure at
the agency. Moreover, the cosponsorship of this workshop by the US
Department of Agriculture and FDA reflects Pew's role as a shill for the
interests of the regulators--namely, expanded mandates, bigger budgets,
and larger bureaucratic empires.

Perhaps this bias and disinformation should come as no surprise. Both the
executive director of the Pew Biotechnology Initiative, Michael Rodemeyer
(a former House of Representatives staffer), and the coauthor of the June
report, Lynn Goldman (a former EPA assistant administrator), have a long
history of biotechnophobia and of striving to increase the
already-stultifying, unscientific regulation of this superior and
promising technology.

Thus, one should not be surprised to find that the June Pew report on food
allergy lacks the context that readers need to make accurate judgments
about the safety of recombinant DNA-derived foods. We break out in hives
every time we read it.

--
Henry I. Miller (miller@hoover.stanford.edu) is a physician and fellow at
Stanford University's Hoover Institution. He was an FDA official from 1979
to 1994 and is the author of "Policy Controversy in Biotechnology: An
Insider's View." Gregory Conko (conko@cei.org) is Director of Food Safety
Policy at the Competitive Enterprise Institute.

References 1. L. Bucchini, L.R. Goldman, "A snapshot of federal research
on food allergy: Implications for genetically modified food," June 2002,
available online at www.pewagbiotech.org/research/allergy.pdf. 2. H.I.
Miller, "Risk and regulations: The UN offers swimming lessons to people in
the Sahara," National Review Online, March 12, 2002.

**********************************************

Need Help!

- "Tom DeGregori" İ

I have just finished a book manuscript on the history of organic
agriculture early this morning and I am looking for some information as I
revise it for submission.

Question 1 - I have been told of news stories on the protests in Mexico
over the GM "contamination" of the local landraces of Maize in which it is
stated that all the demonstrators were outsiders with the farmers watching
and wondering what was everyone protesting about.

Anyone have any information along these lines with URLs etc. that I can
access and reputable sources that I can quote?

Question 2 - Earlier this year, we discussed the following article:

Solomon, Ethan B.; Sima Yaron and Karl R. Matthews. 2002. Transmission of
Escherichia coli O157:H7 from Contaminated Manure and Irrigation Water to
Lettuce Plant Tissue and Its Subsequent Internalization, Applied and
Environmental Microbiology, 68(1):397400, January.

At the time, one of the authors indicated that there were further articles
forthcoming this past spring.

Anyone have any information as to whether follow-up articles with URLs
etc. and any further information such as the authors, title, journal, vol,
issue, date and pages? I believe at least one of the authors is a member
of this list.

I will be grateful for any help. Thank you!

Tom DeGregori

Thomas R. DeGregori, Ph.D., Professor of Economics, University of Houston

**********************************************

Conference: Confidence Building Measures For Biotechnology

December 6, 2002; Tempe, Arizona

The Center for the Study of Law, Science, and Technology at the Arizona
State University College of Law and the Arizona Biomedical Institute are
sponsoring a conference entitled Confidence-Building Measures for
Biotechnology. The conference will be held on Friday, December 6 in Tempe,
Arizona.

The concept of "confidence-building measures" (CBMs) is often used in
international relations to refer to concrete, incremental measures
agreeable to all parties that can be implemented relatively quickly to
reduce tensions and build trust in a time of conflict. Such CBMs usually
involve communication, constraint, transparency, and/or verification
measures. CBMs are not intended to provide a comprehensive solution to a
conflict, but rather to bring about a de-escalation in tensions and to
build trust that can develop into a climate that is more conducive to
negotiations and cooperation on a longer-term solution. CBMs have thus
been described as "pragmatic steps toward ideal objectives."

The concept of CBMs may be useful for biotechnology. Biotechnology has the
potential to provide many health, environmental, and economic benefits to
society, but the realization of those benefits is hampered by public
concern and mistrust of this developing technology. While the American
public has not shown the widespread hostility to genetically modified (GM)
products that has been experienced in Europe, public opinion polls
consistently show a strong undercurrent of concern and lack of confidence
in the American public.

While no comprehensive solutions to bridge completely the differences and
disputes over GM products are on the horizon, there may be pragmatic CBMs
available in the short-term that can reduce controversy and build trust,
thereby creating an atmosphere more conducive to reaching consensus on
longer-term and more permanent solutions. Potential CBMs for biotechnology
may be offered from several different disciplines, including biotechnology
science, regulatory policy, law, social and political science, behavioral
sciences, risk communication, economics, and ethics. The objective of this
conference will be to identify and critically analyze new and creative
CBMs for biotechnology. Emphasis will be given to exploring concrete,
innovative steps that are feasible and economic to implement and which can
enhance consumer trust and confidence in biotechnology.

The Center for the Study of Law, Science and Technology is soliciting
proposals for proposals on one or more potential CBMs for biotechnology
for presentation at the conference. The Center will be in a position to
fund the travel costs of a limited number of applicants who submit the
most meritorious proposals. Interested persons should submit an abstract
of their proposed presentation by August 1, 2002. For further information
on the conference, to register to attend, or to submit an abstract, please
contact: Dr. Gary Marchant, Executive Director of the Center for the Study
of Law, Science and Technology, ASU College of Law, PO Box 877906, Tempe,
AZ 85287-7906, or (480) 965-3246. The conference
will be free of charge,
but advance registration is required because of limited space.

**********************************************

Conference: Engelberg Dialogue on Science

- From: Klaus Ammann

Dear friends,

I want to alert you to a really special conference which is different from
most events I have seen and hosted until now. It is a conference where
participants are called upon to participate in a creative decision making
process, where it is possible to help create projects for the next years
to come. We plan to open the Academia Engelberg Dialogue on Science with a
conference taking care about some fundamental problems in all the present
day debates, be it genetic engineering, famine, developing world,
intellectual property rights etc. We still have some places open for this
invited event in Engelberg, Switzerland, it will take place in the
Monastery of Engelberg.

We can still host a limited number of invited participants, who are
especially interested in the themes below. Interested people should apply
toİklaus.ammann@ips.unibe.ch, they should be aware of the fact that no
funding can be provided for rooms and travel. The Conference will cover
under the umbrella topic (for the coming years) FROM GLOBAL INEQUITY
TOWARDS A HUMANE WORLD (Keynote: Prof. Calestous Juma, Harvard) three
discursive themes will be discussed in a maximum of 6 workshops: 1.
Science and the Public Trust (Keynote: Prof. Klaus Leisinger, Novartis) 2.
Communication through participation (Keynote: Patrick Moore, Greenspirit)
3. In Search for Common Goals among Opponents (Keynote: Anatole Krattiger,
bioDevelopments-International) for further details see the programme and
also the website:
http://www.botanischergarten.ch/Engelberg/ProgAcademiaEngelberg.pdf

compare the website explanations about the discursive method applied in
this conference. Basically it is not a recipe, the method should help to
create a collaborative learning atmosphere and even more: The moderators
will be the midwifes in this process and help to create some unexpected
ideas, platforms and projects. http://www.academia-engelberg.ch

Klaus

**********************************************

New CAST Report on Environmental Safety and Benefits of Biotech Crops

The Council for Agricultural Science and Technology (CAST) released a
comprehensive report today: "Comparative Environmental Impacts of
Biotechnology-derived and Traditional Soybean, Corn, and Cotton Crops."
CAST researchers from Washington State University, the University of
Illinois, Clemson University and the National Center for Food and
Agricultural Policy (NCFAP) reviewed and analyzed the scientific
literature to compare the potential environmental impacts of biotech
derived versus conventional crops and address questions raised regarding
the potential environmental impacts of commercially available biotech
soybean, corn and cotton crops. The study was based on nine criteria
including changes in pesticide use patterns, soil management and
conservation tillage, crop weediness, gene flow and outcrossing, pest
resistance, pest population shifts, nontarget and beneficial organisms,
land use efficiency/productivity, and human exposure.

The United Soybean Board, a nonprofit organization representing soybean
farmers throughout the United States commissioned the report. According to
Richard Borgsmiller, a soybean and corn farmer in Illinois and chairman of
the USB, "Farmers often work land that has been in the same family for
generations. Many of us have seen environmental improvements on our farms
as a result of planting biotech varieties. We wanted to verify these
positive effects through an independent assessment by the best scientists
in the country. The CAST report, combined with similar reports from
leading regulatory agencies, adds to the confidence we have in
biotechnology as a beneficial tool that helps us take better care of our
natural resources."

According to the report, "A comprehensive review of the scientific
literature supports the conclusion that overall the currently
commercialized biotechnology-derived soybean, corn, and cotton crops yield
environmental benefits. Furthermore, a critical analysis of the literature
supports the idea that biotechnology-derived soybean, corn, and cotton
pose no environmental concerns unique to or different from those
historically associated with conventionally developed crop varieties."

Available on the CAST web site at: http://www.cast-science.org

**********************************************

Workshop Considers Field Testing of Complex Genes; L. Lareesa Wolfenbarger

- Information Systems For Biotechnology; ISB News Report; July 2002

Information Systems for Biotechnology sponsored a workshop on Criteria for
Field Testing of Plants with Engineered Regulatory, Metabolic and
Signaling Pathways held in Washington, DC, on June 3-4, 2002. The workshop
was intended to promote a multidisciplinary discussion about field testing
and management of plants that contain the "newer," more complex genes
emerging from plant genomics projects. Participants included geneticists,
plant breeders, biotechnologists, physiologists, and ecologists from
government, industry, and academia. As useful genes emerge from plant
genomic research projects, identifying secondary effects and evaluating
their consequences are integral components of biosafety assessments. Field
testing of these products is the first regulatory challenge, as plants
with engineered metabolic and signaling pathways are developed for
commercial use.

Complete article: http://www.isb.vt.edu/news/2002/news02.jul.html#jul0201

====
Voices of The South and North: Alexandria Conference on Biotechnology and
Sustainable Development

-by Jennifer A. Thomson, Information Systems For Biotechnology; ISB News
Report; July 2002

A review of the meeting held in Alexandria Egypt. Ismael Serageldin,
former chair of the Consultative Group on International Agricultural
Research (CGIAR) and Vice President of the World Bank, presided over the
meeting. Serageldin's opening was followed by Gordon Conway, President of
the Rockefeller Foundation, and Dr. Magdy Madkour, Director of the
Agriculture Genetic Engineering Research Institute in Cairo (AGERI). Other
speakers included Marc van Montagu, Director of the Flanders
Interuniversity Institute for Biotechnology Department of Plant Genetics
and Thomas Hoban, Professor in the College of Agriculture and Life
Sciences at North Carolina State University. Panelists included Pat
Mooney, Executive Director of the Rural Advancement Foundation
International (RAFI), Donald Johnston, Secretary General of the OECD, Rudy
Rabbinge, Professor of Land and Water Resources at the University of
Wageningen, and Marc van Montagu.

Complete article: http://www.isb.vt.edu/news/2002/news02.jul.html#jul0202

=====
Chemically Inducible Expression of Bt Genes; by Elizabeth D. Earle, Jun
Cao, Jian-Zhou Zhao, and Anthony Shelton

Transgenes expressed in crop plants are usually controlled either by
constitutive promoters such as 35SCaMV or by promoters that enable gene
expression in specific tissues or cells such as tubers or tapetal cells.
Promoters that are induced by chemical or environmental triggers have
received much less attention but have some attractive features. One such
feature is their use as part of an overall strategy to delay development
of insect resistance.

Complete article: http://www.isb.vt.edu/news/2002/news02.jul.html#jul0203

=========
Biotechnology Insight: How Biotech Crops Protect Water Quality by David I.
Gustafson

Protecting rivers, lakes, and streams is one of the greatest environmental
challenges facing agriculture today. While soil sediment remains the
single biggest concern for rivers and streams, crop protection chemicals
also need careful management. Monitoring studies have shown that some
pesticide residues are present at detectable levels on agricultural land
and occasionally are detectable at concentrations above standards
established by the Environmental Protection Agency (EPA). While these
standards are highly conservative, and there is no evidence of harm to the
public, perceived value exists in the adoption of new practices and
technologies that meet agricultural production needs while reducing the
use
of mobile and persistent crop chemicals.

Complete article: http://www.isb.vt.edu/news/2002/news02.jul.html#jul0204

**********************************************

The Corporate Key : Using Big Business To Fight Global Poverty

- George C Lodge, Foreign Affairs, July 1 2002

In recent months, world leaders -- including President George W. Bush and
UN Secretary-General Kofi Annan -- have proclaimed their determination to
reduce global poverty. Such promises, however, have been made before, and
past efforts to follow through on them have been disappointing. Success
this time will require a new institution that can harness the capabilities
of global corporations and, helped by loans from development agencies,
directly attack the root causes of poverty.

The need for corporate involvement in the fight against poverty stems from
several factors. To begin with, many of the world's poor live in countries
where governments lack either the will or the ability to raise living
standards on their own. Financial assistance to such governments,
therefore, has often not helped their neediest citizens. In fact, in spite
of the roughly $1 trillion that has been spent on grants and loans to
fight poverty around the globe since the end of World War II, nearly half
the world's six billion people still live on less than $2 a day; a fifth
get by on less than $1. At times, foreign aid has even worsened the plight
of the poor, by sustaining the corrupt or otherwise inefficient
governments that caused their misery in the first place. In such
mismanaged countries -- which number close to 70 -- a way must be found to
change the basic system.

Globalization -- seen by many today as a sort of cure-all -- will
certainly not eradicate poverty on its own. True, international trade and
investment have increased vastly over the last decade, making many people
richer. But the problem is that the process has not really been global
enough. In fact, some two billion people today live in countries that are
actually becoming less globalized: trade is diminishing in relation to
national income, economic growth has stagnated, and poverty is on the
rise. Most people in Latin America, the Middle East, and Central Asia are
poorer today than they were ten years ago, and most Africans were better
off forty years ago. The average per capita income of Muslim countries,
from Morocco to Bangladesh and Indonesia to the Philippines, is now just
half the world average.

Poverty is not, of course, a new phenomenon. But during the Cold War,
economic misery abroad did not matter to Washington; the United States and
its allies were concerned with sustaining anti-Soviet regimes, not raising
living standards. Today, however, a new determination has emerged to deal
with what one UN panel has called the "pre-eminent moral and humanitarian
challenge of our age." This new resolve may be motivated partly by
compassion. But it also reflects a growing recognition that terrorism
flourishes among those who think they have nothing to lose. Western
governments have also come to appreciate that the world's financial
system, which came close to meltdown on several occasions in the 1990s,
depends on political stability to sustain itself. And stability in turn
requires governments to maintain a certain legitimacy, which means
broadening the base of political involvement to include the poor. Poverty,
after all, is not only a matter of income; it also reflects and takes form
in powerlessness, alienation, isolation, illiteracy, and disease.

The World Bank has argued that the best way to combat these scourges is
for rich countries to double their foreign aid budgets, and Gordon Brown,
the United Kingdom's chancellor of the exchequer, has called for a new
Marshall Plan to fight poverty. Both initiatives are misguided, however.
Unless a new means is found to ensure that foreign aid does what it is
intended to -- that is, reduce poverty by attacking its causes -- such
efforts would only make matters worse. The success of the Marshall Plan,
after all, was due in part to the fact that postwar Europe had retained a
social, political, and institutional infrastructure -- albeit one battered
by conflict -- that could be revived with an influx of financial
resources, and that would ensure fair distribution of the fruits of the
resulting growth. Today the poorest regions of the world benefit from no
such infrastructure. And what systems do exist actually cause destitution.
Without basic change, no amount of talk about free markets or balanced
budgets will make a difference.

The solution is an entirely new engine of change: a World Development
Corporation (WDC). This entity could be chartered by the United Nations
and established as a joint venture by a select group of global
corporations based in Asia, Europe, and North America. Assisted by rich
governments and by loans from development banks, the WDC would bring to
impoverished areas technology, credit, access to world markets, and
management know-how. Its projects would need to be subsidized at first but
should become profitable in the long run. This last element is critical,
for there is not enough charity or taxpayer money to make a sustainable
difference; only the profit motive can do that.

EARNING AND LEARNING

Rather than merely applying superficial aid, the WDC, with its varied and
integrated capabilities, would work to change the very system that has
caused poverty in poor countries in the first place. Here again the profit
motive would come into play. The WDC would not only provide jobs and raise
incomes, it would also improve education by giving individuals a new
motivation to pursue it. Education, after all, means more than just school
buildings, teachers, and textbooks. In much of the developing world, the
poor lack faith that changing their lives is possible; few believe in the
existence of a social or economic ladder that, with the proper education,
they could use to climb out of their poverty. As a result of such
despondency, children are not encouraged to go to school; many fail to
attend at all or drop out early. Yet many multinational corporations,
while undertaking their regular profit-making activities, have managed to
change this attitude by providing jobs and opportunities that inspire the
hope of change; examples include Coca-Cola in Venezuela, Intel in Costa
Rica, and Land O'Lakes International, Cisco, BP, and IBM in many
countries. These are the kinds of initiatives that the WDC would undertake
and encourage.

The success of a DaimlerChrysler project in Brazil's poverty-stricken
northeast provides a particularly good example of one such venture -- and
of what corporate initiative can accomplish when harnessed to development
work. In 1992, having come under pressure from the Green Party in Germany,
DaimlerBenz (as it was then known) started looking for ways to use more
renewable natural fibers in its automobiles. At the same time, the
Brazilian government was demanding that companies with manufacturing
facilities in the country increase their local content. To address both
problems at once, Joachim Zahn, the head of DaimlerBenz in Brazil,
arranged with POEMA, a local antipoverty program in Belem, to construct a
modern, high-tech factory that would make headrests and seats out of
coconut fibers from locally grown trees. As of today, some 5,200 people
are employed by this project. For these formerly impoverished Brazilians,
life has dramatically changed for the better. Their children are now in
school and doing their homework, not dropping out. People have hope for a
better life and have become active politically. Health facilities have
also improved.

Although this operation will eventually turn a profit for DaimlerChrysler,
it could not have happened without the help of the German and Brazilian
governments. This highlights another role the WDC could play -- marshaling
often essential government support for new development projects. With
backing and financial contributions from governments, multinational
corporations have it in their power to become the world's most effective
means for reducing poverty.

This unmatched power is based on several key assets that corporations can
bring to bear on development projects. First, corporations possess the
competence for the job -- in the form of skills, technology, and access to
global markets and credit. The market by itself does not necessarily help
the poor; special efforts are required to ensure success. Nor is it
sufficient, say, to simply connect rural villages to the Internet;
villagers must also be taught how to use it and have a reason to do so.
That takes training, education, and motivation; corporations can provide
all three.

Corporations also enjoy remarkable access to power. Big companies are able
to reach and pull the levers of government in order to get a road built,
to have a power line strung, or to obtain police protection for a project.
Corporations can also empower citizens more directly. By motivating,
organizing, and educating people, multinational companies can help them
participate in political processes from which they were once excluded.

Another asset big corporations enjoy is the power to protect programs once
they are put in place, and the strength to thwart the status quo. With
this power comes impressive reach as well, access to even the most remote
locations. Finally, corporations tend to stick with projects once they
have been initiated.

All of these attributes are important to poverty alleviation, because
development is far more than just an economic process. Development has
political, social, cultural, and psychological components; it often
entails permanent change, which can be radical in nature. Effective
development often disturbs the status quo, which, in most instances, local
governments - - especially corrupt or ineffective ones -- are inclined to
preserve and protect.

DOING IT RIGHT

The dislocating effects well-intentioned development can sometimes wreak
were made painfully clear to me a number of years ago in Veraguas
province, Panama, where I was working with students to help a radical
bishop, Marcos McGrath, establish credit and marketing cooperatives. Local
government experts who did not understand the system in place at the time
did not help us; in fact, they were a menace. One government seed
specialist, for example, told a subsistence farmer to plant tomatoes. The
farmer did -- and they flourished so well that the landowner on the hill
above decided to extend his fences to include the farmer's land, which the
landowner had previously thought worthless. The farmer, who had no clear
title, was unable to fight back.

This experience, which demonstrated the importance of understanding the
system that leads to poverty in the first place, was reinforced several
years ago, when the World Bank sent me to Kazakhstan to help the minister
of planning draft a strategy for the economic development of the country.
Kazakhstan is rich in oil and minerals. These resources were being
exploited by foreign companies, in partnership with a government that
displayed many signs of corruption, and in a way that contributed little
to the local population. World Bank loans and foreign aid to the
government did not then and would not in the future reduce poverty,
especially among the 80 percent of the population that lived in the
countryside. Millions of rural Kazakhs had been left destitute when, with
the end of communism, the huge wheat- growing collectives of Soviet times
were abandoned -- and with them the schools, hospitals, and infrastructure
that had been built and sustained by large Soviet subsidies.

Western economists urged the Kakazh government to break up the collectives
into privately owned farms of 200 hectares apiece (the average size of a
wheat farm in Saskatchewan) and let the free market do the rest. But this
was impractical advice. Farmers conditioned by three generations of
cradle- to-grave security were not about to become good homesteaders.
Furthermore, there was no local market for their goods, and the farmers
did not even understand the idea of a market in the first place. Nor was
credit available to pay for farm supplies or equipment. Roads and electric
power lines, such as they were, served the old collectives, not the new
farms.

What was needed then to really improve matters -- as most Western
economists failed to recognize -- was basic, systemic change, not a rapid
introduction of a market economy. There is only one good way to establish
a new economic system to replace the old: bit by bit and locality by
locality. And this process requires the kind of skills, knowledge, and
access that only global corporations, such as Cargill, Nestle, Unilever,
Bechtel, or Mitsubishi, can provide. This is the thinking behind the WDC,
which could combine such assets with loans from the World Bank to the
local government, targeted to pay for roads, power, and other necessities.

PARTNERS IN PROFIT

Clearly, many details need to be worked out if the WDC is to become a
reality. It would require a few companies to step forward and take the
lead. These companies might come from the 300 or so firms that have
already joined the UN's Global Compact to promote social programs around
the world.

To put the WDC in place, a number of actions would be needed. First, the
UN would draft a corporate charter to define the purpose of the new body
and assure its legitimacy. Given the prevailing mistrust of global
corporations and the threat they pose to sovereignty, having such a UN
imprimatur would be crucial.

Once the charter was adopted, a select group of global corporations,
called WDC Partners, would establish the WDC itself, which they would then
own. The partners would assign a small team of managers to set up and
serve as a board of directors. The corporate partners would also recruit a
larger group of corporations, called WDC Affiliates, to the effort.
Partners and affiliates, as appropriate, would then undertake the WDC's
actual projects.

Staff requirements would be small at first -- about 30 people -- and their
salaries could be paid by the rich member states of the Organization for
Economic Cooperation and Development. These employees would look for
promising sites for the initial projects, seek out local partners (such as
Brazil's POEMA), secure the support of local governments, and define the
parameters of each individual project. Eventually the local partners would
be expected to take over a controlling interest in the venture.

Once an affiliate corporation had been linked to local partners and the
project got underway, it would be assisted as necessary by loans from
development banks and grants of foreign aid. WDC projects would not run on
charity, however; indeed, they would not survive if they did. Instead, the
projects should eventually return profits to participating affiliates,
their shareholders, and their local partners.

To ensure that projects start and remain within the guidelines of the WDC
charter, the UN secretary-general would name a review group to monitor
each venture. The WDC itself, however, would remain a small organization
managed by people from many countries -- and not dominated by the
nationals of any one state.

By linking global corporations to local projects, the WDC would create
profitable endeavors in order to reduce poverty permanently and
irreversibly. As Harvard Business School Professor Ray Goldberg has
pointed out, such ventures have already proven possible: a smaller version
of the WDC has prospered for more than 20 years now in Latin America.
Known as the Latin American Agribusiness Development Corporation (LAAD),
its shareholders include 16 major finance and agribusiness companies,
including Cargill, Monsanto, Borden, Gerber Products, and Goodyear Tire
and Rubber. Assisted by loans from the U.S. Agency for International
Development, LAAD has helped establish and promote hundreds of
agribusiness enterprises throughout Latin America -- fighting poverty
regionally in the way the WDC would do on a global scale.

John Browne, chief executive of BP -- one of the world's largest
companies, which operates in some 100 countries -- recently spoke of "the
climate of distrust surrounding ... big business," and the fear that "such
concentrated power is unconstrained." To restore trust, he said,
"companies have to demonstrate that our presence, particularly in the
poorer countries ... is a source of human progress." As Browne made clear,
it is indeed in the interest of the world's major corporations and their
shareholders to improve their reputations. And the WDC would be the best
way to do just that. Poverty reduction should not be left to governments
and their creations like the World Bank, which have too often reinforced,
rather than replaced, the systems that have caused so much suffering in
the first place. A new global solution is desperately needed, and everyone
would profit if it were put in place.
---
George C. Lodge is the Jaime and Josefina Chua Tiampo Professor of
Business Administration, Emeritus, at Harvard Business School. His most
recent book is Managing Globalization in the Age of Interdependence.