Energy and Climate Policy

Icelandic president Ólafur Ragnar Grímsson discusses the international economic, environmental, and security implications of a changing Arctic region.

HARRY BROADMAN: Good morning, everyone. Welcome to the third session of this symposium. And before lunch, which I know is a heavy burden to bear before you and before all of us up on stage, we're going to talk today about the relationship between scarcity, security and conflict using Africa as a case study. I know that obviously, other regions have been discussed, and Africa also came up in the earlier part of discussion, so we'll really focus on Africa, but when necessary, as you see through the dialogue, we'll pick up where is that more generic problem that we're focusing on. The folks joining me -- I'm Harry Broadman. I'm with PWC leading the emerging markets practice and the chief economist of the firm. To my immediate right is Gary Weir. All the bios are on the table. Juergen Voegele is to his right, and Jendayi Frazer is last but not least to the right. All of us have a variety of expertise in Africa and other emerging markets. And what makes this panel for me quite interesting is the interdisciplinary nature of the folks that we have up here on the table, both by training and by experience. And what I thought we would do is carry on a conversation for 30 minutes or so and then open it up to the floor so we get a fair amount of interaction with the audience. And the way I -- we have agreed, I should say, to carry out this conversation is through different sets of lenses: first, you know, discuss sort of what's the facts on the ground in terms of the degree of scarcity and the potential relationship or relationships with security; how do we measure, how do you quantify those relationships, how robust are those linkages; and then thirdly, who are the operative actors in both recognizing these problems and dealing with the problems; and then finally, fourthly, which is what we see as the dessert, is what's the solutions. And we want to try to spend as much time as possible on the solution side of the discussion as on stating the problems. So maybe Juergen, we can just start with you, And since we're former colleagues at the World Bank for me many years ago, you probably have a great command of the facts, so maybe just set the table for us about the issues in this theme. JUERGEN VOEGELE: Thank you, Harry. Also thank you to CI and the council for having the World Bank here in the room. I was here all morning, and I was -- truly fascinating conversation. So I will try to build a little bit on what has been discussed earlier and maybe add a few facts. One of the most stunning figures that you heard is how many people are going to be water scarce. And Africa is -- that's particularly relevant. In the next -- we estimate by 2025, 2030, it'll be 2.5 billion people on this planet. Two-thirds of all countries in this world will face water scarcity. That in and in itself is a huge, huge challenge. Food security is the second one. I don't know how many of you know what our current global food reserves are. Assume tomorrow agriculture will stop. How many weeks of food supply do we have on the planet? It's about two months. About eight weeks. It's the first time in a very long time in our history that we are that low, which is one of many reasons why food prices are so high at the moment because people are very, very concerned. We have in the last four years globally consumed more food every year than we produced. Despite the fact that prices have been high since 2008, that there is a clear market signal and that the markets usually react, they haven't reacted in the way they normally do. Why is that? Because we have this massive volatility. There is uncertainty in the markets. Farmers do not know what -- should they, should they not, when, what, how much, at what price, et cetera. This is a volatility situation, and that has to do with security and -- insecurity globally that is not going to go away; we're going to have this situation for the next five to 10 years going forward for a number of reasons. Several have been mentioned: We have high oil prices. We have great consumption increases. These are also the facts that lead to the situation that we have. A lot more meat is eaten in China, a lot more consumption. Globally it's going up almost exponentially. Supply is not following, as I've said, for a variety of reasons. Weather is one. Call it climate change or not -- we don't really know -- but what we do know is that we had a huge drought in the U.S. last year, we had a huge flood in Australia, we have droughts and floods, major events going forward every year now; what used to be one in a hundred is now one in one or one in 10 years. This is not normal. It's changing. And our analysis shows two things when it comes to agriculture production and climate. Two to 3 percent of what we normally harvest on this planet every year is lost because we are already in a warming world. The science tells us that we are still .8 percent higher than we were historically. And then we have these major events, which take another 3 to 4 percent of global harvest away from us. So here are some of the facts. This affects Africa very strongly, combination of water and food security. In Asia, 40 percent of the agricultural land is irrigated, which is a great part of the stability and security of food supply in Asia. You know what the percentage is in Africa that's irrigated? It's 4 percent. And in order to get it to a more stable, more secure number, (they will ?) require a huge amount of investment going forward. One third factor which is very concerning to all of us, we are not managing our global landscapes very well. We have mentioned about forests and deforestation. We mentioned about dry land. We mentioned about degraded lands a little bit. Twenty-five percent, one quarter of the entire surface -- land surface is essentially degraded on this planet. That's a luxury we could afford in the past. We cannot afford it in the future because we're reaching our boundaries on that. So these are sort of three of the big issues that define the trade-off between, you know, our security and our food supply. BROADMAN: Gary, what's your -- what's your perspective? I really want to bring out -- sort of take -- sort of double-click on this and talk about what are the determinants beyond the climactic (sic) issues, perhaps in the political realm -- Jendayi also, as well, the economics, you know, the technological -- what's driving sort of, in a first-order sense, the kinds of things that Juergen has mentioned. GARY WEIR: Well, my expertise in the area -- by the way, I'm an historian by training, so -- I'm probably the only historian in the room. And I have to bore you for one second by saying -- and this will please my employers no end -- I'm not a representative of the U.S. government. (Laughter.) I'm not a spokesman for DOD, and I'm not a spokesman for my agency, which is the National Geospatial Intelligence Agency. Now that we have that aside, I can move on. (Laughter.) I'd like to take some of Juergen's comments and bring them down to grass roots. A number of years ago, when I was working for the U.S. Naval Historical Center at the time, we were asked to do a white paper on the historical perspective on the application of naval force in the region as a possible partial solution to the piracy issue that was emerging. And one of the most interesting aspects, once again, focusing on what you just mentioned -- one of the most interesting aspects I found in my early research was people who were experiencing pirate seizures and were debriefed afterwards were talking about the people were seized their vessels. And these people were arguing that they weren't pirates; they weren't criminals. They were their coast guard. Right, right, hardened criminals will tell you that, of course, won't they, because it makes it sound good. However, you continue the research, you look more closely and you go a little bit more deeply, and you'll find that a good many of these people who were active in pirate crews were former fishermen. When their government collapsed in the mid-'90s and the UNOSOM forces had to leave in '95, there was nobody to control their coasts, nobody to protect their economic exclusion zone, 12-mile limit, whatever it was they were -- whatever it was they were going to establish. And factory ships began to come in, and they were skimming off the best in one of the most rich fisheries in the entire -- fisheries in the entire world. These people were arguing that they were protecting what was their own. Now, granted, among pirates -- a lot of them are hardened criminals -- that's not an issue. I think there were a great many people there who were experiencing the kinds of shortages that you -- to which you referred. Their livelihood had gone away. They were using their own instruments, their own little dhows, their boats -- their speedboats to seize people's property -- we would call it property, of course -- but this endeavor on their part was an effort to seize back what had been taken from them. And they saw this fishery as being essentially raped by people who were coming in from the outside. Now, this does not justify piracy, but it does put a perspective on how one -- given the task I was given, how one would apply naval force, if that was necessary, and what kind of solution, because a solution's got to be on land; it's not on the ocean, right? The land is the problem, the political instability and difficulties they've had there. That's the real problem. But this is indicative of the fact that they were deprived of their livelihood. Their fisheries were no longer serving them, so they chose the only other option they could possibly have. So that's the way I took my research, and I took a good long look. And you want me to share with my colleagues here, of course, so I'll close my mouth in a minute. But the important thing here is that to my mind, looking at it from a naval perspective, what I discovered was that the fisheries were key. To bring those fisheries back online for those people solved a variety of problems. And I would suggest bringing them back online in a certain way would be even better, within the context of regional fisheries organizations like RECOFI, for example, where you have larger players helping a struggling Somali government, which we just recently reinvigorated and rerecognized, I believe in early 2013, helping them achieve wider international recognition, best practices from their fellow colleagues in these fisheries organizations, while naval force could be applied sometimes ever so slightly in a light fashion, because of course, the commercial shipping companies have learned best practices and have finally allowed some security companies to come in and supply them with security onboard the ship. And, of course, the International Maritime Bureau has contributed a whole series of statistics that we can follow and study and learn from and a place to report and become -- to notify when these -- when these events take place. But the point is I think it's got to be done in a larger regional context with international assistance. And naval force can be applied in a moderate way to enable. But once again, you know, the shortage of food in the area was key as far as I was concerned. It drove everything for these people, because a great many of the people who were acting as pirates, especially 2005, 2005, 2006, at the real height of it -- these are people who used to earn their living with fishing nets, and now they were having to tote around AK-47s and RPGs, right? And there were -- there were alternatives, and we need to bring those alternatives back to them. BROADMAN: Jendayi, there's clearly a political element to this as well as a political-economic element to this. And I wonder if you could share some insights both from your former role in the State Department and the work that you're doing now as to sort of again delayer this a little bit more as to the causes and the determinants, because only once we do that can we sort of have a robust discussion even broader than before about the policy solutions. FRAZER: Well, it's interesting -- when I was asked to speak on this panel and I got the topics, resource scarcity and conflict, I thought -- when I think of conflict, I think of resource abundance in Africa, and that is conflict, in fact, over the natural wealth that the continent has, whether we're talking about, you know, Eastern Congo -- it's resource-rich -- or we're talking about Nigeria -- again, resource-rich. And a lot of the conflict is over -- even when you think about arable land, Africa has so much arable land; certainly water you could talk about, especially when you talk about the Nile River basin. It's been a resource scarcity framing of the conflict. But really I think at the heart of it is about resource management and effective resource management or ineffective resource management as a source of conflict more so than a scarcity. Perhaps when you talk about environmental degradation and people migrating and moving, you can start saying that, you know, they're -- you know, the pastureless are hitting, you know, settled people when, you know, there's a -- there's a -- there's a theory around that. There's a narrative, is what I would say, around that. Others would say maybe it's going the other way around, that they're moving because of conflict and that conflict and that movement is creating the environmental degradation. So they -- you know, we talked about causation, and I'm not so sure that we know which way or that we can universally talk about it given a continent as diverse as Africa with, you know, local histories and local dynamics. But in my own experience, where I came across this issue of resource scarcity contributing to conflict and certainly preventing or making more difficult conflict resolution and conflict prevention was along the Nile River basin. And in that case, Egypt in particular always looked at the question of South Sudan from the perspective of the Nile, you know, and control over the Nile waters being downstream and being very concerned about what position Sudan or a South Sudan, an independent South Sudan, would have over those Nile waters and the use of the Nile waters. You also -- I also found it was the tensions between Ethiopia and Egypt, with the Ethiopians going so far as to say that the Egyptians were actually trying to destabilize the country so that they could undermine their capacity to control those Nile waters. And we do now know that, you know, Ethiopia's doing a major dam project that Egypt and, for that matter, Sudan object to. And so it's contributing to instability within the horn of Africa. But overall, as I said, I really do think this is more a question about the management of resources. And the effort on the positive side of the Nile River -- Nile basin initiative as an effort to collectively manage those -- you know, the Nile waters is, I think, a positive example. But you know, I guess, you know, where I'd like to stop -- you know, as we continue the conversation, we can get deeper -- is that many of these conflicts in Africa, as I see it -- it is not only about management of resources, which they're fundamentally -- and governance becomes a point of issue there, about state capacity and institutional development -- but it's also about colonial history and trying to exist within states and with treaties that were established during the colonial period, for instance, the 1929 agreement between Egypt and the British, basically saying that Egypt has control, essentially 100 percent authority over the use of the Nile River, and then when Sudan was becoming independent in '56, saying Egypt and Sudan (does ?), which of course creates all types of conflict and crises with the upstream countries, Ethiopia, Uganda, Kenya and the rest, but those three in particular. And so this is -- this carries over as well, I believe, in terms of agricultural development, the movement of people who don't necessarily organize their lives according to national states. And this is especially in that Sahel area, where you have more nomadic people moving in and out. You could even talk about Abyei, where you have nomadic people moving in and out of Abyei and seeking to use those resources and the people who are settled saying, no, they control them. And so I really do think it's a fundamental issue about the organization of the state, the capacity, governance and natural resource management, more so than I think it is scarcity. And I say that from the point of view that I believe in human ingenuity. I think human beings have the capacity to -- there's no -- there's no -- to me, there's no absolute scarcity because that's where invention becomes important, and relationships, and how you actually develop initiatives across boundaries to actually promote more cooperative resource management rather than competitive. BROADMAN: You know, it's the -- I'm so glad I heard the word "competitive" because I was about to inject into this conversation sort of the economics of the actors, whether it's the Africans themselves, whether it's foreign investors, whether it's the colonial foreign investors or the Chinese and the Indians and the -- the new foreign investors, and overlaid with the colonial heritage of artificial borders, ethnic rivalries and the like. And you're going to -- you know, I'm sure the bank has done work on sort of the economic side of this equation as to what are the economic forces that couple with the political, that couple with the security, that couple with the climactic (sic), that may be exacerbating the situation, and does -- you know, what can we tease out from sort of the competitive nature of markets, if you will, and incentives that people are responding to, whether consumers or producers, the trend towards urbanization, as opposed to -- and you know, I'm sure the bank, at least when I was there, would do a lot of -- (inaudible) -- on this. I'm just curious what's the -- what's your thinking on this? VOEGELE: And obviously, this has many dimensions, right? What you described about resource management -- just like you, I believe in human ingenuity, right? There's no question that was as humans are capable, in theory, of feeding 9 billion people going forward and managing our resources in a sustainable fashion if we choose to do so. I have no doubt about that. That is possible, in theory. This has never been our challenge, I believe. Our challenge has always been can we do it in practice. Can we overcome all the things that make us not do it? So we had this conversation around, you know, 30 years, 40 years of U.N.-led global conversations, why is not leading to action? Everybody agrees; we know what the problem is, and we know what needs to be -- but we can't do it. So I think that's where the economic incentive and other issues have to come in. The solutions cannot be government alone, whether there's colonial history or all over. The solution has to be a combination of all the actors. And clearly, the private sector is a key to any solution going forward of anything we talk about, because it's now about resource scarcity. And nobody knows better than private companies how to deal with these things if they have the right incentives and if they are on the right tracks. I think creating these partnerships that bring together civil society, local communities, governments and private actors can lead to the kind of change that you want. The existing partnerships, as we have them -- you separate these different tribes -- don't really lead to solutions. In the Africa-specific context, I think 30 years ago some of these resource conflicts were really not such a big issue, but the population has doubled since in many parts of sub-Saharan Africa. And there was a sort of evolution of traditionally herding communities moving into farming. Now that the population has grown dramatically, we see a reverse genesis, basically. We estimate that up to 30 (million), 40 million people will actually move away from farming back into herding, back into grazing, back into migration. And in the current scarcity environment, this is going to be an absolute nightmare from a security perspective. I just want to bring this particular point up. This is actually very, very scary. Africa -- 75 percent of the African landscape -- yes, there is a lot of abundant land, but 75 percent is dryland, with basically very little even opportunity to irrigate in a sustainable fashion. So you cannot really compare this to agricultural land in Asia or in other parts of the world. So taking all these dynamics, I think there is some major, major potential for conflict. Of the economic incentives there, I think this is a very -- this is a much broader conversation. This requires governance. It requires institutions. Private sector has to have the confidence to invest. There has to be a win-win for everybody. You don't want to have something on top of an existing structure. Particularly in socially -- in very, very complex environments, such as the African countries, you cannot just parachute something in and hope it works, because there are -- there's a history, there are existing cultures and structures, and building these partnerships as a win-win is a real, real big challenge. But that's the one that we need to take on. BROADMAN: So let's now, you know, end the conversation by really focusing on these types of solutions beyond public-private partnerships and get down to the -- to the -- to the nitty-gritty, as it were. Gary, from your perspective, if there were two things that you could wish for in terms of a policy response to try to deal with this nexus of issues, I presume, you know, mostly on the -- on the -- on the scarcity-security nexus, from your own particular prism, what two things strike you as sort of the big headline solutions that people need to devote time and resources and political capital to? WEIR: We need to try to return to people in the localities the things they've been deprived. In the case of the studies that I've done working on Somalian piracy in the Horn of Africa, those fisheries need to be returned to the people who need them for their subsistence living. Right. That's the first step to that solution. The second step is, as I mentioned earlier, probably jumping the gun a bit -- sorry about that -- as I mentioned earlier, trying to integrate their -- BROADMAN: Pardon the pun also -- "jumping the gun." WEIR: -- that's right that's right -- the -- trying to construct a solution that not only invigorates a weak government, like the Somalis have right now, but also does so in a regional fashion. I don't think a solution imposed from the outside by the U.S., the U.K., the EU or anybody else is really going to stay intact for very long. That's why I mentioned the use of a framework that might come from one of the local -- the regional fisheries organizations, or I mentioned RECOFI earlier. And there are a number of others. The point is, you'll have major players there interested in those issues, who have already established best practices, who can help a recovering government like Somalia place their own circumstances in that context. And in terms of outside application of assistance, you know, as Secretary Clinton says, it takes a village, right? In this case, it takes the international community. You know, armed force can be used in a -- but applied very, very gently and very, very cautiously in certain instances, to promote a local, a regional solution that might come out of the fisheries issue as a first step. I think that the -- one of the most important things is to try to minimize the amount of external influence, I think, minimize the footprint of navies and such, because we don't really need to be there unless we absolutely have to. I think one of the best things they've implemented is the internationally recommended, you know, traffic corridor, which is a variation on convoying, of course. But the point is, if you need to be convoyed, we are here for you, this type of thing, and you make that choice. One of the most odd things that I discovered in some of my research -- I went to a symposium held by the Office of Naval Intelligence back in the fall of '08, when this was really still very, very vital, very, very growing a problem. And one of the large transport firms was represented by a major executive. The name of the firm, of course, will not be mentioned here. And he said, you know, we've just dealt with piracy as part of doing business; we factor it into the cost. And of course, 90 percent of the people in the room are wearing uniforms and really wanted the pirates to see the business end of an Arleigh Burke Class destroyer, and it did not really go over that well, OK? But -- so this is reality, but what's happened since? Well, a lot of these transport companies have brought on independent security organizations. That presents legal issues, as well, but the point is, it's one of the steps they took to try to ameliorate the problem. These things can be applied in a very, very gentle, needed fashion, but the solution has to be regional. The solution has to be based on what the people need to have restored to them. BROADMAN: Jendayi, what -- if you were queen and you had the magic want to bring forth some solutions, where would we devote our resources in, you know, sort of the top two issues, in your mind? FRAZER: Well, you know, let me be clear. I mean, I agree with most of what has been said, particularly that the solutions will come from within the countries themselves and from within the regions themselves, particularly if it's on a sustainable basis. But I think the first thing that we need to recognize is there are going to be winners and losers. Conflict is human, and states are the mediators of that conflict within societies today. We can't get around it. And so it's nice for us -- and we have to have multi-stakeholder approaches, but not all the stakeholders agree. So there are going to be winners and losers. And so what I would do if I were a queen with a wand, an outsider, I would really start building and working on state capacity and better governance, because states are kings, right, in the international system that we live in today, and trying to encourage greater cooperation between those states. What I would do as a private-sector person and what I'm doing as a private-sector person is in fact investing in agriculture across Africa, but particularly in organizing markets, because some of the failure of the productivity of small-order farmers is they don't have access to pricing. There are middlemen who are taking advantage. And so if you can get greater market mechanisms, if you can put in place warehousing so that they are not forced to sell to the first buyer because of spoilage, so that you can, you know, build that capacity for people to actually share in the wealth of the nation through better markets, organized markets, through better governance, then you're building a future where conflict is less likely but not eliminated, because there's going to be conflict. I think that the dam in Ethiopia is a great example. You have really very serious competing interests, right? The Ethiopian government wants electricity. Others want, you know, the local communities protected for fisheries. That's a major -- both of them are absolutely legitimate desires and expectations. I have a view on it, and it's a view about the role of outside actors, in which, for instance, the United States and government, which, you know, responds very much in Africa to NGO pressures and, you know, pushed out the Africa Development Bank, right, so the Africa Development Bank could not actually be part of that project. And it's all gone to China. The project's being done by China. And I'm not saying China's all bad, but China doesn't have the same environmental standards that the Africa Development Bank has, that would have been put in place if the Africa Development Bank was an investor in that dam. And the government of Ethiopia was not going to be dissuaded on the basis of a local community, you know, of a few hundred people who would be negatively affected versus being able to light up, you know, 70 million and plus because of the power generation going beyond its borders. But those are all legitimate interests, competing interests. And often the state is going to be the dominant player. And I think we need to get smarter about the type of regulations, the type -- you know, I think the Office of Private Investment Cooperation can only do a certain number of coal plants, right? They can only invest in a certain number of coal plants globally in a year or something. I think it's two. But I would imagine that if they could get American investors in there with certain standards, that it actually could be constructive rather than negative, rather than pushing us out. I'm not talking about private sector -- pushing the private sector out and leaving it entirely to others who don't have the same type of environmental, you know, standards and -- I don't want to say "values," because it's really -- that's -- it goes too far to say "values," but practices is what I would say. And so I think it's very complex, complicated. I do definitely think that there are market mechanisms that can be put in place, but I don't think that they will entirely eliminate the inherent conflict in competing interests. BROADMAN: OK. Let's open the floor up. And we have microphones. We have some questions up here? Or we don't have microphones? No? Yeah? Right here. There you are. And would you mind just identifying yourself so -- QUESTIONER: My name is Roger Parkinson (sp). Thank you. We talk about solutions. And this may sound too -- may be too simple, but it seems to me that two big issues are energy and water, as I hear it. There's others. But wouldn't the solution to -- be fusion for energy and desalinization for water? And right now we don't have it, but couldn't we put 10 million -- huge price on whoever can invent desalinization at a cheap price and at cheap energy, and similarly something for fusion? Because it seems to me if we got those two, we're way down the road to solutions. And so that's my question. And why not put those two front and center as possible solutions? BROADMAN: Let's take two or three questions and then let the -- let the panel -- right next -- yeah. QUESTIONER: Dick McCormack, CSIS. Just two quick questions. One, I wonder if our friend from the World Bank could address the broad issue of waste of food from the -- from the field to the table and whether there's potential for addressing the shortage issues by a more intensive addressing of that issue. And the second, Jendayi, if you could say a word or two about the clash that you saw in Africa between commercial farming practices and traditional farming, and with Zimbabwe as an example of what can happen if that's not well-managed, and where you see that heading in the future. BROADMAN: And then this lady in that table right there, the glasses. And then -- and we'll do the fourth at that table as well, so the other gentleman. QUESTIONER: Hi, I'm Abigail Watrous. I work for Congresswoman Betty McCollum. There's been a lot of talk in the food community lately about food aid versus local and regional purchase, in Africa particularly. Could you talk about how U.S. food aid impacts African markets? BROADMAN: And do you want -- the gentleman -- (inaudible) -- I'm sorry. Go ahead. QUESTIONER: Thank you. Vivian Lowery Derryck, the Bridges Institute. Two points, one on state capacity that's -- it's so important, but it also needs to have some bench strength and some depth in Africa. But my question is if we use these partnerships, public-private partnerships, to build this state capacity, what incentives does the private sector have for that? Because it's such a long-term investment. We talked before about short-term -- need for short-term gains, particularly in the market, and that USAID doesn't have very long time frame. And the second point is, Harry, you talked about operative actors, and I'm going to suggest two. I think for us to really think about Africa, the environment and the nexus between security and the environment and development, that we've got to think about having a champion in somebody like Wangari Maathai or someone else that can be a champion for the continent, because most African countries' citizens respond to that, and secondly, to think about using women as a -- as a major interlocutor here, because it's women who are in the markets -- market, women who know what's happening, who can carry messages, and it's also women farmers and now certainly women in agribusiness in Africa. BROADMAN: Thank you very much. We have a question about essentially a big bet. Anybody want to -- want to take a shot at that? And then the rest of the questions will go to -- but our first -- you know, these kinds of questions obviously are of great importance and obviously require a lot of resources, so just -- VOEGELE: Yeah, I think it's a great idea, right? Desalinization is an existing technology that is being applied, used extensively in countries that can afford it. Should we push it to the level where more countries can afford it? Absolutely, because it is a clean and future technology, so we should definitely do whatever we can. Whether a pool mechanism or something similar a price is a good thing -- probably. I mean, absolutely nothing speaks against it. Water is a very interesting, if I -- if I may, in that context it's a very interesting question. It's not only about having it yourself or taking it out of the ocean; you also trade water. I was listening to the conversation this morning. You know, China is really water short, and somebody mentioned this south-north water transfer from the Yangtze River to the Northern China Plain, which is a hugely expensive project that will transfer about 30 billion cubic meters of water per year from the north to -- from the south to the north. Actually, China imports currently 60 million tons of soy beans, about half of which comes out of this country, out of the United States. Importing 60 million tons of soy beans is equivalent to importing 60 billion cubic meters of water because that's the amount of water you would need to grow it yourself in China. And the reason they're importing it is not that they couldn't grow it but that the cost of growing it is so high because of the water shortage that it's cheaper to import it. So the global water trade is a hugely important conversation to have. And China's strategic decisions have more to do with water scarcity than with food scarcity. I think the world actually needs to be very grateful to China for feeding itself, by and large -- with the exception of the 60 million tons of soy beans, which are fed to the animals, which feed the meat consumption increase in China -- but fundamentally, China feeds 21 percent of the world's population on 9 percent of the world's agricultural land. And it comes at a very, very high cost to the country, as you all know -- in terms of pollution; it cannot develop some industries in the north; et cetera, et cetera. In terms of the wastage, if I may come to that point, absolutely critical part of the equation. We waste far too much food, starting from the farm all the way to our dinner plate. Everybody knows in this room how much goes into the trash bin at home, and we all know what happens in restaurants, what happens in supermarkets everywhere. It is an issue that we need to tackle because we cannot continue to afford to waste that much food. And we at the World Bank certainly are going to continue to focus on this. U.S. food aid, I don't really want to comment on it in detail. I think the U.S. food aid program is undergoing a transition where particularly USAID is really focusing on development much more than handing out food; that was more common the past. I think there is a clear awareness that there are issues with that, that you interfere in domestic markets, and it's always a trade-off, right? I think obviously, the vision is to move beyond that over time and have the food produced locally rather than have it either for free or have to purchase it in. I think one thing is important to know that, you know, only 15 percent, 15 percent of the total food produced globally is actually traded internationally. Eighty-five percent of the food we consume globally is produced in the country that we consume it. Going forward, as we will move from 7 billion to 9 1/2 billion people on this planet -- we'll add 2 1/2 or 3 billion people on this planet -- that trade will double because of all of these 3 billion additional people will be born in food-insecure environments, more or less. They won't be born in Europe. They won't be born in Japan. They'll be born in countries that are food import dependent, which are 50 or 60. So any destabilization globally has massive immediate security implications. We heard about this a little bit this morning. When the food prices doubled in 2008, in the spring of 2008, we had over 50 riots -- in 50 different countries we have riots, partly because people didn't know how to anticipate it, and they didn't know what to do with it. Last time the food price spiked last year, we had basically none -- one or two. So the world is learning. This is a little bit on the positive side. The world's actually learning not to impose export bans when there was a shortage. The world's talking to each other on these things. Governments are being more prepared for it. There are more mechanisms in place to deal with it. I just wanted to make this more general point. But the fact is still that we can at any point in time, if we have two or three global events -- and they can be of different nature, another drought like we had last year -- if that comes together, we will see very high food prices, and we will see a lot of people locally, in Africa and other places, not being to afford it, and that will have immediate security implications. And our challenge -- and this is part of the solutions -- is to help governments build the capacity to anticipate it, have risk management frameworks in place, have mechanisms and tools in place that can deal with this. BROADMAN: Can you deal with the question on public-private partnerships, which is where I spend a lot of my time working on the corporate side as well as with governments and the IFIs and the notion that we need not your grandfather's PPPs, but we need something a little bit more energized with the right kinds of incentives? VOEGELE: Right. The previous panelist was talking about that there was a buzz out there, and things are changing. From where I sit at the World Bank, we see this everywhere. The interaction between private sector -- and this is (be ?) corporate but also local -- and the public sector is really changing. You know, five, six years ago, when big private companies talked about environment sustainability, they talked about corporate social responsibility, basically, right, a little department introducing good stuff. This is fundamentally changing. These companies really -- most of them really want to do sustainable sourcing in the long term. They want to be engaged at the -- at the level where they source, which is in many of these developing countries, and that brings you to the interaction. The solution is not for a company, in my view, to buy a hundred thousand hectares somewhere, put a fence around it and apply best technology and basically fight everybody around them off. That's absolutely not the solution. The solution is a model that's supporting the local economy, building on small-holder farming capacity outreach programs, bring them into the market and value chain and have a deal. Bring in the technology to finance from outside, but use the local resources where you are -- where you operate. And there are some examples that really show that this is working now. The narrative of these interactions is changing completely. This is not just a greenfield business proposition. It has to be an interaction and a connection on the ground. That's certainly where it's going from where I see it. BROADMAN: Jendayi, there was -- there was a question directed at you in particular, but I also -- maybe you might -- and Gary -- take a shot at -- and I also have my own view about this question about champions, which is always a perennial topic that we face on the continent. It's not unique to Africa, of course. But I'm wondering if you could address the question that was specific to you and then, you know, who's going to be the champion? FRAZER: Sure. I think that the issue -- the question that was addressed to me was commercial farming versus traditional farming in the case of Zimbabwe and how it led to conflict, and I think it's more about commercial farming meaning large-scale farming and traditional meaning small-holder farming. And the conflict area comes in from the point of view of land tenure, land rights and property rights, right? And so, you know, in the case of, you know, Zimbabwe, obviously the large commercial farms were distributed during the colonial period to British, right, and then to South Africans, in fact, later. And at independence, I think everybody knows the story. You know, the government is taking some of that back, trying to redistribute as such. Now of course, the redistribution tends to go to the elite and not necessarily to the -- you know, the wider population on the land. But this is also a problem in South Africa, you know, the question about land reform. It's a problem that came up in the elections in Kenya, about land reform. But I think that really we're trying to make small-holder farming more profitable and more commercially viable. And so for me it's not really a question about the size; it's a question about the -- it's a question about the commercial viability. And the way you see this becoming more commercially viable in many parts of Africa is through cooperatives. There's a Kenya tea development authority, which is really an aggregation of small-holder tea farmers, right, who are -- who've been brought together in a corporation, a commercially viable corporation that controls 60 percent of Kenya's tea market now. And so I think that it's how do you set up the type of businesses, you know, that can allow small-holder farmers to be more successful. Now, there's also another issue, which is the quote, unquote, land grab, right, which is again about big farm, big plantations versus small holders. But it's not really about small holders; it's about local communities and who owns that land and who has the right to give these, you know, commercial deals to outside companies and et cetera. And so it's again a land rights, land tenure, land property or property rights issue. What you see on the -- on the smallholders -- and it gets back to the question you also asked about the waste -- wastage of food -- I mean, there's a huge push right now across Africa to develop commodity exchanges -- food, agricultural commodity exchanges. It's partly based on the seeming success -- and I only say "seeming" because we still need time to study -- of the Ethiopian commodity exchange, which was very much backed by the USAIDs and the World Banks and the UNDPs. And so it was -- and also the state of Ethiopia, which mandated trade, particularly in coffee, on that commodity exchange. And its location in Ethiopia was very strategic, because that's -- or in Addis Ababa, because that's where all the African heads of state come every year for the African Union summit, and they all took a trip through the Ethiopian commodity exchange and said, I want one of them. (Laughter.) MR. VOEGELE: Exactly. FRAZER: So -- this looks good -- (chuckles) -- and this is a way to get my smallholder farmers more profitable, more commercially viable. And that whole ecosystem of development around commodity exchanges -- you do have people investing in warehousing, in a warehouse receipt system, so that they could commercialize or they can monetize their product and borrow on it or at least save it and sell it another day, when prices may be higher. Obviously there are some people who are concerned about hedging, right, and you know, what impact this will have. But really the development of agricultural commodity exchanges is a capital markets development approaching an organization of the agricultural sector, which can lead to greater agribusiness, more employment, you know, get people out of the cities, as consumers of scarce food product, but as producers now of those food products. And so I think if it works, it has an impact on the infrastructures across country. If it can work, I think it's -- it could be transformative. And that comes to the issue of champions and public-private partnerships. And I have to say I'm scared to say anything negative about the World Bank, because anybody who does business in Africa knows that if you go up against the World Bank, you will be squashed. You will be squashed -- (laughs) -- you know, I'm just saying, you know. And IFC is a competitor, potentially, because they invest in other businesses and they do push those who they are competing against to the side. And the reason why I say that about the World Bank and public-private partnerships -- because many -- the World Bank is very much a big player on the -- on the market side of Africa. They're doing studies. They're doing studies all over the continent, and there are private-sector people who want to invest but they can't invest because the government is engaged with the World Bank on a long study of the viability of particular project. And so instead of the risks being carried by the private sector, and in that risk perhaps speeding up the process to actually get to, you know, the productive outcome, you're in fact engaged in studies and studies and studies and studies upon studies. And so that's a problem. That's a challenge. I would also say that there's a distortion of the market, right? And it's not just the World Bank here. It's the U.N. It's, you know, the international -- you know, the U.S. embassies, in which they inflate prices and wages, right? And they inflate packages, right? And so when you're a private business trying to invest and you have to put together a package that looks like the U.S. embassy's package -- (chuckles) -- you know, of cars and drivers and this and that and the other and, you know, children's education, et cetera, et cetera, et cetera, all of a sudden you realize that you can't make a profit. And it's particularly true when you have to do a long-term investment, where there's not -- if you're -- if you're -- if you're investing in a mine or natural resources, probably it's going to be high-risk but high-return. But if you're investing in building these types of institutions, as a champion, as an impact investor, right, who's looking for a transformative outcome that has social value, so you're not going to realize your return for eight, nine or 10 years, you can't afford all these high costs, which is part of the reason why I say the Ethiopian commodity exchange needs studying, because obviously -- because it was backed by USAID and UNDP and World Bank, et cetera, they had huge packages for expatriate Ethiopians who came home to establish the exchange. Now it's been quote-unquote "localized," and we will see -- we will see if it can maintain its seeming success -- its early success, I should say, not seeming but its early success. And that gets to the champions, who are some of the champions. And you're right -- (inaudible) -- but I'm telling you about the problem of -- I believe in public-private partnerships, but I also believe that, you know, you get into this very long process with governments who are studying with international backing, and so the viability of the project (goes north ?), so who can afford to do that? And some of those champions are obviously local entrepreneurs, and they're -- these people are giving away all their money, right? It's your high-net-worth investor who's taken that pledge, right -- I'm talking about your Gates an your Warren Buffetts and your others -- who've taken that pledge and they want to do something of value, and so they're prepared to put their money behind a project that's not going to have a return for 10 years but has a social transformative value. And so linking those high-net-worth individuals with local entrepreneurs, you know, who have the knowledge, who understand the market, who have the drive and the desire. And I think that's where you get the type of champions that can actually have a transformative impact on, you know, the agricultural sector and the others and build the markets. BROADMAN: I'm sure you're going to want to respond to -- (laughter) -- for some reason, I think you'll want to respond to the World Bank issue. And having left the World Bank five years ago after working there for 15 years, I have my own view. I think the good news is that, particularly in Africa, but in other emerging markets, the governments are actually getting really smarter and they're coming to third parties, like the work that we're doing, in fact, which is independent organization -- luckily, we're a regulated auditing firm, and so we subscribe to all kinds of covenants, and those of us who have worked at the World Bank and development institutions and know the private sector, we're finding, frankly, we're carving up market share from the Bank. So we're very happy about that. On the champion issue, I think you said something about the exchange in Ethiopia, which I'm also seeing a lot of around the world, particularly in Africa, which is the notion that states in Africa, leaders in Africa, businesses in Africa, in different countries, have their eye on each other. And they're competing against each other about who's going to come forth first with different solutions. Now, obviously, these solutions have transboundary characteristics to them and they're not going to be solely domestic solutions. But one of the things that I'm seeing unleashed a lot, as was the case when I worked in China many, many moons ago, where you had competition among the states -- and you still have that -- is you are now seeing competition and emulation among African countries. And I think that is something that ought to be fostered. Gary, why don't you pipe in with some comments that you might have on some of these -- WEIR: The only issue that came -- BROADMAN: Just don't -- just don't defend the World Bank, because Juergen's going to -- (inaudible). WEIR: No, it's up to him. That's his bailiwick. No, the only comment that I wanted to make -- because, you know, what the two of you are addressing is not really my field of expertise, but one advantage that the historical work that I've done and others have done on Somalia and piracy and things of that sort, that's what happens when scarcity takes over. All of the things that we've just heard about require government infrastructure, require international partnerships, require governments that compete and are aware of problems and want to solve them. What happens when none of that takes place? Somalia happens. It's an unbelievable tragedy. And I think one of the reasons why we should take a closer look at that and the solutions that are evolving there is because that's the alternative. If we work our way out of the worst possible alternative, it will inform all of the others. But most fundamentally, that whole situation is being caused by profound scarcity. So we're talking about do we generate plenty here, how to create partnerships that allow governments and people to move forward. They don't see much of that now. And that's one of the things that we have to try to bring back to that country, with international partnerships, with investments, with international intention, and perhaps even with a small measure of military force that would probably try to monitor it a little bit. But I'm not an economist and I'm not going to pretend to be, but Somalia is what happens when it all fails and when scarcity succeeds. BROADMAN: Let's open it up for some other questions, right here and over there, and then we'll work our way to the back of the room. QUESTIONER: William Hauser, Inter-University Seminar. Turning, if I may, to mineral commodities, specifically perhaps also including rare earths, is Katunga, a festering locus of possible interstate conflict. BROADMAN: OK, we had -- we had a question over here, this lady. QUESTIONER: Monique Derfuss, Conservation International. Coming back to this common theme of private sector partnerships, within the African context, my question is around the investment of the Chinese private sector and just the sheer scale of it, both the legal investments as well as in the illegal destruction of natural resources, thinking of trafficking in wildlife. We've got the ivory issue there. So then my question is long-term -- the gentleman just talked about the scarcity issue. What does this mean for the long-term resource needs of Africa's citizens? And I would welcome your ideas on what we might do now to try and counter that. Thank you. BROADMAN: OK, and we have this gentleman in the back corner. We'll get the rest of the room in a second. QUESTIONER: Thank you. John Doyle with the Aviation Week Group. I wanted to ask about United States Africa Command. What role does it have to play in this? And perhaps more importantly, what role do you think it needs to be playing that it isn't playing? BROADMAN: I'm surprised it took so long for that topic to come up. And then this gentleman and this lady, and then we'll do another round. QUESTIONER: In light of -- Alan Wendt (sp). In light of Ms. Frazer's comments about the World Bank in Africa, I would like to ask Mr. Voegele about the IFC. How active is the IFC in Africa? And are they -- are they getting good results? BROADMAN: (Inaudible) -- right -- (inaudible) -- right behind, yeah. QUESTIONER: Paula Stern (sp). I would like you to parse this notion of private-public partnership because I think we think about different things when we hear it. There was a reference earlier to the profound changes over the last five years, I think you said, among corporations and how they view partnerships. And presumably, they would be part of a private-public partnership. There was another reference to private-public partnership with reference to huge philanthropists who were not for-profit organizations who are just willing to put in money without worrying about the bottom line like a corporation might have to consider. So I just would like to get a little more disciplined in what we are talking about. And maybe we're talking about both, but maybe we should use different language, or maybe -- but I'm particularly interested in the private sector, the corporations and how they have shifted, and is it just because their customers are demanding it, and that's why they are going sustainable? And that may be enough. But I just wanted to get a little better idea of where the corporations, the private sector is going. BROADMAN: OK, let's take those questions. Juergen, do you want to -- you want to start it off, or do we want to go to -- VOEGELE: The first two were for you, actually, I think, on the Katanga thing. FRAZER: Yeah, Katanga and whether that's a possibility of a future conflict -- you know, it's interesting. I've never been to Katanga. And I -- and I -- and to be honest with you, I often have difficulty talking about a place that I haven't actually been to, seen, you know, touched, smelled and worked with the people. So I can only give you an impression of what I hear from others and what I've -- you know, what I've learned, which is that it's -- it -- I think there's -- you know, what I've heard is that there's confidence in the governor of Katanga, and he's quite popular, and that there's been tremendous development and that, you know, a lot of the citizens can see that development. In terms of the transborder, there's no conflict because it's all going to Zambia and to South Africa, and there's -- (chuckles) -- there's South African corporations who are just taking out Congo's resources -- (chuckles) -- you know, just pulling it out. And that's what I hear, right? And there's not a lot of attention. Everybody's focused on that eastern border. And you know, I've even heard that there's a conveyor belt of a company that's just taking coal right out of Congo and landing it right into Zambia, and it's now Zambian coal. And so I don't -- I don't know because I -- you know, I -- but what I've heard is that it doesn't seem -- I mean, obviously there are secessionist -- continued secessionist tensions in Katanga. But that's not necessarily about -- maybe it's about resource abundance again, maybe a little bit like Biafra and in other places where you have the abundance of resources and don't really need the rest of the states; they can go your own way. So those are the historical tensions. But I don't think of it as a story of resource scarcity. And I think it's probably a story of local governance that's positive. The question is also can the state capture some of that revenue through systems of taxation so that it is distributed more broadly than in Katanga. And that's certainly an issue that the Kasali (ph) state has been dealing with, which is how does it actually better tax the natural resources coming out of the country so that it can be, hopefully, you know, productively used. The issue of -- I'm just going to take them and then others can -- the issue of the Chinese private sector. And, yeah, it's a big problem, especially, you know, the growing stories that are coming out about the impact on wildlife, and the ivory trade in particular. I think China's role in Africa is more complex than -- it's not a "red scare," you know what I'm saying, and it's also not the savior of the continent. And I think the Chinese -- you know, they've made Africa strategic for those natural resources, and I think that that strategic engagement is going to translate into political influence and geostrategic influence. And I think it will show up in forms like the U.N. Security Council and how votes start to go and in the General Assembly and other such venues. Right now the main strategic issue that they require of their partner African countries is Taiwan, right? And you're with us, you're against us. It's a fundamental point that they constantly are trying to get countries not to recognize Taiwan. That's amazing right now. But with, you know, the BRICS and, you know, if South Africa really gets to establish itself as that "S," then -- South Africa always punches above its weight globally and it certainly will try to organize African countries around an agenda that I think would be more aligned in many ways with China. So I think China's influence is constructive in some ways on the economics front from the infrastructure development, and that taking place in that was necessary to unleash, you know, this new, quote-unquote, "rising Africa," if you want to believe that story, and it's a good one. I see no reason not to, you know, to hang my hat on a rising Africa. And China certainly is part of that story, not only for its demand for commodities but, like I said, creating the enabling environment through the infrastructure development. But African citizens are becoming increasingly impatient with the flood of Chinese labor, and particularly cheap goods in the supply chain that many of those small Chinese traders are having in their markets. And they're major competitors. And so there's been a push for some African governments to cap the immigration, right, and not allow -- or to use their immigration system to limit the number of Chinese coming into the country. So there's a lot of negative, I guess one would say, externalities as well as positives. And China will adjust, and the Chinese will say, we don't control all of our citizens. But I think their model of supporting business and their strategic outlook on Africa is something that we in the West should emulate, and we should do a better job of helping our private sector. We've almost abandoned even the competition. (Laughs.) That's how I put it, not that one's competing, but we've almost abandoned even trying to, you know, be more commercially present, I Think, in Africa. On U.S. Africa Command, I think I'll leave others to talk about U.S. Africa Command. You know, I was one of the people who very much supported having U.S Africa Command; felt early on that it got its mandate a little wrong and its mission. I didn't need a military that -- or as we said at the time, USAID on steroids. (Laughter.) I mean, I -- we don't need that. I think we actually need a military that engages with African militaries to build the capacity of the state to actually do territorial security, you know, to do the things that militaries actually are supposed to do and to paint fewer houses and schools and, you know, and dig a fewer -- a lot fewer wells. On public-private partnership, I apologize. I wasn't -- I did talk about, you know, these big philanthropists, but when I was thinking about it, I was actually thinking about the philanthropists who invest in corporations and invest with private sector, you know, business entrepreneurs. And so they're actually investing on the private sector side. They're not the -- I mentioned Gates and I shouldn't have, because that's, you know -- you know, the HIV/AIDS and maybe some education and stuff, but I'm actually talking about philanthropists who are doing it through impact investment, you know, and they're looking for profit, bottom line, for sustainability. They're not looking for high returns over the shortest amount of time. So I was talking about corporations. BROADMAN: We have about five minutes -- four minutes left, so let me turn it to Juergen, and then you get to -- WEIR: Leave me a minute. That's all I need. BROADMAN: Great. VOEGELE: Briefly, the World Bank 20 years in -- ago in Africa had significant influence. I don't think that's the case today, to be honest. Africa gets billions in terms of money, gets billions and billions of dollars of investment today. China is one example, many others out there. In terms of the actors and players and -- who advise government, Harry mentioned it: private sector is very, very big. Everybody is in that space. We are actually a small player today in Africa. The IFC as the private sector investment arm gets a lot of requests from African governments to come in and sort of help catalyze investment, bring investment in from outside. Does (that ?) sometimes compete internally? For sure, I believe so. And we're going to have lunch, and I'm going to learn more about what got you so totally upset about -- (laughter) -- there must be -- there must be a reason, because that's not what I normally hear. I mean, I do -- it's very clear that when we engage -- (laughter) -- it creates a dynamic, right, and there -- and there -- those who say, my God, now, you know, the IFC's coming in, then all of -- it's the big players, and that's absolutely legitimate, for better or worse. Just one thing I wanted to pick up on on something that was talked about earlier. This was the large-scale versus small-scale farm. I think you have said small-scale. We totally believe that. There was a misconception out there that successful or future farming has to be large-scale farming. That is not the case. The Chinese produce all the food they produce on small -- very, very small farms profitably because they do exactly what you describe. They call it farmers' associations, producer groups, producer associations. They link it in to commercial markets; they get the technology to finance and everything else. The size of the farm is irrelevant. In fact, when it comes to productivity per hectare or per acre, they're typically higher than the large-scale farms, because they really squeeze everything -- every drop out of the resource that you have. So I think the future vision is not to say, let's get rid of small-holder farming and bring the big companies in. Absolutely not, not only for social reasons, in a way, but it's obvious that you shouldn't be doing this, but also for commercial reasons. I just wanted to leave that point in the room. BROADMAN: Gary. WEIR: I thought perhaps I'd comment on the AFRICOM question, the -- I think it came -- it should have come a lot sooner than it did. I think being aware of what's going on in Africa was absolutely significant for the development of events. I think what drew us to do that was a combination of a terrorist threat, which is one of the reasons, for example, that Combined Task Force 150 was created in the Indian Ocean; the piracy threat, which created 151 there at the same time; but also the fact that we were becoming increasingly aware from the history of armies in conflict over time, something that General Petraeus mentioned very early on in his deployments in the -- in the Afghan War, that if you know the ground and the territory that you may have to fight upon as well as -- as well as or almost as well as the people who live on it, you have an important strategic advantage. And that's why, for example, in my own agency, the National Geospatial-Intelligence Agency, not too long ago, we had a major pilot project on human geography, understanding the people of the region as intimately as we possibly can, because strategic threats emerge in those areas, and that knowledge is an advantage. And we have what we call at NSC an NGIA support team at AFRICOM giving them the advantage of our human geography work and all the other things that we do so well that I can't possibly talk about here. (Laughter.) So AFRICOM should have come sooner, in my own personal opinion, but the kind of work that it's doing -- and perhaps part of the human geography effort is digging the wells and painting the schools, and surely that's not a bad thing to do. But they -- but to be more substantive than that, of course, is why they're there -- and to teach security methods, right, to be there as a backup when somebody needs some international support, that's absolutely necessary, of course. So it's -- I think it's an advantage for the U.S. Department of Defense and for our own national security to be there, and also, it fosters international relationships, which are actually absolutely critical to sustaining our own national securities, well and be -- as well as be part of the family of nations in good standing. Did I use my minute? BROADMAN: You did. Very effectively. WEIR: (Chuckles.) BROADMAN: Thanks to the panel. Please join me in thanking them. (Applause.) And we're now breaking for lunch. Is that correct? Yes. Thank you. (C) COPYRIGHT 2013, FEDERAL NEWS SERVICE, INC., 1120 G STREET NW; SUITE 990; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED. UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION. FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES. FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR EMAIL [email protected]. THIS IS A RUSH TRANSCRIPT.

Jendayi Frazer, Juergen Voegele, and Gary Weir flesh out the drivers of scarcity and security challenges related to natural resources in Africa, focusing on natural resource management. This meeting is part of the Global Resources, the U.S. Economy, and National Security symposium, sponsored by the Council on Foreign Relations and Conservation International.

JULIET EILPERIN: Could people please take their seats? That would be now. Take your seats. Stop talking. Thank you. Excellent. Thanks so much. Wanted to welcome everyone to the second session of today's Council on Foreign Relations Conservation International symposium. As a reminder, this is on the record. And so we're really interested in having a discussion, but we're going to do brief opening remarks. We're just going to go down the line and introduce our panelists and let them talk a little about this session, and then -- and then we'll take it from there. So immediately to my right, we have Greg Stone, who's senior vice president for marine conservation and chief scientist for oceans with Conservation International. Since 2000 Dr. Stone has led the effort to create the world's largest marine protected area around the Phoenix Islands in the country of Kiribati and was named one of the National Geographic Society's hero of 2007 for this accomplishment. I also want to note that he is the author of a new book -- why is the title not on here? "Underwater Eden" -- GREG STONE: Right. EILPERIN: -- which is -- I don't know the subtitle by heart, but anyway, it's a fantastic book, if you don't have it, looking at, of course, the effort to basically protect the area around Kiribati, which in many ways is leading the world in terms of valuing its marine resources. Also, while I'm already biased towards marine biologists, Greg Stone is one of my favorite marine biologists of all time -- (laughter) -- although just don't tell all those other marine scientists because then they won't talk to me again. But that's where we stand. Then next to him is Geoff Dabelko, who is director of environmental studies at Ohio University's Voinovich School of Leadership and Public Affairs. He joined the school in August 2012, and before that he was based here in D.C. at the Woodrow Wilson Center's Environmental Change and Security Program. He remains a senior adviser to the Environmental Change and Security Program and is also an adjunct professor at the Monterey Institute of International Studies, presumably because sometimes he wants to leave Ohio to go to Monterey. And Geoff is someone who I always call up when I need to know the intersection between resource scarcity and international security, so we're lucky to have him on the panel. And then all the way at the end, we have Blake Clayton, who's a fellow for energy and national security here at CFR, but -- although in New York. Dr. Clayton is the author of "Commodity Markets and the Global Economy," which is coming out in 2014. And because that's not enough and because he needed to balance the Cambridge University Press with the Oxford University Press, the same year he will have "Fear, Greed and Oil: A Century of Panics in the World Oil Market", and so obviously someone who's deeply immersed in these issues as well. So we're going to start -- Greg's going to give us kind of the broad sense of what's going on, and then we'll talk about how that's playing out across the world in terms of resources. STONE: Thank you, Juliet. And you're my favorite journalist of all time. (Laughter.) EILPERIN: (Inaudible.) This is on the record, so that's -- (inaudible) -- STONE: This is on the record. This is on the record. (Laughter.) Yeah, I really enjoy the discussion format. And thank you, all the organizers of this very important dialogue. So I don't want to talk too long, but I -- just to lay the -- sort of set the table a little bit, to think about this from the -- you know, the supplies that we have on the Earth. I mean, I remember Buckmister Fuller's great metaphor, Spaceship Earth. But he said, importantly, it didn't come with a manual. (Chuckles.) And I think we're at that point in human history now where we're actually having to write that manual, to figure out, you know, how long the supplies are going to last, because we actually did kind of wake up one day, I would say in recent history, and realize that we were on an endless journey without any chance of resupply and that the population is growing, as we heard earlier. So we're in a situation where we need to figure out the supplies and regulate them. We need dashboards. We need to -- we need quick references so that decision-makers can make the right decisions, so that all the plurilateral discussions we heard about earlier can be informed. It's my belief that if -- decision-makers want to make the right decision, if only they knew what it was. And it's a very complex field out there to understand carbon storage, to understand oceans, to understand farm and agricultural practices. So to me, the challenge is understanding our supplies, getting dashboards and metrics so that we can operate within the boundaries of sustainability as we go forward and that we're at an incredibly important moment in history and a very exciting moment in history, and the key is that we need to accelerate all these actions. We can't just be trending in the right direction anymore. We really have to find out what the acceleration pieces are. EILPERIN: Geoff. GEOFF DABELKO: Terrific. Well, again, thanks to the organizers bringing these worlds together. It's one that I've been trying to make sense of for kind of 20-some years, and it continues to be a challenge, especially if you want to do it briefly -- (laughter) -- which we need to do. But in many respects, it is -- I kind of start from a premise that natural resource management is conflict management. We can do it well -- (chuckles) -- and it doesn't result in real conflict, or it can be done poorly, and it can become a problem in the context that we're talking about today with security. But in that context, there are all sorts of opportunities where these issues connect in ways that aren't just about painting just the challenges but some real solution sets. And so from a bottom-up perspective, in the unstable states that Richard was introducing us to kind of focus on, places like Nepal, you will have these kind of inspiring participation and democracy quotes. You know, the first time I voted for anything was part of my forest user group, and so in natural resource management being a place that's actually introducing participation and democracy. From a top-down perspective, instead of treating resources as a luxury item that we worry about once we're rich and democratic, you know, I think it's a meaningful illustration of how it matters to states when the U.N. Security Council puts a moratorium on logging from Liberia, coming out of its period where logging and minerals were part of what created that West African stability, or facilitated it, to give the country breathing space to figure out that over a hundred percent of the countries had been promised in concessions and set up some of the institutions so that the value of those resources could actually, in part, come to the state and be part of building a capable and stable state. And they have a long way to go, but nevertheless, it's those kinds of opportunities that I think we can -- we can really build on. I think there's a lot of concern, and rightful concern, in terms of some of the resource availability and traditional conflict or stability questions, although those are often, I think, unfortunately, too simplified when we kind of say, well, they're scarce, and therefore when folks have no choice, they'll fight -- a lot more complex. Often it's not absolute scarcity; it's scarcity that we create, in part by access and pricing and such, but nevertheless very real issues, but that we also shouldn't just stop at the -- what precipitates conflict or precipitates instability and look at how resources can actually be very helpful in getting out of conflict once you're in it or at least being a bridge for dialogue. And so we have Friends of the Earth Middle East bringing folks together on a very local level around water issues and ecosystem services, not because it's going to solve the Palestinian-Israeli problem, but it's going to be some lifelines for dialogue. And then in the post-conflict setting, after the conflict's ended, again not treating these issues like luxury items, but understanding they're critical to getting economies started, agriculture started, the livelihoods that are so commonly connected to natural resources in big parts of the world again in some of these states that we're concerned about in terms of stability, that these are places where we can make a real difference. We need to focus on them, we need to be concerned about them, but they offer some ways forward that merges these worlds of natural resources, economy and security. EILPERIN: Excellent. And Blake. BLAKE CLAYTON: Thank you, Juliet. It's an honor to be here this morning. I appreciate this event being put together and to have a chance to share some remarks. I think that natural resource scarcity is a topic that's been so much in the news over the last decade, and not surprisingly so. We've seen emerging-market nations with really huge appetite for natural resource consumption push up prices around the world. This was a trend that was largely unforeseen by the natural resource industry in the late '80s and '90s, which led to a prolonged period of under-investment during that time. And that simply caught up with the world when nations like India, China, these so-called BRIC nations, started to require more and more of a host of resources, whether it's oil, natural gas, food, agricultural products, what have you. I think we're only really in the second or third inning of this structural change in commodity markets worldwide, but I think as easy as it is to know the reality of scarcity in some of these areas, I think the lesson of history is also that where you have markets in place and where you have the rule of law, then technology can unleash bounty when it comes to natural resource supply that simply would have surprised people a decade before. I think the best example of that right now is in the North American natural gas landscape. If you had asked almost any energy expert a decade ago where natural gas prices would be today, they would have guessed, you know, five, six, 10 times higher than they actually are. The truth is there's been, thanks to high prices and revolutionary new technologies, abundant new natural gas reserves being tapped right now in the United States. Production's increased something like 30 percent since 2006. Many of the sources of this new natural gas production from shale have caused their own regulatory and environmental questions, and rightfully so. But I also think they've called into question some of the conventional wisdom about scarcity that you might have heard five or 10 years ago. So I think that the lesson of history is that when it comes to those commodities where there is a good market -- oil, coal, base metals, food -- I think there's a tremendous amount to be optimistic about. These are cyclical industries. We've been in one part of that cycle, the upswing part, but I don't think it's the end of history, by any means. I think that through good public policy and through an active private-sector engagement, that some of these resource constraints can be managed and solved. EILPERIN: OK. So we're going to try to start on an optimistic note because inevitably we will get into pessimism. But so let's -- we'll make our attempt. And obviously, Blake, you were talking about, obviously, some of the traditional resources that we think of, whether you're talking about fossil fuels and food and things like that. Obviously, part of what has -- there's been an effort to kind of redefine natural resources in terms of healthy fisheries, standing forests, things like that. So I'm just wondering, broadly speaking, since Greg, you talked about the idea of kind of identifying what's out there, you've obviously worked on the Global Ocean Index, can you all speak to how right now you think countries, both developing countries and developed countries, are seeking to define the value of the natural resources that they have? You know, where do we stand in that process, before we get on to some of the policy questions? Greg, I'll put you on the spot. STONE: Sure. Well, I think that -- you know, it's very interesting the data systems and the data -- the awareness of, for example, the financial sectors in the world. I've talked to some hedge fund managers. And these guys and these analysts, they know all the currency exchange rates, all the stock market indices, all the real estate -- for every second of the day. Then they make decisions based on that to enhance and increase their returns. Same thing in the medical area. We've -- we're able to manage the information in the medical area extremely well so that when you go to the doctors and you have a -- get a blood sample, it's compared against millions of other blood samples. In the environmental natural resource base, unless there is an incentive like there is with natural gas or something like that, we are still around with notebooks. And we need to -- we need to accelerate our data, synthesis and analysis of these natural resources into your question. We sense a very strong hunger in the countries that we work with through Conservation International where we engage with them -- a lot of these are developing countries -- they want to know what's out there. They want to have the accounting. They want to get the natural capital of their countries' resources on the books, and they want to start working with it. So I sense a very strong incentive and a very strong hunger, and we need to step up and satisfy that. DABELKO: Yeah, you know, to start introducing some of those -- the glass half-empty side of things, I would -- I would say that there is the recognition in some quarters, and it's a matter of then integrating it across the concerns and with people who are making a -- have broader portfolios. And so I think still too often we will run into folks that say, no, you know, no, don't talk to me about that, that's the environment ministry, that -- it's not my problem, right? I'm the finance ministry or I'm development. Or equally challenging, I'm the water ministry; why are you talking to me about forests? And so in that set, some of these -- some of the data may be gathered, may be appreciated but not in kind of how we're talking about here, how they connect. And it's not just a conservation issue, it's critical to -- national economy critical to security. And so getting that integration across portfolios where it doesn't say environmental for resources on the -- on the door, so to speak, is where we have to go. EILPERIN: And Blake, I know, again, you're talking to a lot of people about kind of the traditional commodities. Can you give a sense of what sense -- you know, to what extent they are thinking about these others issues? Or again, is that kind of off their radar? CLAYTON: Well, I think that you can look at natural resources as part of two different classes. There are some that are readily tradable -- natural gas or some of these other -- where there are these global commodity markets. I think those tend -- supply and demand discrepancies in those types of markets tend to be resolved more easily. A lot of what we heard, I think, in the panel before this was about issues like the Law of the Sea or forests where there can be this problem of the tragedy of the commons, right, where there are poorly delineated or contested property issues that make it very hard to set up the kind of self-regulating market that I think exists for some other goods. I think the only point I would add is that I think it's tempting and sometimes easy to focus only on the below-ground part of the scarcity or sustainability -- you know, how much oil do we have on the ground, how much natural capital in that sense do countries have. But I would argue that so much, perhaps even the majority of the sustainability issue, as I see it, is really about these -- the above-ground factors, so getting property law right, getting regulation right, getting international cooperation right. If we can make strides on those fronts, I tend to believe that the perceived scarcity when it comes to the underground stuff will actually take care of itself. EILPERIN: OK. And so then following up on that, we're -- again, obviously, we have kind of a patchwork of approaches across the world on these issues. Could you give examples of where you feel like it's really going right, where you have countries that are absolutely tackling this in kind of a way that makes sense, and, of course, at the same time, you know, where are you seeing it going the wrong way at this point, particularly with some of these peoples and, you know, traditional commodity resources? STONE: Yeah. First of all, I'd like to -- you mentioned earlier the global Ocean Health Index. And I'm going to connect that with a place where this is going well. There is some literature out there about this, but we just published a paper in Nature -- we being about 60 other scientists, including myself, an effort to -- collaborative effort to measure ocean health through a metric, a very rigorous metric, a composite index including about 180 data sets. But the really important thing about this metric is that it includes humanity in the measure. And there was a moment when we -- when we developed this -- there was a desire to measure progress in ocean conservation, thus come up with a metric. So we got a group of scientists together internationally. And at one moment in time, there was a division. Half the scientists wanted to measure an ocean of a thousand years ago and how healthy would that have been. The other half realized that we have now become part of the ocean ecosystem, humanity has become part of it. We are essentially gardening the Earth, right? We can no longer go back to a point where you've got wilderness over there, and you've got humanity here. We're integrated, and we rely on it entirely. So this ocean health index was sort of a breakthrough idea in that we're measuring the human-ocean coupled system, and really we have to do that globally. We have to measure the human global coupled system. So that's an example of this data synthesis that I was talking about earlier. Now, where is it going right? There's an initiative in the South Pacific I'd like to highlight called the Pacific Oceanscape. And 15 nations that are -- that are unified in something called the Pacific Island Leaders Forum have banded together and adopted a framework called the Oceanscape, which essentially recognizes that they -- the ocean between their countries is much like the atmosphere: it flows through them, and they share it, and they need to manage it. Now, this is a region of the planet that covers 8 percent of the planet's surface or 10 percent of the oceans. And this is conservation, this is commodity markets, this is natural resource management at scale. And interestingly, Peter Seligmann and I were at the Pacific Island Leaders Forum meeting in August in the Cook Islands, right? This is this remote little island-nation in the South Pacific. And you can drive around it in about, you know, one and a half hours. And guess who was there? Hillary Clinton was there, the Russian government was there, the -- everybody was there at this meeting because they were interested in the natural resources of this part of the planet. So, you know, the planet's small -- EILPERIN: And the strategic resources as well -- (inaudible). STONE: Well, there's also this pivot to the Pacific -- (laughter) -- the strategic resources, yes. But -- EILPERIN: But yes, they care about them. STONE: -- it's fish, it's strategic access, it's deep-sea minerals. You know, the -- because of the geological history of the Earth, there's a lot of rare earth minerals on the sea floor, and there's been an exponential uptick in deep-sea mineral exploration over the last six months. So -- and there's -- most of them are in this part of the world. So there's an example where, you know, there's awareness at scale, conservation at scale, and I -- and I think it's working. EILPERIN: (Inaudible.) DABELKO: Perhaps instead of a country, an institution that has evolved in positive ways. So I see Richard Matthew from UC Irvine, and he and I have the pleasure of working for a number of years with the U.N. Environment Program, the folks who are focusing on resources and conflict. And in -- early on in conversation with other parts of the U.N. the more traditional security, Peacebuilding Commission, DPKO, the blue helmets folks, the dialogue was, why are you talking to us about these resources and conflict links? You know, prove to us that they're connected. And what has happened, in part because of dialogue and because of research that then came before them, it became, OK, so we're now convinced; what do you want us to do? And so in some of the toughest spots in the -- in the world where natural resources are part of the challenge but also the opportunity, there's a greater willingness to bring those things in and see them as part of the threat but also the opportunity. And so that's progress, not there yet, but that's progress. A negative example -- and this perhaps would be a counterpoint to Blake's on the -- on the food market, anyway -- is the folks who are water-poor and food-insecure, the wealthy countries. This whole notion of land grab and securing food security in third countries is something that kind of remains to be seen how it plays. But, you know, at least anecdotally, places like Madagascar, where the proposed South Korea deal was part of what people brought people into the streets and was part of the coup. And so the prospect for these land deals that are essentially driven by resource scarcity and other parts by countries that have a lot of money to me puts additional set of dynamics that we have to start paying attention to, and we're only starting to do so. EILPERIN: Thank you -- (off mic) -- OK. Then -- so I want to also raise an issue where you might have resource -- two different resources in conflict. And so one that comes to mind, which is something I've certainly started talking to people recently about, are grasslands and energy exploration. And one of the interesting things is, you know, grasslands are just as sexy as, say, the rainforest, something like that. And my understanding is it's the most imperiled type of ecosystem in the world. There are only three large intact grasslands left: in the northern great plains and in Canada, connected; Patagonia; and Mongolia. And certainly with at least two of those, the northern Great Plains, slash, you know, in Canada, and then also Mongolia, you have some real resource extraction opportunities as well as, at least in the -- you know, in terms of here in North America, you also have the farming opportunities, with crop prices being what they are. And I'm real interested to see -- you know, it's -- there are obviously groups that are trying to work on, for example, keeping these ecosystems intact, but it's pretty hard to do that when, you know, corn prices are where they are and natural gas and shale oil is where it is. So I just would be curious of, you know, if any of you have looked at that or have a sense of, again, when you're talking about trying to have a dialogue and make people think about, for example, a few of these things at the same time, how do you -- how do you work that out? Talk on that quick. CLAYTON: Sure, I think that's a great point. And I think the point about there being conflicting concerns or priorities certainly is relevant. And I think, to your point, it's always easy to look abroad -- (inaudible) -- you know, to see examples of what's either going right or maybe wrong on some of these issues. But as you say, the North American example, U.S. example when it comes to how to handle some of these issues, with regard to shale gas and shale oil, for example, is a great illustration of some of these tensions. And I would argue it's kind of a microcosm of larger issues that, if they're not taking place already on the energy side when it comes to other parts of the world, they soon will be in the decades to come. So when it comes to fracking, for example, there have been a host of environmental concerns raised about this process. I think there are two of those that, in my mind, are especially important. The first is wastewater disposal and access to water. Fracking is a very water-intensive process. It takes as much as 5 million gallons of desalinated water to drill a single -- to frack a single well. And when you're talking about fracking in hundreds or thousands of wells in a given region or country, that's a lot of water -- so getting access to that water, making sure it isn't taken from other areas that arguably need it more, but also what to do with that water when it comes back out of the well. Most of that water will come back out to the surface, and it comes out with a lot of either other substances that were pumped down into the well along with it or other materials from under the ground. So wastewater disposal is absolutely huge. I think the technology is still playing catchup to a large extent in that area. And I think the third critical question is about methane releases. That's one that's gotten a lot of attention in the press recently, and I think rightfully so. But I'd also point out that the International Energy Agency, or IEA, released a very interesting document awhile back called "Golden Rules for a Golden Age of Gas." And basically, it was a road map to best practice when it comes to shale gas development. And what the IEA argued was that all -- if you look at all of what the industry really should be doing when it comes to best practices for upstream shale development, if they were to implement all of those best practices, it would only increase the cost of fracking a well and developing a well by 7 percent. So that's not an insurmountable extra price tag for the industry to bear. And if that's what needs to and can indeed happen for shale gas to be developed cleanly, I think it's absolutely worth it. I think we're only in the very early stages of this so-called shale boom being transported to other countries around the world. You'll see China, you'll see Russia, the Middle East, the U.K. and others in Europe also using these same methods. So getting them right and having the U.S. be an example in that regard is crucial. DABELKO: Well, I would second that excellent answer as -- having just moved back to my home state of Ohio, I've moved into the middle of this. My county has four injection wells. We're not -- we're not fracking yet. But -- and interestingly, I think Ohio has 98 percent of last year's Pennsylvania waste water. So it doesn't even go necessarily where -- you know, it's not disposed where it was extracted. So, you know, if you -- we apparently have a policy of "bring it on" in terms of this water, and -- but for all the reasons that Blake's just talked about, I wouldn't be -- I'd get in trouble with my colleagues at home if I didn't mention how important these questions are to look at. I guess I would say also, a water energy nexus in another part of the world where -- my colleague at the Wilson Center, Jennifer Turner, and folks have looked at some of the, for example, Chinese plans on coal up north, and there just -- the water that's necessary is just not there, given the projections and expectations. And so that may be a positive thing in some respects but nevertheless not necessarily considered. And then in some ways, to talk about some of the integration, even within you could say an environment or a conservation, communities having different and sometimes conflictual -- if we look at biofuels and growing energy and trying to move away from carbon, could see that potentially as a positive thing. But I think some of our experience where European biofuels targets led to rapidly accelerated deforestation, monoculture around palm oil to source that in parts of the world with CI is very active, creates some real challenges in terms of what it means for forestry and biodiversity that are, again, geographically remote but highly relevant and ones that there has been learning in terms of kind of sourcing some of the biofuels in ways where we're learning, but it's still along way to go to even understand within various conservation efforts that we can run amok of the different sectors. STONE: You know, I think it's -- you know, it's really very simple, and that is that the ecosystem services, the natural resources of the planet are worth a lot. That's where we came up with this natural capital. All we have to do is do the math and accept and embrace a longer time frame to the -- to the -- to the equation, to the -- to the business model, to the proposition. EILPERIN: And how long is that time frame? Is it 30 years, 40 years, 50? What do you think is likely? STONE: Well, that's the problem. The time frame generally stretches beyond political elections. EILPERIN: Yes, certainly. STONE: And we as a -- we as a nation kind of get swept up into the political election time frame. So it goes further than that. And then the second thing we need to do is to find those strategic actions -- I would call them, you know, sweet spots that involve -- that get the business community to go along with this because the business sector, of course, globally, is where most of all the human endeavor happens, it's where most of the money flows, and it's where, if you're going to effect change, you know, that's where you got to focus. Let me give you an example. I heard this morning the undersecretary was talking about illegal fishing and unregulated fishing. We know that fisheries are collapsing. We know there are certain solution sets to this. OK, here's one action that could -- that if we -- that if we took it globally would help, and that's traceability. OK. Right now, when you go to the grocery store and you buy your hamburger, there is a -- there is a very long and detailed supply chain custody trail of that. Everybody knows exactly where it came from. They know the temperature that it was at throughout its supply chain. They know everything. When you buy seafood, you have no idea. There is no traceability in seafood. And this something that industry wants to quality control purposes, the environmental community wants it for stopping unregulated and illegal fishing, and nations want it in order to increase the value of their fish. And remember, one out of every four people in the world every day gets their animal protein from fish. This is a huge food security issue. So if we were able to imagine the fish comes onboard the boat, and immediately there's a chip put in the crate, and the chip would tell you where it was cut, ideally what depth it was caught at, then the chip records the temperature and the location of this fish right up to your plate, that would solve, you know, a large percentage of the overfishing problems in the world. And everybody wants it, so let's just do it. EILPERIN: All right, although I have to say, I've written about this subject. And when I bring it up with, say, officials at the National Oceanic and Atmospheric Administration, they were not -- they're not super gung-ho about it. So -- but it -- but it -- but you're right that, obviously, it could increase the value in the chain, and I could see an interest in it. And clearly Target is, I think, the only real -- the major real retailer that's committed to trade stability by 2015. And obviously, I imagine that other businesses are going to join onto it. But it's just been interesting that there hasn't been as much uptick given that governments are worried about (global oceans ?). STONE: Well, I'm surprised that Noah (sp) had that opinion. I co-chair the oceans council for the World Economic Forum, and this has become our number one -- EILPERIN: Interesting. STONE: -- initiative. And we've got some of the biggest seafood suppliers in the world behind it. EILPERIN: And are there -- and are there countries that you think are really embracing it? Or maybe again, maybe the government's divided on it. STONE: Well, if the -- if the retailers -- EILPERIN: How would you have to broker that? Would that -- would you basically try to do something through the U.N. to do it or no? It's -- private -- private -- OK, right. STONE: No, you want to -- you want to get the stores that are selling the product to demand it, and then it'll happen naturally through the free market economy. You know, we know that from experience. EILPERIN: To just drive it (out ?). OK. Excellent. At this point we're going to move to questions, because I'm sure there are plenty of smart questions. So you're supposed to -- so I will recognize you, and then you wait for the microphone. I'm going to start with this gentleman right here. Please stand, state your name, affiliation, avoid speeches, ask real questions, and go. (Laughter.) QUESTIONER: William Hauser, Inter-University Seminar. From what we read in the press, the Chinese are about to launch one of the greatest engineering projects in the history of man, that is, the transporting of excess water from their south to their water-deprived north. And my question would be, how reliable are the water resources, particularly the tributaries of the Yangzi Jiang (ph)? EILPERIN: Can anyone take a stab at that or speak more broadly about the issue -- (inaudible)? DABELKO: I can tell you a few things that my colleagues have tried to teach me -- EILPERIN: There you go. DABELKO: -- which are that very question about the -- there are the -- the comment I made about the water scarcity in the north makes these tens of billions of dollars of engineering projects then suddenly seem slightly more rational, at least from that engineering perspective. And so I think that is behind some of this. I think there's a lot of concern for a variety of reasons about that, particularly its sustainability, but maybe taking a step back from that specific project and say again, this is one other dimension where these issues become security questions. And so in China, whether it's scarcity or often quality, the pollution of waters -- you're seeing even by government-reported statistics tens of thousands of protests and ones that reach a higher level than kind of a few people waving placard; are attributed to some combination of pollution slash corruption slash land-taking that is part of this rapid industrialization and capitalism that's going on that gets the center's attention, because it is often a critique, then, of the party and becomes then a very political question in terms of stability. And so some of the -- some of these discussions in terms of how resources are connected to security come in -- this issue comes into question in place like China that, obviously, as some pretty high stakes whether -- you know, no matter what area you're looking at. So it's a very good question. EILPERIN: OK. Other questions? Yes, Nancy (sp). Wait for the microphone. Microphone's going to come right here. QUESTIONER: I'm Nancy Warzon (sp) with the Naval Postgraduate School. I wanted to find out why the wastewater ended up in a different place. Can you sort of -- I just couldn't understand that flow. STONE: Yeah, I think it's because Ohio's paid 5 cents a gallon. It's interstate commerce. So those who are trying to oppose it are told that its like, you know, trade in garbage across states. And so Ohio's adopted a policy that that's going to be an import that pays. We'll see what the price tag is later on, but -- EILPERIN: Sorry. Just another great -- (off mic). QUESTIONER: Thanks very much. Adam Wolfensohn, Wolfensohn & Company. I think one of the scarcest resources we haven't spoken about too much is that of the atmosphere to absorb all the carbon from the very plentiful fossil fuels below. And Dr. Stone, my question is, we have so much data on energy use, on climate, and that data has not translated into meaningful policies, so how will we keep data projects like the ocean health index from suffering a similar fate of ineffectiveness when it actually comes to policy? So I'm less optimistic than you are, perhaps, about data in policy. STONE: Well -- (laughter) -- I take -- I take your point, but I would -- I would say that while we in the -- in the scientific community and perhaps even in the policy communities, you know, are aware of the data that the UNCCC, et cetera -- and it doesn't seem to be moving the needle -- I would say that we are still so far behind other sectors of humanity and civilization in the use of data and the presence of it, that we just haven't gotten there yet, and we have to do more, is my -- is my take on it. For example, I don't think we have, on that topic in particular -- we do know the numbers for CO2 in the atmosphere. We understand the thermodynamics of the Earth. We can make all that. But we've not yet done the math on or made the case entirely for the economic impact, the degradation of all the ecosystems, what that's going to cost the business community, what's that going to cost countries. I mean, I think that side of it, you know, we need to -- if we had that out on the table and were able to get it to the finance ministers, then I think we might be moving the needle. EILPERIN: And in fact there really hasn't been any update since the Stern report came out, basically. What was that, like 2008, '09, something like that? STONE: Yeah. EILPERIN: So yeah. OK, all the way in the back, that gentleman right there. QUESTIONER: Curtis Valentine with MarylandCAN. My question is more to the microlevel, how we frame the effect of deforestation, of lack of access of water, to education in a lot of these countries, where a lot of children wake up in the morning, have to go very, very far distances to gather water, have to go very, very far to gather wood for burning wood, and in many cases are not going to school; and how you frame these economic issues to local governments. The second question is around the impact of education in America and people being more environmentally friendly if they're more educated, and whether that data is something you're all looking at. EILPERIN: Geoff, can you take a stab? DABELKO: Yeah, well, I can certainly try. I mean, I think -- I think the kids realize some of the value of the resources, as do their parents. It's, as you say, the local governments that aren't making investments. You know, there are -- what is it -- (Rich would ?) know -- whether it's 900 million or 1.1 billion, the figures for the lack of access to adequate drinking water, this is criminal, in part because much of that could be done by actually deciding to prioritize and spend on it. It's not like HIV or something else where we need to invest in new research and discoveries. We know how to address some of these issues. And so in that respect, I think there are certainly challenges associated with -- water infrastructure can be expensive. It doesn't have to be expensive. But that it's a matter of engaging with the public sector. Sometimes, you know, there are a whole bunch of questions about private sector and the pricing, and that can lead us back to some of these security questions, unfortunately. I know that's not a -- I know that's not a great answer. I think there are processes where things are getting better in that regard. You know, whether we'll meet the targets or whether we like targets as a mechanism, but the Millennium Development Goals around that have focused attention and have, in fact, given those local people a way to advocate with their national governments for greater expenditure because there are kind of numbers behind them. So I think there is some progress, but nevertheless, unfortunately, kids under 5 dying of diarrhea is not sexy and it's not very economic in terms of putting money into it, and so it doesn't happen as much as it should. EILPERIN: And Blake. CLAYTON: I would just add that I think that on the energy side, you raise a great point. And that's that there's a whole generation rising right now of people who are so attuned to and interested in renewable energy and climate change and aware -- are deeply aware of how important these issues are. But you know what I think would be really powerful would be to combine that expertise among young people in renewable energy, for example, with a deeper understanding of some of the traditional energy sources. I think too often those who are passionate about renewables or climate, young people, I mean, don't have an understanding of the whole mix of energy. If they could also speak to coal, could speak to gas, could speak to oil, how these resources should be developed, how the trade-offs between these competing energy sources should be managed, I think that would be so effective at really informing public debate in this country and elsewhere in terms of how we should get our energy mix right. And all too often you see people siloed in their particular part of the natural resource question. The more broadly I think young people can be speaking to these issues, and really deeply informed about them, the better the national debate will be. EILPERIN: (Off mic) -- right here, this gentleman. QUESTIONER: Hi, Stewart Patrick from the council. I just wanted to pick up on Blake's thought that with proper use of markets, proper regulation and the rule of law, that some of these problems can be dealt with. And sort of a two-part question. The first is can you, any of the three of you, talk about the best examples, in your mind, of putting a price on ecosystem services so that the externalities of private behavior are actually internalized in the cost? Have there actually been any examples of that? And then the second is really this issue of -- I could see how using markets could work, and market discipline, in, you know, catch shares with fisheries, for instance, conceivably forests. But I wonder about food and water, where, you know, the -- according to National Intelligence Council, 40 percent of the Earth's population are going to be living in water-stressed environments by 2030, and at that same time food is going to have to be 35 percent -- there's going to have to be 35 percent more food production, given population growth but also changing dietary preferences, not least an affinity for meat. How do you bring those sorts of things into sort of market discipline? EILPERIN: Who wants to -- Blake, you care about -- CLAYTON: I'll speak to the second question. MR. : But it was -- there was a question -- (inaudible) -- CLAYTON: With regard to the food question, so how do you increase food supply? Let's set aside the water for a second. But you look at yield, and you also look at arable land, right, or increasing acreage. So in terms of increasing yield, the Green Revolution in the 20th century was absolutely huge in terms of helping to achieve that goal. But a lot of the funding behind those types of ventures has simply petered out in recent decades, and that's too bad because the same amount of primary research that was really needed to dramatically increase crop yields, which you did see in the mid and late 20th century -- that plateaued, largely, during the late '90s and 2000s, one of the reasons why food prices did rise so much over the last 10 years. But I think an important part of the -- that question is also recognizing the interrelationship among natural resource prices and markets. So the food question is not just about water or land; it's also about oil. The cost of oil makes a tremendous difference in how much food costs. It matters because it affects how much it costs to transport the stuff, to produce it and also to pay for fertilizer and other inputs. So I think that the food question will inevitably, I think, for policymakers, not just be about food, water, land, but also dealing with subsidies and other issues with regards to oil prices. EILPERIN: Great. And for the first part of the question, an example where natural capital has been properly valued, or at least there's been an effort to quantify it and what kind of response there's been to that? (Inaudible) -- Greg. STONE: Well, there's been -- there's been plenty of examples where it's been -- where it's been valued. We've worked in the freshwater systems in Africa. We've worked in marine systems. But I think your question was has the value made a difference to a policymaker. And you know, I think we're at that -- we're at that point where the answer to that is not very often. But we -- I think we're at -- I'm an optimist, as you can tell. (Laughs.) I think we're really at that turning point, though, where those values, the pollinators, the fresh water inputs, the ocean economics, the values to smaller coastal states -- we know what the values are now, and decisions are beginning to turn in that direction. EILPERIN: And part of the question is basically -- I mean, is the market question of how you put it in money, right, like, in other words, the leaders of Botswana, the leaders of -- they're willing to say this is how much this resource is worth, but then they're dependent on, essentially, whether it's nonprofits or other governments, to help supply the money to put it off limits, right? I mean -- STONE: Yeah, and -- yeah, and there's also -- there's a lot of pressures in these countries for -- again, we're getting back to that short time horizon. If you've got a -- if you've got a child that's, you know, dying of a disease, do you put your money into curing that -- helping that child, or do you put your money into saving an ecosystem because you were just convinced that it needed to be saved? First you've got to get the health care systems, you know, up and running, you've got to get people fed, then you can turn your attention to these other things, although the health care and the food, long-term, are related to the health of the ecosystem. So it's a complex field. EILPERIN: Although -- and then just one point on fracking, though. Isn't the best of example of it happening, you know, the -- kind of the example they teach in textbooks here is that -- the resources of the Catskills, right, as the drinking water supply for New York City, and basically, that's loomed incredibly large in Governor Cuomo's decision to continue to keep delaying fracking activity in New York, which is that essentially, economists made the case decades ago, and it was acknowledged that essentially, this was so important as a drinking water supply for, you know, one of the most important cities in the world that it's actually -- that's part of the argument he makes in basically -- (inaudible) -- DABELKO: And it's even cheaper than -- cheaper than building the hard water -- EILPERIN: Hard infrastructure. DABELKO: Yeah, water infrastructure. EILPERIN: Exactly. In the red jacket right there, yeah. QUESTIONER: Jessica Mathews, the Carnegie Endowment for International Peace. I'm going to be a bit provocative here. I think you all are kind of ducking the tough questions. There is too much, if we only get the policy right, if we only get the international cooperation right, if we only get the time scale right, then these issues are OK. Well, those are the three things that we haven't been able to get right for 40 years since we started talking about the security aspects of the environment. And there are good reasons, obviously, why we haven't, right? One is getting the time scale right. Bringing the future into the present means you've got to cope with issues where the only way you get the right answer is to use a 0 percent discount rate. And you ask an economist to use a 0 percent discount rate, and they say that's nonsense because in economic terms, it is. The other problems, of course, have to do with relative urgency, of security issues. If you were secretary of defense right now, I guarantee you're not thinking about climate change, right? You're thinking about Syria, Iran, budget cuts, making a 21st-century force posture, right? And so I -- you know, and having kind of starting on this issues (sic) in the late '70s, early '80s, I'm sitting here thinking, what's changed? Not a whole hell of a lot, I think. And I -- so I'm -- I'd like to -- I'd like you to kind of grapple with this postulate a bit. Tell me I'm wrong; it'd be great. But I -- you know, I think we should take it as a given that if we get the policy right, we don't have a problem, and if we can get the time scale right, we don't have -- you know, for policymakers, we don't have a problem, and let's go on from there, because I think we do have a big problem. EILPERIN: OK. Go ahead, Greg. STONE: No, I -- it's a great question. And I would -- I would argue back that from the -- yeah, for the inside baseball, yes, it's been 40 years. But I would say from the external optics of the world, it's only been about five or eight or 10 years. I think that the world is at a different place. Also, back to my first point, which I really want to underscore, I think that the information systems are at a different place right now. And we talked about sensors and a few other things this morning. The world has changed exponentially over the last few years. So I sense a different moment. I really do. I sense that governments are open -- the example I gave you in the South Pacific. There's other examples that we could go into in Africa and elsewhere. So I don't know what my fellow panelists think, but I understand your frustration. I've been in this business a similar length of time. But I feel a bounce right now. EILPERIN: Yeah. Thoughts? DABELKO: Well, I mean, I cut my teeth in getting into this field by reading things like Jessica's -- I think, 25-year anniversary of her "Redefining Security" piece in Foreign Affairs. It was instrumental in getting people to focus on these issues together. And so I guess I was uncharacteristically optimistic and rosy then in my presentations to this point, in that I share a lot of these fundamental concerns. They come in kind of a -- for example, a daily fashion where on the one hand, I'm trying to add context to those who will say, well, because there's no more of this, then by definition, people are going to start fighting, when it's a lot more complex. And the flip side is you don't even have to be scarce in a place like water issues between India and Pakistan; you just have to have the perception that India is taking more than its share on the industry, the -- for that to be a really provocative way for those who want to, say, deal with Kashmir to stir up trouble and kind of demagogue on the issue. So even where we have real scarcities and real challenges, we -- it's even worse than that because it can just even be the perception. And it's obviously a neighborhood that really matters on a lot of -- in a lot of ways. And I would suggest that some of our traditional security institutions are paying very close attention to questions like that, even if they're not having at the top of the list an issue like climate. So I agree it's -- a lot of things haven't changed. One that I wish we would have in the macro is start asking questions, not just so to speak on how do we increase supply but on demand, and so -- and ask some of these tougher questions about the logic of just ever more consumption and -- as a positive thing and start to say, well, how do we meet some of these needs with fewer material, less material throughput, and have that be part of the conservation, say, on -- American energy policy, for example, would be -- would be one area. So I guess share some of that pessimism, but at the same time try to make -- have some optimism in individual circumstances. EILPERIN: Right here. Yes, right -- wait for -- the microphone's going to come. Right there. QUESTIONER: Frank Loy from The Nature Conservancy. Following up on Geoff's point about demand, one of the ways to regulate demand is by price. And energy and food are priced. We buy them. In a lot of places in the world, water is free. The question is whether there is any outlook that one could price water in -- particularly in developing countries in a way that wouldn't topple the government and cause the kind of dislocation that people worry about. EILPERIN: (Inaudible) -- we have a hard time doing that in this country. Is there -- is there an opportunity to do that overseas, do you think? (Chuckles.) STONE: I'm not sure I really understood the question. I mean, yes. (Chuckles.) Fresh water can be valued and integrated. We're doing that with small shareholder firms right now in parts of Africa by showing the relationship. And -- but in terms of -- I'm not sure what you meant by priced. I would use the word value is think is the -- is the -- EILPERIN: You mean, like, force people to pay for it in a way that they don't pay for it now? QUESTIONER: (Off mic) -- especially in the agriculture area, as opposed to just having it and therefore the amount of waste -- (off mic). DABELKO: Yeah. I mean, it's a -- it's a terrific question, and I wish there were easy answers, but I think whether it's water or food or fuel, these kinds of subsidies where countries are many times overpaying to keep it cheaper, essentially, are really a big part of the problem. But as you say -- and the one that we always hear about is Cochabamba where -- kind of doubling of prices, and -- brings folks into the street, and it's about that water doubling of prices with -- through privatization, but it's also about other things, and you do have two successive governments fall in Bolivia in the late '90s in part because of those protests. So it's not that there are imagined security issues associated with them. But nevertheless, it -- just to make it a little worse, you can even see really negative outcomes -- say, in India, the fact that the fuel for the pumps for the farmer is free means that there's no incentive to save water in terms of irrigation, so you do flood irrigation in a place -- from groundwater, so -- you know, so kind of really crazy use of that water in part because the pricing in another sector is so counterproductive. And so some of the conversations are about how to do that. But, of course, again, the unrest -- (chuckles) -- that is immediately induced by some changes in those -- in those subsidies are -- is really a challenge. EILPERIN: Right there -- (inaudible). Go ahead. Let's see if there's -- (inaudible) -- QUESTIONER: Thank you. I'm Paula Stern, The Stern Group. And I -- glad you brought up the issue of subsidies. And building on some of the other conversations and questions, I'm very interested in your tackling the questions of the rules of the -- rules of the road, rules of law, the WTO, the World Trade Organization, the fact that energy has really never -- oil's never been covered in the WTO. I would like to ask you to kind of stretch your imagination as to how the WTO could be better utilized to deal with subsidies that are very distorting, as you said, in a -- in a variety of these resources. Is there a role there? They have resolved disputes in other environmental-related matters in the fisheries areas. I'd like to get your views on that. EILPERIN: Blake, you're going to answer that question and maybe tackle this issue. I mean, the administration -- CLAYTON: That's all right. I mean, I -- EILPERIN: The administration has also, right, tried to push through the G-20 this idea of phasing out fossil fuel subsidies, which, again, the Obama administration can't even do here in the United States, but they've tried to make it a -- (off mic). CLAYTON: Yeah, I mean, it's an enormously complicated and difficult issue. I think there are many analysts, as you know, who cited the subsidies question and the removal of those subsidies in the Middle East and North Africa as a primary cause of what happened, or at least a related cause of the uprisings there recently. Part of why I think the subsidies question is such a hard one is because the very people that are most affected by the removal of those subsidies are the poorest. And -- but I think that, you know, I wouldn't be surprised to see many countries starting to grapple more seriously with their own subsidy regimes, not from outside pressure but actually from fiscal pressure internally. It's simply so expensive to maintain fuel subsidies with global oil prices where they are right now, the highest, really, whether in nominal or inflation-adjusted terms in the history of the industry. So I was recently in India, for example, a couple weeks ago talking to government officials there. And on the energy side, almost all of them named subsidies as -- and doing something about subsidies as a top priority. It's not from outside pressure, but again, it's from their own bottom line. I think that the IMF, the World Bank and others have written lots of good things when it comes to kind of thinking strategically and tactically about how to deal with those, but I think it varies so much country by country it would be hard to give kind of a general road map from where I'm sitting in terms of how any one country should deal with their own subsidy distortions. EILPERIN: Great, and the table back -- the gentleman right there has a question. Right there. There we go. Yeah. Microphone's coming. QUESTIONER: Gise Marie Khartouz (ph) of -- (inaudible) -- International. I'd like to make a point that I agree with your point that the right policies are not enough, and we know that. But for me, the most important thing is first -- the right policy is only the first step. You need to have the right institutions, the right capacity and resource to implement this policy. And that's the problem in most of the developing countries. They don't have that. We saw, for example, from the presentation of the Assistant Secretary Jonas (ph) that it's really hard to implement some of the basic policies in the U.S. U.S. has money that can grow capacity, some of the best scientists around the world, and they -- in this -- in the -- (inaudible) -- could not implement some of the basic policies. Imagine this situation in a country that's -- that doesn't have scientists, doesn't have a research institute, that doesn't have money to do that. So I think in terms of contributions to the global discussion, I think the developing countries have already doing a lot of things. For example, if you go to the Convention of Biological Diversity, we have 20 targets, great targets. If all the countries followed these targets, we are going to move the world into a sustainable path. But how these countries can implement, how these countries can achieve these targets if they don't have the basic things to implement the right policies? So this is the kind of question that I would like to propose to you, so I'd like to get your reflection about that, this capacity gap to implement the right policies. STONE: Well, he's my colleague, so we can have this conversation any day of the week. I'll let one of my -- one of my panelists -- (laughter). EILPERIN: All right, Geoff, you're going to be in the hot seat. Can you take a stab at it? DABELKO: Sure. No, I mean, I completely agree. And I think one of the ways that would be helpful for us to recognize that need is to have a more realistic timeline and sense of the resources it takes to build those capacities and partnerships with the -- so for example, when our common, not all, but a common U.S. Agency for International Development program to build capacity on -- pick your environmental issue -- unfortunately, not because they think a one- or two-year time frame is a great idea but because the dictates of their portfolio demand that -- they don't know that they have money past that -- then there becomes this expectation that you're going to solve capacity problem X in two years and say, thank you, we'll move on to the next. I mean, it's just crazy. And you know, so the way that we structure our support mechanisms by, of course, insufficient funds, a really short timeline, lack of ability to cooperate even among issue areas where there should be, because it's different portfolios, different streams of money, and then just to really pile on, that so many of these issues are across borders, but we organize our embassies and our missions on a bilateral basis. And so it may be a priority for -- you know, water may be a priority for country X, and next door -- it's a transnational issue, a transboundary issue, but it's not a priority there, and somebody's not interested in water, so you don't deal with it because we just organize ourselves poorly to reflect the reality that these things happen to ignore political boundaries often. STONE: I'd like to make a comment just in general to say -- and also that -- the other comment about 40 years ago. I mean, I think that what's really important is discussions like this where we can create new knowledge amongst ourselves. These are really, really critical. And I also think that in a general trend, you know, we have to -- the United Nations conventions, like we've talked about today -- I don't think they've yielded the kind of results that we all kind of want. And there is a general, not abandonment of those conventions by any means, but looking elsewhere. I think the private sector is even looking elsewhere. They're -- they've looked to the United Nations for guidance, but they're not -- they're not getting it from these conventions. So they're beginning to organize on their own. They're beginning to look to the NGO community. They're looking to the Council on Foreign Relations. So I think 40 years ago, you know, I don't think we -- I don't think we knew -- we knew -- we knew the problems, but I don't think we actually knew what to do. I think today we know the problems really well and we know what to do, so that we can move forward with it, especially with discussions like this. EILPERIN: OK, and we have a couple questions -- yes, there we go -- (off mic) -- and then we'll go -- (off mic) -- yeah. QUESTIONER: Hi, Harrison Gale with Georgetown University. I wanted to ask about the issue of energy scarcity, or in our case, abundance. You talked about the explosive growth of domestic gas production here in the U.S., and oil is the same way. We've increased oil production by 40 percent in the last three years alone. We're on track to become a net exporter of oil sometime next year. My question is, is with everybody seeing -- this is undoubtedly responsible for hundreds of thousands of new jobs in America and a key component of our economic recovery. But with everyone seeing dollar signs, how can we remind key decision-makers that the true cost of this carbon dioxide, putting it into the atmosphere, and if we achieve 5 degrees global average temperature rise, the world becomes ungovernable -- so how are we -- keep this in the conversation with energy prices going to plummet in the next couple years? EILPERIN: Yeah, Blake. CLAYTON: I think it's a great question. First of all, some of the points you made -- I think, for one thing, the U.S. will remain a large oil importer for the foreseeable future. So we already are exporting -- we're the second-largest crude product exporter, so diesel, jet fuel, gasoline, that type of thing. But we're also the second-biggest crude oil importer, after China. And that's not going to change anytime soon. I think there are many people, including the IEA, who think that it will change in 10, 20, 30 years. But for the foreseeable future, we -- our economy still has a lot of the same challenges posed by high oil prices that it did a few years ago. And that's not going to change anytime soon. And I think certainly the debate over energy scarcity and energy security in the United States has changed. With natural gas prices at historic lows as a result of this shale gas abundance, with oil production and gas production being a major, now, source of economic growth not just in the oil patch but also, as you mentioned, in places like, potentially, in New York, Ohio, Pennsylvania, states that, for the last 150 years, at least, really haven't been producing any of this stuff -- they're now seeing tremendous gains in growth, employment, incomes, on the back of this newfound hydrocarbon wealth. So I think that the national debate over climate, which in no small part is related to the, you know, source of our own energy supplies and our own energy security outlook, has to change. But I think that the case for taking steps towards renewable energy and doing something about climate remains solid, but it has to be made a little bit differently. As I see it, there were two real pillars to the argument for doing something about climate change and embracing renewable energy 10 years ago, or five years ago, and they were that we were running out of oil and gas and that we were changing the atmosphere, changing the environment in a way that was irreparable and harmful. I think the first of those, that we were running out of oil and gas, it just really doesn't apply in the same way anymore. I think there are people who wish it did, but I don't think it does. And I think that in five or 10 or 20 years, you'll see even more than you can today that it really doesn't, that there are vast reserves of oil and gas that can be produced at today's prices, that have simply changed the game when it comes to global energy supply. But the second pillar -- that's the case for renewable and climate as a means of, you know, keeping the planet clean, ensuring economic development, humanitarian concerns, all of those reasons -- that hasn't changed. So I think that there's still a very solid case to be made, but it has to be made in a different way. And I think the internal kind of policy debate in the United States will have to reflect that. EILPERIN: OK. We have time for one last question, so I guess we'll go to this gentleman in the back. QUESTIONER: Jan Smith -- EILPERIN: OK, wait one sec to get a microphone. There you go. QUESTIONER: My name is Jan Smith Donaldson. I have many associations, but I'm here basically as a concerned citizen. And I want to follow up on you saying we know what to do. It seems like we don't know how to do -- and I want you to bring us up to date on exactly what to do and how to do -- to clean this waste disposal water from fracking. Where are we? How can we lead the world in this, since it's obviously such a great opportunity. EILPERIN: Blake is the one who, if anyone has an answer, he's going to have it. CLAYTON: Sure. Well, I think there are some simple and some complex solutions. Some simple ones first. A lot of the problems with wastewater -- I shouldn't say -- I guess disposal, when it comes to fracking fluid has been that in some cases the fluid has simply ended up in open pits, uncovered, right, after it comes back out of the well. That's a problem for wildlife. And so I think there are some very simple remedies, some very simple regulations when it comes to putting laws in place to prevent that kind of open air fracking fluid disposal or storage or whatever you want to call it from happening. It shouldn't happen that way. I think that to the point you made about disposing the stuff in Ohio -- (laughs) -- (inaudible) -- DABELKO: They also want to ship it to Texas, right? Isn't it the desire to get permits to put it on barges so you can take it all the way down and do it in Texas as well. CLAYTON: Right. I mean, and so far as those reflect, you know, democratically elected officials making decisions about how they want to do it, it's a question, then, of mobilizing people and really creating change in people's attitudes towards how they want to manage that stuff. QUESTIONER (?): Really hard. EILPERIN: OK. We'll just take -- this gentleman had a question earlier, so let's just take -- be very brief. Let's run and get you a microphone, and we'll do that and then we're going to wrap up. QUESTIONER: Thanks. Will Turner with Conservation International. Picking up on the same point but maybe expanding a bit, so there's this idea that we've just been -- you know, the last 10 years there's been an absolute transformation in the North American energy sector because of shale gas and shale oil, and the observation that that, you know, potentially can go worldwide in the near future. Enormous consumer of water. It was pointed out earlier that 40 percent of the world -- EILPERIN: Ask a question. We -- QUESTIONER: -- 40 percent of the people are going to be in water-stressed areas in the near future. Put those together and it's a train wreck with the expansion of this. So what is the one thing that we can do to ensure that -- not sort of looking backwards trying to fix problems after they've happened, but to ensure that countries and the international community is able to respond to these things? Because I have prediction that is not going to be the last time we're surprised by a transformation, so we need to be prepared for it. What's the one thing we can do? EILPERIN: Would be adopt the golden rules? What would it be? CLAYTON: I think there are a host of things that need to happen. But I think, as you said, the water issue is huge. I think there are other concerns as well: infrastructure; the fact that many of these shale basins lie also underneath some of the most -- you know, biggest cities in the world, unlike here in the United States, where the population density tends to be lower in those areas, is important. So I don't think there's any one kind of silver-bullet answer when it comes to how to deal with it. I wish there were. But certainly I think kind of bearing in mind the water issue, finding some way to inject, you know, market competition or at least price or value that water in a way that's truly reflective of the trade-offs involved in using it for producing energy is crucial. EILPERIN: OK. And by the way, just a reminder, this was on the record. Please join me in thanking our panelist for -- (inaudible). (Applause.) (C) COPYRIGHT 2013, FEDERAL NEWS SERVICE, INC., 1120 G STREET NW; SUITE 990; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED. UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION. FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES. FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR EMAIL [email protected]. THIS IS A RUSH TRANSCRIPT.

Blake Clayton, Geoff Dabelko, and Greg Stone discuss natural capital accounting and valuing ecosystem services as key components in promoting sustainable natural resource management, while noting the role of technology in overcoming perceived natural resource scarcity. This meeting is part of the Global Resources, the U.S. Economy, and National Security symposium, sponsored by the Council on Foreign Relations and Conservation International.

RICHARD HAASS: Great. Well, good morning. Good morning. Welcome to the Council on Foreign Relations, and I'm Richard Haass, president of the CFR. For those of you who are not familiar with us, we are an independent, nonpartisan think tank, membership organization and publisher. And what we're trying to do day in, day out, year in, year out is work to improve awareness of and understanding of American foreign policy and the choices facing the United States and other people around the world. And we're trying to be a resource for the public, the business community, academics, journalists and our members. We're particularly proud to be welcoming you here this morning because we have a partner with Conservation International, one of the premier if the not premier organization in the world devoted to raising awareness, and more than that, doing things to protect the environment around the world and to, as you'll see today, to raise awareness, and again, do things about increasing sustainability of our resources. Now in the full disclosure department, let me -- I wouldn't call this a conflict of interest, I would call it a congruence of interest. My day job is president of the Council on Foreign Relations, but one of the ways I moonlight is as a board member of Conservation International. And it's only fair because the president of CI -- the founding president of CI, Peter Seligmann, is also a member of the Council on Foreign Relations. So we've got some connections going here. We're particularly proud to welcome you here to this building here today, and there's a very good reason. This meeting is taking place in our LEED Gold Certified building. LEED, for those of you who are not aficionados, is Leadership in Energy and Environmental Design. This building is certified at the -- at the Gold level, which is extraordinary because it's partly a historic building. And we're proud of it, and we -- one of the reasons we did it was to symbolize and underscore our commitment to the importance of thinking about the environment and acting on it in a responsible way. And it's something that is integral not simply to what we study but what we do here at the Council on Foreign Relations. Peter's going to be speaking in a minute, and he'll say more about this extraordinary organization he has created and helped build over the decades, but what I want to do is say one or two things also about CI and also about the issues we're going to be discussing here for today. And what this is about is not simply conservation in the traditional sense. As important as that is, as important it is to protect and promote nature, it's more than that. And the mission of CI has evolved over the years, and now it's also about ensuring that ecosystems, that people in countries, societies depend on -- be it for food, air, water, what have you -- that they're maintained. And the reason, again, is not simply because it's a good thing, but it's also a necessary thing. And what this is about is not simply the survival of this species that we are all part of but it's also about the viability of states. And that's why it's so important -- and in some ways that's why we are here today. This is not simply, if you will, a quote, unquote, "environmental issue," but it's also a national security issue. And for too long, I would argue, it -- concerns about the environment, concerns about conservation have been pigeonholed, if you will, or siloed for people who really care about those issues and really know about those issues. And as I am often fond of saying, universities may have departments, but the world doesn't. And we simply don't have the luxury of siloing these issues, because what happens when it comes to the core environmental challenges facing a country, when it comes to its stock of resources, when it comes again to basic issues of their resources and their -- and their environment, it affects their economic viability and ultimately, it affects the viability of the -- of the country itself. I mean -- what, in two decades, three decades, we're going to go north of 7 billion people on this planet to 8 (billion) or even conceivably 9 billion. It's going to create tremendous pressures on our -- on our resources for food and water and more, obviously energy. But it also creates all sorts of tensions potentially not simply within states but between them, and the possibility that energy and the implications of sustainability issues, refugee flows, internally displaced persons, all of this could put tremendous pressures on the international system at a time, shall we say, there are already sufficient pressures. I'm particularly concerned with the issue of viability of states. Let me give you a prediction: In the 21st century for the coming decades, at least as big, if not a bigger, problem as strong states will be weak states. And these are states that simply don't have the capacity to manage what takes place within their borders. And that's one of the fundamental obligations of sovereignty. And what we're seeing around the world in select places, and I fear we may see even more going forward, is the lack of capacity of states. And that's where terrorists take root, that's where pirates take root, that's where traffickers set up shop. And -- again, cartels of all sorts -- and so to the extent that sustainability issues undermine capacities of states, this then becomes not simply a domestic challenge to those societies, but will spill over. In this age of globalization, borders tend to be crossed with impunity. And again, my point is simply that the issues of sustainability have to now be seen, I believe, through a much broader lens. This is a challenge for governments. This is a challenge for the private sector, as we'll be hearing today. This is a challenge for all those involved in the foreign policy and the national security debate. Before turning things over to Peter, let me just also thank Rita Hauser. This is -- this program today is this year's annual Hauser Symposium. Work in this area depends upon the commitment and generosity and resources of individuals and foundations who basically believe that we need to have a capacity, if you will, in the institutional world as well. So I want to thank Rita Hauser, who's been a long-term supporter of the Council. With that, let me turn things over to Peter Seligmann. Peter is -- in the nonprofit world, is often not associated with the word entrepreneur. We think of entrepreneurs as guys who -- and women who run around Silicon Valley and the like. Peter's an extraordinary entrepreneur. He has built up this organization over the decades, and he's made it a force. It's -- you know, I run a -- I'm lucky enough to head a think tank, and our principal widget is ideas. Peter runs a do tank. What CI has done around the world is, you know, quite remarkable in protecting forests and protecting ocean space and protecting coral areas, and in helping governments meet the challenges that we're talking about today, which is the challenge of sustainability. So with that, Mr. Seligmann. (Applause.) PETER SELIGMANN: Good morning. It's so nice to be here. And I'm very, very enthusiastic about our partnership with the council and appreciate the hard work that all the people of the council have put in with the CI team to pull this together. I'm really looking forward to the discussions today. There are a lot of ideas, a lot of experiences that many of you have that if we pull them together and think carefully, maybe we'll discover some paths forward. And we really do need to find some new trails to go forward as we look at what our global society is facing today. Richard touched upon, you know, much of the areas that we are really concerned about -- (audio break) -- you know, just to -- kind of the highlight kind of a moment of kind of awakening for me personally was just a few years ago, when I was thinking about the kind of the relevance and the impact that our organization, Conservation International, was having on the protection of biodiversity. And as I added up all the wonderful successes as we were thinking about how we were going to increase support for the organization, I realized that really if you're objective about it, no matter, you know, how many new places are protected, the fact is that all these indicators are going in the wrong direction, that extinctions were accelerating, fisheries were being depleted and we're actually dealing with climate issues that are -- where the hundred-year storm is becoming the annual storm. And what we realize when we have 7 billion people going towards 9 billion is that every one of these major events impacts millions of people, and every one of these major events stresses out all the support systems that communities have. And when you get to that place, you begin to have security challenges and security issues. And what we recognized at that point a few years ago was that this was actually not a biodiversity issue, this was a human issue. And at that point, we shifted our mission from protecting biodiversity to a mission of supporting human well being by maintaining ecosystems that give support and services, goods for people and societies all over the world. And if we cannot get to the place where we recognize that we need nature to thrive, we're basically cooked. And it's OK for those of us who are kind of a little long in the tooth and old, but for the youngsters that's not a very good gift. And so we decided to redesign the organizations at CI to focus really on the simple issue of how do we protect nature for people, and how do you translate that into the real-life issues of a sustained source of food and water and energy and health? How do you -- how do you -- how do you really understand the contribution that healthy ecosystems make for livelihood? And all those issues, those are the issues that are essential for a healthy, desirable place to live. And as we undercut ecological health, we expose ourselves to frequently occurring disasters. And so today we've got this convergence of dramatic shifts in weather. And whether it's the acidification of the ocean, or the loss of polar caps, or the extraordinary droughts, or floods, or amazing storms that hit us every year, or whether it's the simultaneous destruction of ecosystem health, we've got a convergence of challenges that have to be addressed. These are national security issues, fundamental. They're as real, as palpable as cyber threat. They will undercut the stability of our societies and our nations. And that's why we're here today. We're here today to actually have that conversation. And it's not a new conversation. Secretary of State Baker spoke about it 20 years ago. Secretary of State Clinton spoke about it last year. I mean, it's not that it's a new issue, it's just an issue that has not received the intensity and the focus and the commitment to find answers. And that's really why we wanted to partner with the council. It's an extraordinary organization. Richard Haass has played a really great, great role at Conservation International. You know, there is a thought that sometimes the people that are involved in the NGO community like to kind of close their eyes and cross their fingers and click their heels to make good things happen. And when I would do that, I would open my eyes and there's Richard saying, OK, that's really nice, but that's not the way it's going to happen. And so it's really important to actually put truth into the issues that we have to solve and address. And that's why I'm really pleased that so many of you are here because you're dealing with issues at a national level, at a business level. And if we bring these together with academia and with the NGO sector, we really can find some new answers, and that's really what we have to find. And so with that, thank you so much for being here. Richard, thank you so much for hosting us. And let me turn it back to -- excuse me -- Mr. Lindsay. Thank you. Thank you, Jim Lindsay. Thank you. (Applause.) JAMES LINDSAY: Good morning, everyone. I want to welcome you to the breakfast keynote session of today's CFR Conservation International Symposium on global resources, the U.S. economy and national security. I'm James Lindsay, the director of the David Rockefeller Studies Program here at the Council on Foreign Relations. And as a reminder, this symposium, which is co-sponsored by the Council on Foreign Relations and Conservation International, is on the record. It is my distinct honor to introduce our keynote speaker, Dr. Kerri-Ann Jones, who is assistant secretary of state for Oceans and International Environmental and Scientific Affairs at the U.S. Department of State. Assistant Secretary Jones has had a distinguished career. A graduate of Barnard College at Columbia University, she earned her Ph.D from the Department of Molecular Biophysics and Biochemistry at Yale University. Dr. Jones has served in several capacities within the U.S. government, including in the White House Office of Science and Technology Policy, the National Science Foundation, the U.S. Agency for International Development and the National Institutes of Health. Dr. Jones has been assistant secretary since August of 2009 and her remit, the set of issues she's responsible for, includes, and let me read, ocean fisheries, the Arctic, Antarctica, conservation, biodiversity, climate change, water, toxic chemicals -- KERRI-ANN JONES: (Inaudible.) LINDSAY: -- endemic preparedness, innovation and just to give her something to do in her spare time, space. (Laughter.) So Assistant Secretary Jones has a very full inbox, I would imagine. She is eminently qualified to kick off our symposium today. So please join me in thanking her for coming. JONES: Thank you. (Applause.) Thank you. LINDSAY: Dr. Jones, the title of today's symposium is Global Resources, the U.S. Economy and National Security. From where you sit in the State Department, what do you see as the most significant trends in global natural resources? JONES: Well, thank you. And I'd first like to thank the organizers of this meeting. It's a very important conversation to have at this point in time. From where I sit, I see some of the things that we heard from Richard and Peter, the increasing stress on the natural resource (base ?) from all different directions, including climate change, but also the increasing population, the drive to develop and just the general push to overusing what we have and not sort of thinking about what that means in the long term. So that's from the natural resource piece. But from where I sit in the State Department, what I worry about is foreign policy and national security. And so seeing these issues now become more and more threats to stability, sustained economic growth, they're foreign policy issues, because I see them in all of the countries I visit as topics that are migrating from the isolation of a ministry of environment to the ministry of foreign affairs, to the national security discussion. So the pressures there -- we all know what they are -- coming at every country from different directions, and then when you look at the different states of developments of countries, it depends on how their reaction is going to be. And this is a turning point for some countries, how they go forward and how we can help influence choices, as well as make sure we're making the right choices. LINDSAY: Fair enough. If we may, Dr. Jones, can we sort of look at one issue here? Let's think about fisheries, ocean fisheries. JONES: Right. LINDSAY: Can you give us some sense of the nature of the problem? JONES: Sure. I think the number is something like 57 percent of marine fisheries are now under threat moving towards being unsustainable, and perhaps there are already 30 percent that are in serious trouble. So the number is very high. It's close to 87 percent that are stressed. So that's significant. It's significant because of the overall ecosystem, but it's also very significant because that's an important food source for many countries, including many developing countries. It also is important because nations compete for those fisheries. And when you have a resource that's becoming limited, that's important to your population, it's often one of the causes of conflict. And so that whole continuity from the natural resource issue -- what's happening to the fisheries, how do we know what's sustainable and what's not -- up to the competition for that resource, it's very significant. And so what we're trying to do is work on this on multiple fronts, bilaterally, regionally and multilaterally. We certainly try to make sure we're plugged into the science on all of this. And as you heard when Jim read all of those topics that are in my portfolio, those topics are in my portfolio from a foreign policy standpoint. So what we do is work with all of the technical agencies in the U.S. government to make sure that we have the science that we need to understand these questions. So fisheries is a huge issue. I mean, we spend a tremendous amount of time looking at multilateral agreements to put in place approaches that can protect fisheries. For instance, there's a new treaty out there on port state measures to look at what happens when fish that are caught illegally, they are unregulated, are brought into port -- how are they dealt with in that port? We also participate in many regional fisheries management organizations that are also treaty organizations that look at how do we make sure that the fish in that region are being fished in a sustainable way. So we're trying to use all kinds of tools to address this, but one of the things that we know is fundamental is significant engagement on all of this and keeping it on a foreign policy agenda. LINDSAY: I want to get into sort of the mechanisms for dealing with the problem, if we could spend just a few more minutes talking about some other dimensions of the problem. What about water and access to fresh water? JONES: Well, fresh water is another, you know, tough issue, OK, because water's fundamental. It's fundamental for human survival, production of food, all kinds of very basic human needs. And across the globe, I think there are about 260 river basins that are shared by multiple countries. As water stress increases, there's a possibility for conflict -- transboundary conflict. And that's something we try to look at. We also have been -- you know, Secretary Clinton had really pushed to elevate this issue, and Secretary Kerry is continuing that attention on water. We're also trying to make sure that our development programs really address this because it's a health issue in that there's so many diseases related to water. It's also such a fundamental development issue. So I think -- you know, water is the -- I think is the epitome of a natural resource that we see being stressed and that we recognize has a tremendous effect on an individual life on a day-to-day basis, but it is a very significant national security issue. LINDSAY: And just one other topic -- illegal logging, particularly deforestation and its link to climate change. JONES: Well, that one you could sort of spend a whole day talking about. Illegal -- you could really spend a day talking about any one of these pieces. And illegal logging -- I think that we all know it's a huge industry in terms of -- logging -- forget illegal logging, but logging itself is a huge trade issue. And certainly there's a large percentage of that that's illegal. It threatens species that are endangered. It also can lead to a lot of pressure on communities because communities depend on forest products for some of their economic survival. And if you have trees being taken out and moved out of a country illegally, that's a loss of income. We also know that sometimes these profits go to organizations that are terrorist organizations. The U.N. Security Council, I think it was last year, had a resolution to stop the import of charcoal that was coming from Somalia because that was related to a terrorist group. And so, you know, the pressure is on on all of these resources. And so you sort of have gone through some of the big ones and just sort of touching on fish, water, logging. The stress on logging is also important because, you know, trees are a carbon sink. You sort of don't want to see deforestation happening for multiple reasons, but certainly the climate impact is significant as well. I think that -- what I notice from my position is that I didn't come into this job as a -- as a fish person -- (laughs) -- or as a forest person. I came as a scientist. And what's really interesting is the convergence of all of these issues. You know, you see these multiple stresses on countries and you also see ministries and departments sort of struggling with how do you bridge this bureaucratically from a policy standpoint? How do you make advances that will look at the local needs as well as the national needs? And then, how does that roll up into what the whole world is trying to do to sort of, you know, rebalance some of the consumption models that we're living under now that I think we have to try to change? LINDSAY: Fair enough. Well, this connection between sort of resource scarcity and security is a theme that Secretary of State Kerry has picked up, indeed. On Monday, he unveiled a proposal to create a marine reserve in the Ross Sea. JONES: Right. LINDSAY: Now I'm going to ask you a second about that, but I'm just -- I think it's worth quoting Secretary of State Kerry. He said: This is not just an environmental issue, this is a security issue, it's an economic security issue, it's a national security issue. And it's not too hard, in some of these cases, to draw connections; for example, I read recently that some scientists predict that the glaciers that feed the great rivers of South Asia will be gone by 2050 and that will create significant problems for, among other things, agriculture in India, in Pakistan because they depend upon the various rivers for it. JONES: Right. LINDSAY: So how is this being handled within the U.S. government? I mean, because there's so many other issues going on. Is there coordination among the various parts of the State Department? Because you're really handling sort of a nontraditional set of national security issues. JONES: Right. Well, it's an interesting question. I've worked off and on with the State Department a long time, from different jobs across the government. And I head up a bureau that's known as a functional bureau, right? And in the State Department you have geographic bureaus and functional bureaus. The geographic bureaus have been the traditional well-known points of contact, right, because that's how the geopolitical issues are often engaged in. What I have seen over the past 20 years is the increasing importance of the functional bureaus because these issues are being looked at on -- in almost every bilateral relationship we have. And so there is coordination across the State Department, and it's not just my bureau with regional bureaus, it's my bureau with the economic bureau, because this has an economic and trade dimension. It's my bureau with our new Bureau on Energy and Natural Resources because as you look to energy profiles, how do you think about what that profile means in terms of impact on the natural resource base? It's also looked at in terms of the Bureau for International Narcotics and Law Enforcement because something like wildlife trafficking has really gotten to be an issue of organized crime and how do you move money around countries and understanding how money moves. So there's a lot of coordination going on across the State Department. But more much broadly, as I said earlier, there's a lot of other agencies in the U.S. government involved in this, because more and more what has happened on these issues, the -- what used to be called the domestic agencies -- you know, Fish and Wildlife Service, the National Institutes of Health, the National Science Foundation -- while their mandates all started domestically, the issues that they're involved in are now global. You know, Fish and Wildlife Service has to be engaged internationally. The National Institutes of Health does as well. And the reason I mention them is because the water and disease issue, the disease is coming from exotic animals that may be crossing borders illegally. So there's coordination across all of those technical agencies as well. And I think it's challenging. No doubt about it. Because just as every country has a culture, so does every technical agency or every discipline. So we work across those. But it really is an effort to coordinate broadly, recognizing sort of the breadth of these issues and the technical depth that's required. LINDSAY: OK. So you have a challenge sort of at home coordinating? JONES: Oh, absolutely. LINDSAY: But obviously, at the end of the day when you produce a policy, there's a limited amount to what the United States can do unilaterally. You have to work bilaterally, regionally, you mentioned, and multilateral. JONES: Multilaterally. LINDSAY: Let's just sort of take one example, maybe perhaps this proposal for a marine reserve in the Ross -- in the Ross Sea. As I understand it, there is a commission or panel was set up several decades ago to regulate issues related to marine life in the Antarctic. JONES: Right. LINDSAY: There had been hope that last November an agreement would be reached. An agreement wasn't reached, and so Secretary Kerry made his announcement -- I guess this is a proposal -- for the United States, New Zealand, maybe Australia. Maybe you want to sort of -- JONES: Sure, sure. It's a long story, here. And this is one of my favorite acronyms: CCAMLR, which is the Commission on the Conservation of Antarctic Marine Living Resources. Only in Washington or the international community could we come up with something that interesting. CCAMLR is one of the groups that has been established under the Antarctic Treaty. And last October, November, it had a meeting. And there several proposals going into that meeting about creating marine protected areas. The U.S. and New Zealand both had proposals for creating a protected area in the Ross Sea, which is a very important area because it's in close to the coast and then it moves out. So it has a lot of teeming life; it has the coastline. It's been a very good laboratory in terms of seeing what's happening. So we each had proposals. So we went into that meeting, and we were able to come together and develop a joint proposal. At that time, however, the members of CCAMLR were not ready to accept that proposal. There were other proposals on the table. Australia and the EU and France, I believe, have a proposal in the East Antarctic water -- the Southern Ocean. And so what's going to happen is, later in the summer, there's going to be another meeting to try to advance this proposal and get agreement. Agreement in CCAMLR is by consensus, and so that's always a challenging international negotiation when it's consensus. There are countries involved in CCAMLR who fish in these areas. There are different interests. And so we are doing everything we can to talk to the countries in CCAMLR to make this come forward. And what happened the other night when the secretary was speaking is, he was -- there was a film at the National Geographic that was about the Southern Ocean and about the area of the Ross Sea and why it's so important from a conservation standpoint. And so he was able to endorse this proposal along with New Zealand and Australia, and we were really pleased that the secretary wanted to be out there on one of his earliest discussions talking about this issue and recognizing that this isn't just about conservation. This is much bigger than that. This is all of the other topics we're talking about -- economics and national security. LINDSAY: OK. I should point out that we're talking about a very vast amount of ocean. The notion I kept hearing was that it was nine times larger than New Zealand, which may not be an analogy that resonates with Americans, but it's three and a half times the size of Texas. JONES: Right. LINDSAY: Which is a mighty big state, I can assure you. JONES: It'd be the largest -- it'd be the largest established -- LINDSAY: It'd be the largest -- it'd be the largest reserve. And one of the issues there that's complicated discussions is something known as the Antarctic Toothfish, which is better known to diners at restaurants as Chilean sea bass. JONES: Not a very attractive fish, if you've ever actually seen a picture of it. (Laughter.) LINDSAY: Yes. It turned out, I guess, in some of the cases, when they renamed it, sales went off the charts. But -- JONES: Marketing is everything. LINDSAY: Marketing is everything. I'm curious, because when you look at this, this is sort of a plurilateral organization, CCAMLR. And at the other end of the spectrum, you have opportunities to do things unilaterally. The United States, beginning in the mid-1980s with the Magnuson-Stevens Act, tried to control fishing in sort of the United States' economic exclusion zone. And my understand is, some fish stocks had begun to rebound because of legislation -- not all fish stocks. Particularly, I believe, cod off of Massachusetts or New England has not really recovered. But in between there are the sort of bilateral efforts. And to what extent does the United States engage in sort of capacity-building so that maritime states can control their own economic exclusion zones and prevent overfishing in their own waters? JONES: There's lots of different ways. A couple of things on that point. The other thing -- to go back to the Magnuson-Stevens Act -- our own domestic legislation also has ways to impact the international scene by, you know, what we expect from other countries that are bringing products into the U.S. And so we have domestic legislation from both the Magnuson-Stevens Act, and we have the Lacey Act in terms of logging, and which was -- first started out in terms of wildlife, but extended to timber just a few years ago. And both of those are domestic legislation that have an impact on what comes into our country and how we sort of look at countries and regularly look at whether or not what they're bringing is -- has been taken appropriately, and whether or not we can, in some way, affect imports or think about other actions we can take. So that's one -- that's the other piece of how we can sort of deal with things. So we do things unilaterally, but then sometimes our domestic legislation can have an international impact, certainly. But from a bilateral perspective -- we have bilateral relationships with countries all over the world. And from a -- from a fishery standpoint, we have bilateral fisheries discussions, certainly with some of our key partners, like Canada. We talk a lot about fisheries with Canada because we share certain waters and boundaries. But you know, most recently -- just to give you an example, I was in Malaysia last week, where we have a joint committee on science and technology. And this -- many countries want to have science and technology relationships with the U.S. in science because we have an excellent reputation and everyone wants to sort of learn how we do things and be partners. In that group, one of the -- one of the areas that we have identified as a priority for our two countries are marine issues. And so we begin to think about their -- the research-base of understanding sustainable fisheries, linking the marine ministry in some way to the foreign policy ministry. So we do a lot through different channels. So some will be specifically about fisheries. Some will be about science and technology. And we're always kind of looking for ways to cross-fertilize topics where we know they play a role in these issues. It's one of the interesting things in the bureau that I lead, that we look at the science that underpins everything and we try to have that inform it. We also use our science relationship as a way to further these other topics, you know, from a science base to conservation issues, because as you would imagine, often the U.S. can be viewed as coming in and saying: You should do this and you should do that. And you know, we don't have the best track record on certain issues. And sometimes that creates a difficult conversation. So really having a science-based approach to these topics is kind of fundamental to having a really good dialogue with partners around the world. LINDSAY: Speaking of partners, I mean, obviously, when you look at international relations today, one of the most significant developments is the rise of China. And if you have been to China, or simply watched the news, you know that China has substantial internal environmental problems. To what extent have the Chinese been willing to engage in international discussions, or even bilateral discussions, with the United States on these issues -- whether it's fresh water, oceans, illegal logging, what have you? JONES: Oh, they're very willing to engage. You know, it's -- we have multiple, multiple forums and venues where we engage with the Chinese bilaterally and regionally and multilaterally. Having sort of, as everyone knows, made a turn to the Pacific, we have many regional organizations where we are engaged. You know, we have also with China -- let me give you one example. We have -- we've signed a memorandum of understanding on illegal logging with China. And I know that this is something that has come up often because, you know, with China -- (inaudible) -- what are they doing in other countries? How are they involved or, you know, what are there policies related to illegal logging? So with this memorandum, we are able to have a regular dialogue with the Chinese very specifically, where the Ministry of Foreign Affairs is at the table, but their Forestry Ministry is at the table, our forestry folks are at the table, trade people are at the table. And we talk about this from multiple perspectives. We talk about what their systems are for tracking illegal products. We talk about the requirements of our Lacey Act. So we're very engaged. I think with every country, implementation and how do we ensure that what we're trying to do is complementary is a challenge, just because bureaucracies are different. So alignment is often a challenge. So you know, a lot of people -- at least, I have to say, some people in my family wonder why I'm in so many meetings all the time. But the meetings with bilateral partners are sort of how you get these discussions going. And a lot of it is just learning each other's systems, recognizing you have similar priorities and then figuring out within those systems, how do you develop approaches that can make a difference. And the approaches sometimes culturally have to be different as well, just because of the way governments are structured. LINDSAY: We talked a lot this morning about problems. And one of the downsides of talking about problems, you end up persuading everybody how difficult things are. So my last question, I guess, I want to ask you is, what have been our successes in this area? Have we made progress? Where have we made progress? What's the good news? JONES: I think -- I think there's a lot of good news. I think, from my perspective, I think the issues -- the collection of issues we're talking about now are on the foreign policy/national security agenda in ways they have never been. I think -- and I think that's a very positive thing. I think when you have the leaders of APEC making a statement about wildlife trafficking, that would have been unheard of years ago, OK? So that I think is a very big deal. Granted, that's in the diplomatic world, but that's how you begin to get traction on these issues. So I think that's very positive. And it's not just in APEC; we see it in many other places being put on the agenda. I also think it's very positive in terms of wildlife trafficking that you are seeing an increase in arrests, you are seeing more shipments being stopped. There's more to do, but I think, again, the awareness on these issues is really, really increasing. And that is -- that's very positive. I also think that the fact that -- just from a bureaucratic standpoint, when you see all of these different interest groups in a government beginning to talk across the silos, that's a very positive -- very positive sign. There's a lot -- there's a lot more to be done; there's no doubt about that. But I just -- I think there's a lot of progress. And I think -- the other piece of this is I think that the partnerships between governments, NGOs and the private sector has become much stronger -- much, much stronger. And I think that's going to continue to grow. And I think that will make a difference. There's an activity that we're working on now called the Tropical Forest Alliance for 2020, which is a partnership -- so far the U.S. and the Netherlands are involved, but the Consumer Goods Forum is in it. And the point is the recognition that if you're a company and you're developing a lot of different products, well, you're getting them from some natural resource base. And so let's have the conversation about how do you green the supply chain? And that has impact on ecosystems in a -- in a fundamental way. So that discussion is starting. Now, these are complicated discussions for sure. But they're happening, and I think they will make progress. I think the interesting thing in all of this is the level of detail you have to go into. And I think people are beginning to really make that commitment to dig in on an industry basis, on an ecosystem basis, and I think that's all good news. LINDSAY: Terrific. Right now, we're going to invite questions from our audience. JONES: Sure. LINDSAY: I would ask people in the audience to please wait for a microphone and speak directly into it. And I would ask you that you please stand, state your name and affiliation. And finally, in this long list of directions, I am to ask you to please keep your question and comments concise -- (laughter) -- to allow as many members as possible to speak. So -- sir. QUESTIONER: Frank Loy from the Nature Conservancy. JONES: Hi, Frank. (Chuckles.) QUESTIONER: Thank you, Secretary, for a very informative talk. My question is this: It seems increasingly difficult for the United States to ratify any treaty, even treaties that have bipartisan and broad support. My question is, is that the premise on which you're working? And how does that difficulty affect your negotiations? JONES: We've noticed that too. (Laughter.) Yes, it is -- it is an interesting challenge. I think that we could all list a number of treaties that are pending ratification right now. I think that we are looking at this in a very pragmatic way. I mean, this is the nature of our system. We work with Congress to sort of move forward on treaties. We -- as we are going into treaty negotiations, we are being very sensitive to the fact that when you're negotiating an international treaty, more and more, one foot is in the -- in the international world and one foot is the domestic. And so we have some treaties that are pending because they require domestic legislation, what we call implementation language, to make sure that we align with whatsever (sic) in that treaty. So we're looking very closely as we go into negotiations as to how we think about all the legislation that might be needed, knowing that that's going to be a hurdle. So that's one thing. The other is that we are looking at other ways of doing things. And I think many countries are looking at this as well. They may not have some of the congressional challenges we have, but having 193 countries come to a conclusion on increasingly complicated issues can take a long time. And I think there's an urgency on some of these issues that countries are beginning to be more sensitive to. So you're seeing, I think, more creative regional activities. You're seeing more efforts to sort of keep the multilateral relations going, but also try to do other things that support them and take action. So it does make it a little bit difficult for the U.S. with our -- with our track record, but I think we're trying to now be very pragmatic to think about what we would really need in a treaty to sort of be able to sort of have our Senate be very supportive of it, and we sort of take that forward. And then there are these other channels that we're really trying to take actions with. LINDSAY: (Inaudible) -- on this particular treaty question, how much would passage of the U.N. Convention on the Law of the Sea Treaty help you in the area of what you're doing in terms of oceans? JONES: It would be an enormous help. It would be an enormous help because we -- you know, we follow what is in that treaty as just sort of best practices, but it is -- it is sometimes difficult to be in organizations as an observer trying to be a leader. So you're not at the table, you're in the room. You are the United States, and so you do have -- you do have a platform to speak from, but you're not a member. And so it does -- it does give you -- it does give you a challenge in terms of how you can really help shape things in some of the important discussions. So that would be an enormous plus for us to join that treaty. And as you know, it's a priority for this administration. It was a priority for Secretary Clinton. It is a huge priority for Secretary Kerry. So we're going to keep working on that. LINDSAY: Fair enough. Sherri. QUESTIONER: Thanks, Jim. Thanks, Secretary Jones. And thanks to the council and Conservation International for organizing this. I think it's very, very important and very timely. LINDSAY: Sherri, can I get you to identify yourself? QUESTIONER: Sherri Goodman at -- Sherri Goodman, CNA. At -- on the rebalance to Asia, in national security circles it's often thought of in terms of the military balance and diplomatic throw-weight and other categories. JONES: Right. QUESTIONER: But you've raised some important issues here this morning. And I've been increasingly struck -- in a meeting I had with the Vietnamese ambassador to the U.S. just yesterday, he said the most important thing happening right now is the Lower Mekong Initiative, which is all about water. JONES: that's right. QUESTIONER: And so I wonder whether and how you see this set of national resource issues figuring higher on the agenda within this region as a critical part, as you and others have said, in ensuring global stability and preventing the factors of instability from water, climate change, energy and the weak state factor from becoming much more prominent in the future. JONES: I agree with you. I mean, I think that the whole natural resource profile in Asia is an important part of our rebalancing thinking, OK? Because you have key maritime countries there. You have a country like Indonesia, which has an enormous amount of biodiversity, coastline, important natural resources. And they are developing very, very quickly, and that certainly is something that they're very concerned about. I mean, they talk about the green economy and the blue economy. And so what does the blue economy mean? The blue economy, you know, you can look at it as a very positive term, but you have to -- you have to, I think, put into that term the sustainability as the base, because otherwise it's just another source of economic growth and you can't do that in an unsustainable way. And so you have competition for resources in that region among countries that are rapidly developing. They have some of the unique resources of the globe, but they also are going to be competing for resources in that growth curve. And so that is a piece of the overall, I think, you know, stability and importance of that region, and I see it as one of the issues, as we look at it on our foreign policy agenda. LINDSAY: All the way to the gentleman in the back. If I could ask you to stand and give your name and affiliation. QUESTIONER: Good morning. JONES: Good morning. QUESTIONER: (Clears throat.) Pardon me. John Doyle with the Aviation Week Group. You said several times about how these issues affect national security. I wonder if you could go into a little bit about what kind of cooperation and reach-out you're having with the armed services, and to the ability you can talk about it, what the current budgetary situation may or may not be doing to continuing those efforts. JONES: Good question. We work a lot with the Defense Department on these issues. The Defense Department is sensitive to the stability and security issues related to a stressed natural resource base -- certainly climate, certainly water. And so they're very involved in this. My own experience with them has been on the science side of things. The Office of Naval Research, the Air Force Office of Research, they've been involved in many of the things that we do. They're very interested in the marine environment -- obviously, ONR is. And they were just with us in Malaysia talking about what kinds of work we could do with the folks in Malaysia regarding ocean mapping and understanding what's out there. And so they're -- they're sort of a member of the team when we go forward in an interagency process to talk about all these issues. Certainly, in the wildlife trafficking, there have been discussions regarding what's going on in Africa and, you know, what the Defense Department has been looking at in Africa in terms of tracking different sorts of groups and their involvement in wildlife trafficking. So they're a member of the interagency team, as we're looking at this whole collection of issues. The budget question I really can't answer, because that sort of is a dynamic situation right now. And every time I am at an interagency meeting, all the agencies are saying, we're working -- we're seeing what's happening. So I couldn't really give you, I think, the kind of answer that would -- that would -- that would tell you we see -- we see - we know where this is going to go. We do see a downward trend. We do hear that offices in the Defense Department are saying, you know, well, maybe we can't engage at the same level that we had hoped. But I don't have -- I don't have figures at this point. LINDSAY: Young lady in the back. QUESTIONER: Hi, Cindy Johnson (sp), (SNR Denton ?) and a member of the Chairman's Council of Conservation International. Assistant Secretary, it's so great to hear your views today. I don't think this falls in your purview, but I know that the FDA is reviewing a comment period on Atlantic salmon and whether or not Atlantic salmon will be able to be qualified as wild -- would it have altered DNA? And I believe the comment period for this is over in the middle of April. I was just wondering about your agency. Do you interact with FDA on that, and -- or are other countries saying, hey, the United States, we don't think this is a great idea? I know that these fish are supposed to be offshore, and personally, my worry is that, you know, God forbid they escape from whatever marvelous tank they're in. But how does that affect your job, and what do you think about that topic? JONES: At this point, that has not been on my screen as an issue. It has not been raised internationally to me in the different settings I have been in recently. The issue -- the more general issue of genetically-modified organisms and how different countries are dealing with it sometimes comes up, but the particular case you're mentioning doesn't come up. We have been -- the work we have been doing predominately with FDA has to do more with the issue of, you know, counterfeit drugs and substandard medicines, which is a huge issue around the world and something that we try to deal with as a health issue and as an economic issue. But the particular issue you're mentioning has not come on to my list of things. Which doesn't mean it won't, but my list is fine right now -- (laughter) -- LINDSAY: I was going to say, Assistant Secretary, it seems like it'd be easier to list the topics you're not involved with than the ones you are involved with. JONES: I know. LINDSAY: We're going to go over to this gentleman right here. QUESTIONER: Thank you. Bob Barnes from the Nature Conservancy; sorry for the hoarse voice. I'd like to come back to the issue of the role of traditionally domestic agencies in this very complex situation. Many of the important domestic agencies in these arenas have no independent authority to operate overseas and no budget line to support that operation -- USGS, Natural Resource Conservation Service and the Department of Agriculture. It would seem to me that the administration should consider sponsoring legislation to create these authorizations for overseas activity and separate budget line to take some of the pressure off the foreign assistance budget. I'd like your response to that. JONES: It's a very good question. I've thought about that myself a few times. The issue that you raised about authorities is a really important one. And some of the agencies have international authorities in different ways. I know this because at one point I was asked by our colleagues in Congress to look at authorities related to -- specifically science and technology. And so we looked at that. And USDA and NIH both have some international authority because of the nature of protecting the health of U.S. citizens and the food supply of U.S. citizens. FDA is increasingly going out there because of the percentage of -- when you look at drugs made in the U.S. -- drugs sold in the U.S., a huge percentage of the components of those drugs come from around the world. And so the standards in a Chinese factory or an Indian factory have to sort of be looked at. And so there's a -- there's a number of agencies that have some authority. There are others that need more, but I think the question -- the question that's more at the root, I think, is a funding issue, because I think the agencies that have it and the ones that are maybe moving more forward than their authority necessarily states -- everyone recognizes that these systems are links, you know, that you can't really talk about the U.S. food system or our separate health system, you know, for drugs, or -- and the same thing with wildlife trafficking. I mean, you know, we are a market for wildlife, you know, that's brought in that should not be. So we are sort of not clear in this area. So we have to have fish and wildlife understanding, where things are coming from, which means they have to understand the systems around the world. So I think there's more and more recognition that domestic technical agencies really have to be involved in the world. I think the budget issue is a big -- is a big question. It's a huge question, and I think at this time and the budget situation we're in, it's particularly difficult. But we are always having conversations with Congress about this. There are particular different groups in Congress that are interested. There's a -- there's a group that's very interested in conservation and wildlife. They talk to us a lot. Representative Rice, I think, is involved in that. We have a lot of champions on the Hill who are very concerned about fisheries because their states are on the water or they have -- they're very concerned about both the competitiveness issue, about where their fishermen can go. So we have pockets of support that are looking to how do you fund certain things, but the overarching budget question remains. And I think it's something we're just going to have to deal with as this continual kind of interconnectedness continues. I mean, it's just going to get more and more and more because we can see how systems are getting that way. But I don't -- I don't know that there would be any interest right now in trying to sponsor additional funding when we are in the situation we're in. I think it's really talking more about getting the issues visible and then doing this on a case-by-case basis to sort of target some funds for very important topics. LINDSAY: This gentleman over here. QUESTIONER: Good morning. JONES: Morning. QUESTIONER: My name is Jeff Guyon (sp) with -- on the board of Conservation International. And my kind of -- my question goes back kind of to the Defense Department. As you -- well -- are you well aware of that, you know, Afghanistan has depleted their force by 98 percent? JONES: Yes. QUESTIONER: The 2 percent left right now is under tremendous pressure for illegal logging going into Pakistan. Since we have the military there, do we have the might to try to stop that? JONES: We certainly engage and talk to them about that. And I've met with the minister of environment of Afghanistan at one of the multilateral meetings. And we've talked a lot about it. Yes, we engage on those issues and we recognize that they are, you know, part of the overall stability question. I think it's a challenge to have that -- have that be the priority we think it should be. It's an ongoing discussion. I can't -- I can't answer your question with a yes or no, but we recognize that the military are often, you know, the first on the ground, the ones who are there who can make a big difference in sort of how environmental activities are happening or not happening. And so we are very engaged with discussions with them as we are, you know, around the world. But conflict areas are by definition often extremely vulnerable for the environment, because, you know, nobody's paying -- people are taken with life and death situations, and they are using the resources in a very harsh way. And so trying to sort of turn that around, I think, is an ongoing -- it's an ongoing issue in any conflict situation. LINDSAY: Dr. Stewart Patrick. QUESTIONER: Hi, yeah, Stewart Patrick, senior fellow and director of the Program on International Institutions and Global Governance here. Thank you very much, Secretary Jones. Just wanted to pick up on the challenges of multilateral diplomacy when it comes to conservation and sustainability in a couple of different senses. The first is, it seems to me that there is a significant fatigue about U.N. mega conferences that has built -- you know, there's been Johannesburg, obviously, Rio+20 more recently, but a lot of these sort of huge, 193-member conferences. Do you have a sense that that's the case and that most effective work is going to have to take place in sort of more minilateral coalitions of -- and not only the willing but the relevant? And then the other is -- the other question has to do with your -- the bureaucratic issue you raised, which that just as in the State Department functional bureaus tend to lose out to regional bureaus or at least -- JONES: Not so much anymore. QUESTIONER: Not so much anymore That's good. JONES: (Laughs.) QUESTIONER: That's good to hear. In the international arena, it -- you know, when you have -- when you have a a conference of parties that are negotiated by environment ministers, they tend to be a little bit underpowered compared to secretaries of the treasury or ministers of foreign affairs. Do you see that changing? Because that seems to me the way to get this up to the next level. JONES: Right. On your first point, on the multilateral fatigue, I think -- I think we have to do all of those things. I think you have to do multilateral as well as the regional as well as some dynamic plurilateral activities. I think -- you know, I was at Rio+20 last summer. And I think one of the things that struck me was that that conference had so many issues on it. I mean, it had everything on it. And every one of them is a complex issue. So every one of them sort of is kind of, how could you negotiate something that would come forward from that that could really get into or address all of the issues that were there? I think that the outcome document sort of, you know, is a good framework document, but then you have to pick each piece and go after it. I think that we need to continue the multilateral dialogues or conventions. I think we will have to think about more creative ways to do them because they're very expensive and look at ways to use all this new technology, electronic and whatnot, that we can do to connect. But you know, we just had -- on a different subject, we just had a multilateral convention developed for mercury, OK, that was successful, OK. And it was very interesting to me because it's a singular issue. Now granted there's multiple products and there's multiple sources and everything, but it was a very singular issue. And I think that was -- that's going to be something that I think we can look at as success. I think when you move over to the collection of issues that defines sustainable development, it's huge. It's huge. And so we have to sort of think about them as they're all connected. No doubt about it. But you have to sort of think about, so how do you make advances on them? And so I think that's why you have to have both the multilateral and the regional and all the other -- all the other approaches. And then your second question, which I had forgotten, was -- QUESTIONER: This is on the fact that many of the multilateral negotiations take place with ministers of the environment or, you know, at the undersecretary level. JONES: Right, right. And this is absolutely true. I participate in UNEP meetings, U.N. environmental program, and have really been struck by the environment ministers sometimes being somewhat isolated from the give-and-take of financial movements and power struggles and everything else that go along. And so I think one of the things you see -- and you certainly see it happening in climate -- is finance ministers are getting very involved, OK, which is really important. I also think that in having the Rio Conference this summer, one of the most important things was to rebalancing, to say sustainable development is not just environment. It's environment, it's economic and its social. And the convergence of the economic perspective of environmental issues is very important, and so the finance people, I believe, need to be sitting at the table. It's -- you know, on a more granular level it's -- the private sector has to be involved, because the private sector is sort of developing and making choices and they want -- you know, they're always looking at profit but they also have to sort of be involved in discussing, so what are the environmental impacts and how do we make choices? SO I think there's a recognition of that, and I think more and more that is happening. And certainly in settings when I'm traveling, I try to meet with multiple ministries. And I think many of my colleagues do that as well. So I think that's more of a trend that is happening, that environment is becoming less isolated in sitting over here and much more integrated in the discussions. LINDSAY: Oh, David, go ahead. QUESTIONER: David Hitchings from Northrop Grumman corporation. My question is, do you think you have enough sensors in the space, sky, sea and land not only for your scientists to understand the problems, but also for enforcing the treaties that you have already worked on? JONES: Probably not. (Laughter.) I mean, I think the sensor technology is developing at a rapid -- a rapid pace, OK? And I think that there is a general recognition that in terms of both understanding the environment as well as tracking what's happening, we're just in a whole new -- whole new world of possibility. I mean, if you look at -- I think -- what is it -- Google Forest 2.0 (sic: Global Forest Watch 2.0) or something like that, that's a collaboration with Google, World Resources Institute and the University of Maryland. I mean, they're going to be looking at forestry and what's happening in ways that we never even thought about before. I was at a meeting the other day with some ocean scientists who were talking about the fact that we now or very soon will have the capacity to begin to map the ocean that way. And of course, I was with a bunch of oceanographers, so they felt it was very unfair that space was getting more sensors than the oceans. But, you know, the technology is rapidly developing. I think this is a -- this is something where there's great potential. The challenge is, how do you coordinate it globally? How do you make sure all the data has open access, which is one of our themes over and over and over again, every place we go? And how do you make sure that you can sustain the infrastructure? I was -- as I said, in Malaysia; I was also in Australia last week, and in Australia, we talked a lot about, how do we make sure the continuity of the Earth observing systems that we have continue? And we come back to budgets. So that -- you know, you have this -- we just launched, I guess, Landsat 8, which was -- which was a really good thing to do. And all of that Landsat data is available, but there are other satellite systems where we have budget questions. So I think that -- I think the short answer is no, we can do more with sensors. I think it is a -- it's an area of great potential. But I think the coordination and the sustainability of infrastructure are very big issues we're going to have to talk about. LINDSAY: Secretary Jones has a meeting that she has to go off to, so we have time for one last question. Before I take it, I just want to remind all the participants that this session has been on the record. And we'll go to the back of the room. QUESTIONER: Madam Secretary, Bobby Charles, former assistant secretary for INL. JONES: Oh, great. QUESTIONER: And I wanted to just pose a question. I don't envy you -- the breadth of your reach and the budget problems. JONES: Thank you. QUESTIONER: But budget follows relevance, and as a former also DOD-related person, I wonder if any thought has been given to a model or a process by which you could identify resource triggers of national security crises. In other words, I particularly think of AFRICOM, where we know there are national security crises coming related to resources. Is there any comprehensive process under way -- a multilateral or U.S. or DOD and State to put a model of some kind into place that would be predictive rather than just kind of broadly looking at treaties? JONES: Somebody I heard give you an answer up here. And it's kind of taking information to that next step. It's sort of understanding the intelligence that's out there on the ground and trying to be prepared as best we can. We are certainly in discussions with AFRICOM as to what's happening -- what we're seeing on the ground -- in particular, you know, recently related to some reporting on wildlife trafficking and potential groups moving across Africa. And so, we're in those discussions, but that's sort of the first phase of your -- of an answer to your question. The next one, about modeling -- I think we have to sort of think a little further about that, because there's an interesting issue here, which is, across cultures -- between the conservation culture and the defense culture. This is a -- sometimes a sensitivity within countries, and it's one of the things we are working very hard to sort of bring down those barriers and sort of have real conversations about, how do you bring these communities together? I've worked on this in health with defense at times. It's very similar in the conservation area. So we're sort of having those conversations, but we're not far -- as far along as to say, you know, we have models and we're there yet. LINDSAY: Very good. Secretary Jones, thank you for such an excellent set of remarks. You've given us a lot to think about over the remainder of the day. (Applause.) JONES: Thank you, thank you all. (C) COPYRIGHT 2013, FEDERAL NEWS SERVICE, INC., 1120 G STREET NW; SUITE 990; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED. UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION. FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES. FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR EMAIL [email protected]. THIS IS A RUSH TRANSCRIPT. RICHARD HAASS: Great. Well, good morning. Good morning. Welcome to the Council on Foreign Relations, and I'm Richard Haass, president of the CFR. For those of you who are not familiar with us, we are an independent, nonpartisan think tank, membership organization and publisher. And what we're trying to do day in, day out, year in, year out is work to improve awareness of and understanding of American foreign policy and the choices facing the United States and other people around the world. And we're trying to be a resource for the public, the business community, academics, journalists and our members. We're particularly proud to be welcoming you here this morning because we have a partner with Conservation International, one of the premier if the not premier organization in the world devoted to raising awareness, and more than that, doing things to protect the environment around the world and to, as you'll see today, to raise awareness, and again, do things about increasing sustainability of our resources. Now in the full disclosure department, let me -- I wouldn't call this a conflict of interest, I would call it a congruence of interest. My day job is president of the Council on Foreign Relations, but one of the ways I moonlight is as a board member of Conservation International. And it's only fair because the president of CI -- the founding president of CI, Peter Seligmann, is also a member of the Council on Foreign Relations. So we've got some connections going here. We're particularly proud to welcome you here to this building here today, and there's a very good reason. This meeting is taking place in our LEED Gold Certified building. LEED, for those of you who are not aficionados, is Leadership in Energy and Environmental Design. This building is certified at the -- at the Gold level, which is extraordinary because it's partly a historic building. And we're proud of it, and we -- one of the reasons we did it was to symbolize and underscore our commitment to the importance of thinking about the environment and acting on it in a responsible way. And it's something that is integral not simply to what we study but what we do here at the Council on Foreign Relations. Peter's going to be speaking in a minute, and he'll say more about this extraordinary organization he has created and helped build over the decades, but what I want to do is say one or two things also about CI and also about the issues we're going to be discussing here for today. And what this is about is not simply conservation in the traditional sense. As important as that is, as important it is to protect and promote nature, it's more than that. And the mission of CI has evolved over the years, and now it's also about ensuring that ecosystems, that people in countries, societies depend on -- be it for food, air, water, what have you -- that they're maintained. And the reason, again, is not simply because it's a good thing, but it's also a necessary thing. And what this is about is not simply the survival of this species that we are all part of but it's also about the viability of states. And that's why it's so important -- and in some ways that's why we are here today. This is not simply, if you will, a quote, unquote, "environmental issue," but it's also a national security issue. And for too long, I would argue, it -- concerns about the environment, concerns about conservation have been pigeonholed, if you will, or siloed for people who really care about those issues and really know about those issues. And as I am often fond of saying, universities may have departments, but the world doesn't. And we simply don't have the luxury of siloing these issues, because what happens when it comes to the core environmental challenges facing a country, when it comes to its stock of resources, when it comes again to basic issues of their resources and their -- and their environment, it affects their economic viability and ultimately, it affects the viability of the -- of the country itself. I mean -- what, in two decades, three decades, we're going to go north of 7 billion people on this planet to 8 (billion) or even conceivably 9 billion. It's going to create tremendous pressures on our -- on our resources for food and water and more, obviously energy. But it also creates all sorts of tensions potentially not simply within states but between them, and the possibility that energy and the implications of sustainability issues, refugee flows, internally displaced persons, all of this could put tremendous pressures on the international system at a time, shall we say, there are already sufficient pressures. I'm particularly concerned with the issue of viability of states. Let me give you a prediction: In the 21st century for the coming decades, at least as big, if not a bigger, problem as strong states will be weak states. And these are states that simply don't have the capacity to manage what takes place within their borders. And that's one of the fundamental obligations of sovereignty. And what we're seeing around the world in select places, and I fear we may see even more going forward, is the lack of capacity of states. And that's where terrorists take root, that's where pirates take root, that's where traffickers set up shop. And -- again, cartels of all sorts -- and so to the extent that sustainability issues undermine capacities of states, this then becomes not simply a domestic challenge to those societies, but will spill over. In this age of globalization, borders tend to be crossed with impunity. And again, my point is simply that the issues of sustainability have to now be seen, I believe, through a much broader lens. This is a challenge for governments. This is a challenge for the private sector, as we'll be hearing today. This is a challenge for all those involved in the foreign policy and the national security debate. Before turning things over to Peter, let me just also thank Rita Hauser. This is -- this program today is this year's annual Hauser Symposium. Work in this area depends upon the commitment and generosity and resources of individuals and foundations who basically believe that we need to have a capacity, if you will, in the institutional world as well. So I want to thank Rita Hauser, who's been a long-term supporter of the Council. With that, let me turn things over to Peter Seligmann. Peter is -- in the nonprofit world, is often not associated with the word entrepreneur. We think of entrepreneurs as guys who -- and women who run around Silicon Valley and the like. Peter's an extraordinary entrepreneur. He has built up this organization over the decades, and he's made it a force. It's -- you know, I run a -- I'm lucky enough to head a think tank, and our principal widget is ideas. Peter runs a do tank. What CI has done around the world is, you know, quite remarkable in protecting forests and protecting ocean space and protecting coral areas, and in helping governments meet the challenges that we're talking about today, which is the challenge of sustainability. So with that, Mr. Seligmann. (Applause.) PETER SELIGMANN: Good morning. It's so nice to be here. And I'm very, very enthusiastic about our partnership with the council and appreciate the hard work that all the people of the council have put in with the CI team to pull this together. I'm really looking forward to the discussions today. There are a lot of ideas, a lot of experiences that many of you have that if we pull them together and think carefully, maybe we'll discover some paths forward. And we really do need to find some new trails to go forward as we look at what our global society is facing today. Richard touched upon, you know, much of the areas that we are really concerned about -- (audio break) -- you know, just to -- kind of the highlight kind of a moment of kind of awakening for me personally was just a few years ago, when I was thinking about the kind of the relevance and the impact that our organization, Conservation International, was having on the protection of biodiversity. And as I added up all the wonderful successes as we were thinking about how we were going to increase support for the organization, I realized that really if you're objective about it, no matter, you know, how many new places are protected, the fact is that all these indicators are going in the wrong direction, that extinctions were accelerating, fisheries were being depleted and we're actually dealing with climate issues that are -- where the hundred-year storm is becoming the annual storm. And what we realize when we have 7 billion people going towards 9 billion is that every one of these major events impacts millions of people, and every one of these major events stresses out all the support systems that communities have. And when you get to that place, you begin to have security challenges and security issues. And what we recognized at that point a few years ago was that this was actually not a biodiversity issue, this was a human issue. And at that point, we shifted our mission from protecting biodiversity to a mission of supporting human well being by maintaining ecosystems that give support and services, goods for people and societies all over the world. And if we cannot get to the place where we recognize that we need nature to thrive, we're basically cooked. And it's OK for those of us who are kind of a little long in the tooth and old, but for the youngsters that's not a very good gift. And so we decided to redesign the organizations at CI to focus really on the simple issue of how do we protect nature for people, and how do you translate that into the real-life issues of a sustained source of food and water and energy and health? How do you -- how do you -- how do you really understand the contribution that healthy ecosystems make for livelihood? And all those issues, those are the issues that are essential for a healthy, desirable place to live. And as we undercut ecological health, we expose ourselves to frequently occurring disasters. And so today we've got this convergence of dramatic shifts in weather. And whether it's the acidification of the ocean, or the loss of polar caps, or the extraordinary droughts, or floods, or amazing storms that hit us every year, or whether it's the simultaneous destruction of ecosystem health, we've got a convergence of challenges that have to be addressed. These are national security issues, fundamental. They're as real, as palpable as cyber threat. They will undercut the stability of our societies and our nations. And that's why we're here today. We're here today to actually have that conversation. And it's not a new conversation. Secretary of State Baker spoke about it 20 years ago. Secretary of State Clinton spoke about it last year. I mean, it's not that it's a new issue, it's just an issue that has not received the intensity and the focus and the commitment to find answers. And that's really why we wanted to partner with the council. It's an extraordinary organization. Richard Haass has played a really great, great role at Conservation International. You know, there is a thought that sometimes the people that are involved in the NGO community like to kind of close their eyes and cross their fingers and click their heels to make good things happen. And when I would do that, I would open my eyes and there's Richard saying, OK, that's really nice, but that's not the way it's going to happen. And so it's really important to actually put truth into the issues that we have to solve and address. And that's why I'm really pleased that so many of you are here because you're dealing with issues at a national level, at a business level. And if we bring these together with academia and with the NGO sector, we really can find some new answers, and that's really what we have to find. And so with that, thank you so much for being here. Richard, thank you so much for hosting us. And let me turn it back to -- excuse me -- Mr. Lindsay. Thank you. Thank you, Jim Lindsay. Thank you. (Applause.) JAMES LINDSAY: Good morning, everyone. I want to welcome you to the breakfast keynote session of today's CFR Conservation International Symposium on global resources, the U.S. economy and national security. I'm James Lindsay, the director of the David Rockefeller Studies Program here at the Council on Foreign Relations. And as a reminder, this symposium, which is co-sponsored by the Council on Foreign Relations and Conservation International, is on the record. It is my distinct honor to introduce our keynote speaker, Dr. Kerri-Ann Jones, who is assistant secretary of state for Oceans and International Environmental and Scientific Affairs at the U.S. Department of State. Assistant Secretary Jones has had a distinguished career. A graduate of Barnard College at Columbia University, she earned her Ph.D from the Department of Molecular Biophysics and Biochemistry at Yale University. Dr. Jones has served in several capacities within the U.S. government, including in the White House Office of Science and Technology Policy, the National Science Foundation, the U.S. Agency for International Development and the National Institutes of Health. Dr. Jones has been assistant secretary since August of 2009 and her remit, the set of issues she's responsible for, includes, and let me read, ocean fisheries, the Arctic, Antarctica, conservation, biodiversity, climate change, water, toxic chemicals -- KERRI-ANN JONES: (Inaudible.) LINDSAY: -- endemic preparedness, innovation and just to give her something to do in her spare time, space. (Laughter.) So Assistant Secretary Jones has a very full inbox, I would imagine. She is eminently qualified to kick off our symposium today. So please join me in thanking her for coming. JONES: Thank you. (Applause.) Thank you. LINDSAY: Dr. Jones, the title of today's symposium is Global Resources, the U.S. Economy and National Security. From where you sit in the State Department, what do you see as the most significant trends in global natural resources? JONES: Well, thank you. And I'd first like to thank the organizers of this meeting. It's a very important conversation to have at this point in time. From where I sit, I see some of the things that we heard from Richard and Peter, the increasing stress on the natural resource (base ?) from all different directions, including climate change, but also the increasing population, the drive to develop and just the general push to overusing what we have and not sort of thinking about what that means in the long term. So that's from the natural resource piece. But from where I sit in the State Department, what I worry about is foreign policy and national security. And so seeing these issues now become more and more threats to stability, sustained economic growth, they're foreign policy issues, because I see them in all of the countries I visit as topics that are migrating from the isolation of a ministry of environment to the ministry of foreign affairs, to the national security discussion. So the pressures there -- we all know what they are -- coming at every country from different directions, and then when you look at the different states of developments of countries, it depends on how their reaction is going to be. And this is a turning point for some countries, how they go forward and how we can help influence choices, as well as make sure we're making the right choices. LINDSAY: Fair enough. If we may, Dr. Jones, can we sort of look at one issue here? Let's think about fisheries, ocean fisheries. JONES: Right. LINDSAY: Can you give us some sense of the nature of the problem? JONES: Sure. I think the number is something like 57 percent of marine fisheries are now under threat moving towards being unsustainable, and perhaps there are already 30 percent that are in serious trouble. So the number is very high. It's close to 87 percent that are stressed. So that's significant. It's significant because of the overall ecosystem, but it's also very significant because that's an important food source for many countries, including many developing countries. It also is important because nations compete for those fisheries. And when you have a resource that's becoming limited, that's important to your population, it's often one of the causes of conflict. And so that whole continuity from the natural resource issue -- what's happening to the fisheries, how do we know what's sustainable and what's not -- up to the competition for that resource, it's very significant. And so what we're trying to do is work on this on multiple fronts, bilaterally, regionally and multilaterally. We certainly try to make sure we're plugged into the science on all of this. And as you heard when Jim read all of those topics that are in my portfolio, those topics are in my portfolio from a foreign policy standpoint. So what we do is work with all of the technical agencies in the U.S. government to make sure that we have the science that we need to understand these questions. So fisheries is a huge issue. I mean, we spend a tremendous amount of time looking at multilateral agreements to put in place approaches that can protect fisheries. For instance, there's a new treaty out there on port state measures to look at what happens when fish that are caught illegally, they are unregulated, are brought into port -- how are they dealt with in that port? We also participate in many regional fisheries management organizations that are also treaty organizations that look at how do we make sure that the fish in that region are being fished in a sustainable way. So we're trying to use all kinds of tools to address this, but one of the things that we know is fundamental is significant engagement on all of this and keeping it on a foreign policy agenda. LINDSAY: I want to get into sort of the mechanisms for dealing with the problem, if we could spend just a few more minutes talking about some other dimensions of the problem. What about water and access to fresh water? JONES: Well, fresh water is another, you know, tough issue, OK, because water's fundamental. It's fundamental for human survival, production of food, all kinds of very basic human needs. And across the globe, I think there are about 260 river basins that are shared by multiple countries. As water stress increases, there's a possibility for conflict -- transboundary conflict. And that's something we try to look at. We also have been -- you know, Secretary Clinton had really pushed to elevate this issue, and Secretary Kerry is continuing that attention on water. We're also trying to make sure that our development programs really address this because it's a health issue in that there's so many diseases related to water. It's also such a fundamental development issue. So I think -- you know, water is the -- I think is the epitome of a natural resource that we see being stressed and that we recognize has a tremendous effect on an individual life on a day-to-day basis, but it is a very significant national security issue. LINDSAY: And just one other topic -- illegal logging, particularly deforestation and its link to climate change. JONES: Well, that one you could sort of spend a whole day talking about. Illegal -- you could really spend a day talking about any one of these pieces. And illegal logging -- I think that we all know it's a huge industry in terms of -- logging -- forget illegal logging, but logging itself is a huge trade issue. And certainly there's a large percentage of that that's illegal. It threatens species that are endangered. It also can lead to a lot of pressure on communities because communities depend on forest products for some of their economic survival. And if you have trees being taken out and moved out of a country illegally, that's a loss of income. We also know that sometimes these profits go to organizations that are terrorist organizations. The U.N. Security Council, I think it was last year, had a resolution to stop the import of charcoal that was coming from Somalia because that was related to a terrorist group. And so, you know, the pressure is on on all of these resources. And so you sort of have gone through some of the big ones and just sort of touching on fish, water, logging. The stress on logging is also important because, you know, trees are a carbon sink. You sort of don't want to see deforestation happening for multiple reasons, but certainly the climate impact is significant as well. I think that -- what I notice from my position is that I didn't come into this job as a -- as a fish person -- (laughs) -- or as a forest person. I came as a scientist. And what's really interesting is the convergence of all of these issues. You know, you see these multiple stresses on countries and you also see ministries and departments sort of struggling with how do you bridge this bureaucratically from a policy standpoint? How do you make advances that will look at the local needs as well as the national needs? And then, how does that roll up into what the whole world is trying to do to sort of, you know, rebalance some of the consumption models that we're living under now that I think we have to try to change? LINDSAY: Fair enough. Well, this connection between sort of resource scarcity and security is a theme that Secretary of State Kerry has picked up, indeed. On Monday, he unveiled a proposal to create a marine reserve in the Ross Sea. JONES: Right. LINDSAY: Now I'm going to ask you a second about that, but I'm just -- I think it's worth quoting Secretary of State Kerry. He said: This is not just an environmental issue, this is a security issue, it's an economic security issue, it's a national security issue. And it's not too hard, in some of these cases, to draw connections; for example, I read recently that some scientists predict that the glaciers that feed the great rivers of South Asia will be gone by 2050 and that will create significant problems for, among other things, agriculture in India, in Pakistan because they depend upon the various rivers for it. JONES: Right. LINDSAY: So how is this being handled within the U.S. government? I mean, because there's so many other issues going on. Is there coordination among the various parts of the State Department? Because you're really handling sort of a nontraditional set of national security issues. JONES: Right. Well, it's an interesting question. I've worked off and on with the State Department a long time, from different jobs across the government. And I head up a bureau that's known as a functional bureau, right? And in the State Department you have geographic bureaus and functional bureaus. The geographic bureaus have been the traditional well-known points of contact, right, because that's how the geopolitical issues are often engaged in. What I have seen over the past 20 years is the increasing importance of the functional bureaus because these issues are being looked at on -- in almost every bilateral relationship we have. And so there is coordination across the State Department, and it's not just my bureau with regional bureaus, it's my bureau with the economic bureau, because this has an economic and trade dimension. It's my bureau with our new Bureau on Energy and Natural Resources because as you look to energy profiles, how do you think about what that profile means in terms of impact on the natural resource base? It's also looked at in terms of the Bureau for International Narcotics and Law Enforcement because something like wildlife trafficking has really gotten to be an issue of organized crime and how do you move money around countries and understanding how money moves. So there's a lot of coordination going on across the State Department. But more much broadly, as I said earlier, there's a lot of other agencies in the U.S. government involved in this, because more and more what has happened on these issues, the -- what used to be called the domestic agencies -- you know, Fish and Wildlife Service, the National Institutes of Health, the National Science Foundation -- while their mandates all started domestically, the issues that they're involved in are now global. You know, Fish and Wildlife Service has to be engaged internationally. The National Institutes of Health does as well. And the reason I mention them is because the water and disease issue, the disease is coming from exotic animals that may be crossing borders illegally. So there's coordination across all of those technical agencies as well. And I think it's challenging. No doubt about it. Because just as every country has a culture, so does every technical agency or every discipline. So we work across those. But it really is an effort to coordinate broadly, recognizing sort of the breadth of these issues and the technical depth that's required. LINDSAY: OK. So you have a challenge sort of at home coordinating? JONES: Oh, absolutely. LINDSAY: But obviously, at the end of the day when you produce a policy, there's a limited amount to what the United States can do unilaterally. You have to work bilaterally, regionally, you mentioned, and multilateral. JONES: Multilaterally. LINDSAY: Let's just sort of take one example, maybe perhaps this proposal for a marine reserve in the Ross -- in the Ross Sea. As I understand it, there is a commission or panel was set up several decades ago to regulate issues related to marine life in the Antarctic. JONES: Right. LINDSAY: There had been hope that last November an agreement would be reached. An agreement wasn't reached, and so Secretary Kerry made his announcement -- I guess this is a proposal -- for the United States, New Zealand, maybe Australia. Maybe you want to sort of -- JONES: Sure, sure. It's a long story, here. And this is one of my favorite acronyms: CCAMLR, which is the Commission on the Conservation of Antarctic Marine Living Resources. Only in Washington or the international community could we come up with something that interesting. CCAMLR is one of the groups that has been established under the Antarctic Treaty. And last October, November, it had a meeting. And there several proposals going into that meeting about creating marine protected areas. The U.S. and New Zealand both had proposals for creating a protected area in the Ross Sea, which is a very important area because it's in close to the coast and then it moves out. So it has a lot of teeming life; it has the coastline. It's been a very good laboratory in terms of seeing what's happening. So we each had proposals. So we went into that meeting, and we were able to come together and develop a joint proposal. At that time, however, the members of CCAMLR were not ready to accept that proposal. There were other proposals on the table. Australia and the EU and France, I believe, have a proposal in the East Antarctic water -- the Southern Ocean. And so what's going to happen is, later in the summer, there's going to be another meeting to try to advance this proposal and get agreement. Agreement in CCAMLR is by consensus, and so that's always a challenging international negotiation when it's consensus. There are countries involved in CCAMLR who fish in these areas. There are different interests. And so we are doing everything we can to talk to the countries in CCAMLR to make this come forward. And what happened the other night when the secretary was speaking is, he was -- there was a film at the National Geographic that was about the Southern Ocean and about the area of the Ross Sea and why it's so important from a conservation standpoint. And so he was able to endorse this proposal along with New Zealand and Australia, and we were really pleased that the secretary wanted to be out there on one of his earliest discussions talking about this issue and recognizing that this isn't just about conservation. This is much bigger than that. This is all of the other topics we're talking about -- economics and national security. LINDSAY: OK. I should point out that we're talking about a very vast amount of ocean. The notion I kept hearing was that it was nine times larger than New Zealand, which may not be an analogy that resonates with Americans, but it's three and a half times the size of Texas. JONES: Right. LINDSAY: Which is a mighty big state, I can assure you. JONES: It'd be the largest -- it'd be the largest established -- LINDSAY: It'd be the largest -- it'd be the largest reserve. And one of the issues there that's complicated discussions is something known as the Antarctic Toothfish, which is better known to diners at restaurants as Chilean sea bass. JONES: Not a very attractive fish, if you've ever actually seen a picture of it. (Laughter.) LINDSAY: Yes. It turned out, I guess, in some of the cases, when they renamed it, sales went off the charts. But -- JONES: Marketing is everything. LINDSAY: Marketing is everything. I'm curious, because when you look at this, this is sort of a plurilateral organization, CCAMLR. And at the other end of the spectrum, you have opportunities to do things unilaterally. The United States, beginning in the mid-1980s with the Magnuson-Stevens Act, tried to control fishing in sort of the United States' economic exclusion zone. And my understand is, some fish stocks had begun to rebound because of legislation -- not all fish stocks. Particularly, I believe, cod off of Massachusetts or New England has not really recovered. But in between there are the sort of bilateral efforts. And to what extent does the United States engage in sort of capacity-building so that maritime states can control their own economic exclusion zones and prevent overfishing in their own waters? JONES: There's lots of different ways. A couple of things on that point. The other thing -- to go back to the Magnuson-Stevens Act -- our own domestic legislation also has ways to impact the international scene by, you know, what we expect from other countries that are bringing products into the U.S. And so we have domestic legislation from both the Magnuson-Stevens Act, and we have the Lacey Act in terms of logging, and which was -- first started out in terms of wildlife, but extended to timber just a few years ago. And both of those are domestic legislation that have an impact on what comes into our country and how we sort of look at countries and regularly look at whether or not what they're bringing is -- has been taken appropriately, and whether or not we can, in some way, affect imports or think about other actions we can take. So that's one -- that's the other piece of how we can sort of deal with things. So we do things unilaterally, but then sometimes our domestic legislation can have an international impact, certainly. But from a bilateral perspective -- we have bilateral relationships with countries all over the world. And from a -- from a fishery standpoint, we have bilateral fisheries discussions, certainly with some of our key partners, like Canada. We talk a lot about fisheries with Canada because we share certain waters and boundaries. But you know, most recently -- just to give you an example, I was in Malaysia last week, where we have a joint committee on science and technology. And this -- many countries want to have science and technology relationships with the U.S. in science because we have an excellent reputation and everyone wants to sort of learn how we do things and be partners. In that group, one of the -- one of the areas that we have identified as a priority for our two countries are marine issues. And so we begin to think about their -- the research-base of understanding sustainable fisheries, linking the marine ministry in some way to the foreign policy ministry. So we do a lot through different channels. So some will be specifically about fisheries. Some will be about science and technology. And we're always kind of looking for ways to cross-fertilize topics where we know they play a role in these issues. It's one of the interesting things in the bureau that I lead, that we look at the science that underpins everything and we try to have that inform it. We also use our science relationship as a way to further these other topics, you know, from a science base to conservation issues, because as you would imagine, often the U.S. can be viewed as coming in and saying: You should do this and you should do that. And you know, we don't have the best track record on certain issues. And sometimes that creates a difficult conversation. So really having a science-based approach to these topics is kind of fundamental to having a really good dialogue with partners around the world. LINDSAY: Speaking of partners, I mean, obviously, when you look at international relations today, one of the most significant developments is the rise of China. And if you have been to China, or simply watched the news, you know that China has substantial internal environmental problems. To what extent have the Chinese been willing to engage in international discussions, or even bilateral discussions, with the United States on these issues -- whether it's fresh water, oceans, illegal logging, what have you? JONES: Oh, they're very willing to engage. You know, it's -- we have multiple, multiple forums and venues where we engage with the Chinese bilaterally and regionally and multilaterally. Having sort of, as everyone knows, made a turn to the Pacific, we have many regional organizations where we are engaged. You know, we have also with China -- let me give you one example. We have -- we've signed a memorandum of understanding on illegal logging with China. And I know that this is something that has come up often because, you know, with China -- (inaudible) -- what are they doing in other countries? How are they involved or, you know, what are there policies related to illegal logging? So with this memorandum, we are able to have a regular dialogue with the Chinese very specifically, where the Ministry of Foreign Affairs is at the table, but their Forestry Ministry is at the table, our forestry folks are at the table, trade people are at the table. And we talk about this from multiple perspectives. We talk about what their systems are for tracking illegal products. We talk about the requirements of our Lacey Act. So we're very engaged. I think with every country, implementation and how do we ensure that what we're trying to do is complementary is a challenge, just because bureaucracies are different. So alignment is often a challenge. So you know, a lot of people -- at least, I have to say, some people in my family wonder why I'm in so many meetings all the time. But the meetings with bilateral partners are sort of how you get these discussions going. And a lot of it is just learning each other's systems, recognizing you have similar priorities and then figuring out within those systems, how do you develop approaches that can make a difference. And the approaches sometimes culturally have to be different as well, just because of the way governments are structured. LINDSAY: We talked a lot this morning about problems. And one of the downsides of talking about problems, you end up persuading everybody how difficult things are. So my last question, I guess, I want to ask you is, what have been our successes in this area? Have we made progress? Where have we made progress? What's the good news? JONES: I think -- I think there's a lot of good news. I think, from my perspective, I think the issues -- the collection of issues we're talking about now are on the foreign policy/national security agenda in ways they have never been. I think -- and I think that's a very positive thing. I think when you have the leaders of APEC making a statement about wildlife trafficking, that would have been unheard of years ago, OK? So that I think is a very big deal. Granted, that's in the diplomatic world, but that's how you begin to get traction on these issues. So I think that's very positive. And it's not just in APEC; we see it in many other places being put on the agenda. I also think it's very positive in terms of wildlife trafficking that you are seeing an increase in arrests, you are seeing more shipments being stopped. There's more to do, but I think, again, the awareness on these issues is really, really increasing. And that is -- that's very positive. I also think that the fact that -- just from a bureaucratic standpoint, when you see all of these different interest groups in a government beginning to talk across the silos, that's a very positive -- very positive sign. There's a lot -- there's a lot more to be done; there's no doubt about that. But I just -- I think there's a lot of progress. And I think -- the other piece of this is I think that the partnerships between governments, NGOs and the private sector has become much stronger -- much, much stronger. And I think that's going to continue to grow. And I think that will make a difference. There's an activity that we're working on now called the Tropical Forest Alliance for 2020, which is a partnership -- so far the U.S. and the Netherlands are involved, but the Consumer Goods Forum is in it. And the point is the recognition that if you're a company and you're developing a lot of different products, well, you're getting them from some natural resource base. And so let's have the conversation about how do you green the supply chain? And that has impact on ecosystems in a -- in a fundamental way. So that discussion is starting. Now, these are complicated discussions for sure. But they're happening, and I think they will make progress. I think the interesting thing in all of this is the level of detail you have to go into. And I think people are beginning to really make that commitment to dig in on an industry basis, on an ecosystem basis, and I think that's all good news. LINDSAY: Terrific. Right now, we're going to invite questions from our audience. JONES: Sure. LINDSAY: I would ask people in the audience to please wait for a microphone and speak directly into it. And I would ask you that you please stand, state your name and affiliation. And finally, in this long list of directions, I am to ask you to please keep your question and comments concise -- (laughter) -- to allow as many members as possible to speak. So -- sir. QUESTIONER: Frank Loy from the Nature Conservancy. JONES: Hi, Frank. (Chuckles.) QUESTIONER: Thank you, Secretary, for a very informative talk. My question is this: It seems increasingly difficult for the United States to ratify any treaty, even treaties that have bipartisan and broad support. My question is, is that the premise on which you're working? And how does that difficulty affect your negotiations? JONES: We've noticed that too. (Laughter.) Yes, it is -- it is an interesting challenge. I think that we could all list a number of treaties that are pending ratification right now. I think that we are looking at this in a very pragmatic way. I mean, this is the nature of our system. We work with Congress to sort of move forward on treaties. We -- as we are going into treaty negotiations, we are being very sensitive to the fact that when you're negotiating an international treaty, more and more, one foot is in the -- in the international world and one foot is the domestic. And so we have some treaties that are pending because they require domestic legislation, what we call implementation language, to make sure that we align with whatsever (sic) in that treaty. So we're looking very closely as we go into negotiations as to how we think about all the legislation that might be needed, knowing that that's going to be a hurdle. So that's one thing. The other is that we are looking at other ways of doing things. And I think many countries are looking at this as well. They may not have some of the congressional challenges we have, but having 193 countries come to a conclusion on increasingly complicated issues can take a long time. And I think there's an urgency on some of these issues that countries are beginning to be more sensitive to. So you're seeing, I think, more creative regional activities. You're seeing more efforts to sort of keep the multilateral relations going, but also try to do other things that support them and take action. So it does make it a little bit difficult for the U.S. with our -- with our track record, but I think we're trying to now be very pragmatic to think about what we would really need in a treaty to sort of be able to sort of have our Senate be very supportive of it, and we sort of take that forward. And then there are these other channels that we're really trying to take actions with. LINDSAY: (Inaudible) -- on this particular treaty question, how much would passage of the U.N. Convention on the Law of the Sea Treaty help you in the area of what you're doing in terms of oceans? JONES: It would be an enormous help. It would be an enormous help because we -- you know, we follow what is in that treaty as just sort of best practices, but it is -- it is sometimes difficult to be in organizations as an observer trying to be a leader. So you're not at the table, you're in the room. You are the United States, and so you do have -- you do have a platform to speak from, but you're not a member. And so it does -- it does give you -- it does give you a challenge in terms of how you can really help shape things in some of the important discussions. So that would be an enormous plus for us to join that treaty. And as you know, it's a priority for this administration. It was a priority for Secretary Clinton. It is a huge priority for Secretary Kerry. So we're going to keep working on that. LINDSAY: Fair enough. Sherri. QUESTIONER: Thanks, Jim. Thanks, Secretary Jones. And thanks to the council and Conservation International for organizing this. I think it's very, very important and very timely. LINDSAY: Sherri, can I get you to identify yourself? QUESTIONER: Sherri Goodman at -- Sherri Goodman, CNA. At -- on the rebalance to Asia, in national security circles it's often thought of in terms of the military balance and diplomatic throw-weight and other categories. JONES: Right. QUESTIONER: But you've raised some important issues here this morning. And I've been increasingly struck -- in a meeting I had with the Vietnamese ambassador to the U.S. just yesterday, he said the most important thing happening right now is the Lower Mekong Initiative, which is all about water. JONES: that's right. QUESTIONER: And so I wonder whether and how you see this set of national resource issues figuring higher on the agenda within this region as a critical part, as you and others have said, in ensuring global stability and preventing the factors of instability from water, climate change, energy and the weak state factor from becoming much more prominent in the future. JONES: I agree with you. I mean, I think that the whole natural resource profile in Asia is an important part of our rebalancing thinking, OK? Because you have key maritime countries there. You have a country like Indonesia, which has an enormous amount of biodiversity, coastline, important natural resources. And they are developing very, very quickly, and that certainly is something that they're very concerned about. I mean, they talk about the green economy and the blue economy. And so what does the blue economy mean? The blue economy, you know, you can look at it as a very positive term, but you have to -- you have to, I think, put into that term the sustainability as the base, because otherwise it's just another source of economic growth and you can't do that in an unsustainable way. And so you have competition for resources in that region among countries that are rapidly developing. They have some of the unique resources of the globe, but they also are going to be competing for resources in that growth curve. And so that is a piece of the overall, I think, you know, stability and importance of that region, and I see it as one of the issues, as we look at it on our foreign policy agenda. LINDSAY: All the way to the gentleman in the back. If I could ask you to stand and give your name and affiliation. QUESTIONER: Good morning. JONES: Good morning. QUESTIONER: (Clears throat.) Pardon me. John Doyle with the Aviation Week Group. You said several times about how these issues affect national security. I wonder if you could go into a little bit about what kind of cooperation and reach-out you're having with the armed services, and to the ability you can talk about it, what the current budgetary situation may or may not be doing to continuing those efforts. JONES: Good question. We work a lot with the Defense Department on these issues. The Defense Department is sensitive to the stability and security issues related to a stressed natural resource base -- certainly climate, certainly water. And so they're very involved in this. My own experience with them has been on the science side of things. The Office of Naval Research, the Air Force Office of Research, they've been involved in many of the things that we do. They're very interested in the marine environment -- obviously, ONR is. And they were just with us in Malaysia talking about what kinds of work we could do with the folks in Malaysia regarding ocean mapping and understanding what's out there. And so they're -- they're sort of a member of the team when we go forward in an interagency process to talk about all these issues. Certainly, in the wildlife trafficking, there have been discussions regarding what's going on in Africa and, you know, what the Defense Department has been looking at in Africa in terms of tracking different sorts of groups and their involvement in wildlife trafficking. So they're a member of the interagency team, as we're looking at this whole collection of issues. The budget question I really can't answer, because that sort of is a dynamic situation right now. And every time I am at an interagency meeting, all the agencies are saying, we're working -- we're seeing what's happening. So I couldn't really give you, I think, the kind of answer that would -- that would -- that would tell you we see -- we see - we know where this is going to go. We do see a downward trend. We do hear that offices in the Defense Department are saying, you know, well, maybe we can't engage at the same level that we had hoped. But I don't have -- I don't have figures at this point. LINDSAY: Young lady in the back. QUESTIONER: Hi, Cindy Johnson (sp), (SNR Denton ?) and a member of the Chairman's Council of Conservation International. Assistant Secretary, it's so great to hear your views today. I don't think this falls in your purview, but I know that the FDA is reviewing a comment period on Atlantic salmon and whether or not Atlantic salmon will be able to be qualified as wild -- would it have altered DNA? And I believe the comment period for this is over in the middle of April. I was just wondering about your agency. Do you interact with FDA on that, and -- or are other countries saying, hey, the United States, we don't think this is a great idea? I know that these fish are supposed to be offshore, and personally, my worry is that, you know, God forbid they escape from whatever marvelous tank they're in. But how does that affect your job, and what do you think about that topic? JONES: At this point, that has not been on my screen as an issue. It has not been raised internationally to me in the different settings I have been in recently. The issue -- the more general issue of genetically-modified organisms and how different countries are dealing with it sometimes comes up, but the particular case you're mentioning doesn't come up. We have been -- the work we have been doing predominately with FDA has to do more with the issue of, you know, counterfeit drugs and substandard medicines, which is a huge issue around the world and something that we try to deal with as a health issue and as an economic issue. But the particular issue you're mentioning has not come on to my list of things. Which doesn't mean it won't, but my list is fine right now -- (laughter) -- LINDSAY: I was going to say, Assistant Secretary, it seems like it'd be easier to list the topics you're not involved with than the ones you are involved with. JONES: I know. LINDSAY: We're going to go over to this gentleman right here. QUESTIONER: Thank you. Bob Barnes from the Nature Conservancy; sorry for the hoarse voice. I'd like to come back to the issue of the role of traditionally domestic agencies in this very complex situation. Many of the important domestic agencies in these arenas have no independent authority to operate overseas and no budget line to support that operation -- USGS, Natural Resource Conservation Service and the Department of Agriculture. It would seem to me that the administration should consider sponsoring legislation to create these authorizations for overseas activity and separate budget line to take some of the pressure off the foreign assistance budget. I'd like your response to that. JONES: It's a very good question. I've thought about that myself a few times. The issue that you raised about authorities is a really important one. And some of the agencies have international authorities in different ways. I know this because at one point I was asked by our colleagues in Congress to look at authorities related to -- specifically science and technology. And so we looked at that. And USDA and NIH both have some international authority because of the nature of protecting the health of U.S. citizens and the food supply of U.S. citizens. FDA is increasingly going out there because of the percentage of -- when you look at drugs made in the U.S. -- drugs sold in the U.S., a huge percentage of the components of those drugs come from around the world. And so the standards in a Chinese factory or an Indian factory have to sort of be looked at. And so there's a -- there's a number of agencies that have some authority. There are others that need more, but I think the question -- the question that's more at the root, I think, is a funding issue, because I think the agencies that have it and the ones that are maybe moving more forward than their authority necessarily states -- everyone recognizes that these systems are links, you know, that you can't really talk about the U.S. food system or our separate health system, you know, for drugs, or -- and the same thing with wildlife trafficking. I mean, you know, we are a market for wildlife, you know, that's brought in that should not be. So we are sort of not clear in this area. So we have to have fish and wildlife understanding, where things are coming from, which means they have to understand the systems around the world. So I think there's more and more recognition that domestic technical agencies really have to be involved in the world. I think the budget issue is a big -- is a big question. It's a huge question, and I think at this time and the budget situation we're in, it's particularly difficult. But we are always having conversations with Congress about this. There are particular different groups in Congress that are interested. There's a -- there's a group that's very interested in conservation and wildlife. They talk to us a lot. Representative Rice, I think, is involved in that. We have a lot of champions on the Hill who are very concerned about fisheries because their states are on the water or they have -- they're very concerned about both the competitiveness issue, about where their fishermen can go. So we have pockets of support that are looking to how do you fund certain things, but the overarching budget question remains. And I think it's something we're just going to have to deal with as this continual kind of interconnectedness continues. I mean, it's just going to get more and more and more because we can see how systems are getting that way. But I don't -- I don't know that there would be any interest right now in trying to sponsor additional funding when we are in the situation we're in. I think it's really talking more about getting the issues visible and then doing this on a case-by-case basis to sort of target some funds for very important topics. LINDSAY: This gentleman over here. QUESTIONER: Good morning. JONES: Morning. QUESTIONER: My name is Jeff Guyon (sp) with -- on the board of Conservation International. And my kind of -- my question goes back kind of to the Defense Department. As you -- well -- are you well aware of that, you know, Afghanistan has depleted their force by 98 percent? JONES: Yes. QUESTIONER: The 2 percent left right now is under tremendous pressure for illegal logging going into Pakistan. Since we have the military there, do we have the might to try to stop that? JONES: We certainly engage and talk to them about that. And I've met with the minister of environment of Afghanistan at one of the multilateral meetings. And we've talked a lot about it. Yes, we engage on those issues and we recognize that they are, you know, part of the overall stability question. I think it's a challenge to have that -- have that be the priority we think it should be. It's an ongoing discussion. I can't -- I can't answer your question with a yes or no, but we recognize that the military are often, you know, the first on the ground, the ones who are there who can make a big difference in sort of how environmental activities are happening or not happening. And so we are very engaged with discussions with them as we are, you know, around the world. But conflict areas are by definition often extremely vulnerable for the environment, because, you know, nobody's paying -- people are taken with life and death situations, and they are using the resources in a very harsh way. And so trying to sort of turn that around, I think, is an ongoing -- it's an ongoing issue in any conflict situation. LINDSAY: Dr. Stewart Patrick. QUESTIONER: Hi, yeah, Stewart Patrick, senior fellow and director of the Program on International Institutions and Global Governance here. Thank you very much, Secretary Jones. Just wanted to pick up on the challenges of multilateral diplomacy when it comes to conservation and sustainability in a couple of different senses. The first is, it seems to me that there is a significant fatigue about U.N. mega conferences that has built -- you know, there's been Johannesburg, obviously, Rio+20 more recently, but a lot of these sort of huge, 193-member conferences. Do you have a sense that that's the case and that most effective work is going to have to take place in sort of more minilateral coalitions of -- and not only the willing but the relevant? And then the other is -- the other question has to do with your -- the bureaucratic issue you raised, which that just as in the State Department functional bureaus tend to lose out to regional bureaus or at least -- JONES: Not so much anymore. QUESTIONER: Not so much anymore That's good. JONES: (Laughs.) QUESTIONER: That's good to hear. In the international arena, it -- you know, when you have -- when you have a a conference of parties that are negotiated by environment ministers, they tend to be a little bit underpowered compared to secretaries of the treasury or ministers of foreign affairs. Do you see that changing? Because that seems to me the way to get this up to the next level. JONES: Right. On your first point, on the multilateral fatigue, I think -- I think we have to do all of those things. I think you have to do multilateral as well as the regional as well as some dynamic plurilateral activities. I think -- you know, I was at Rio+20 last summer. And I think one of the things that struck me was that that conference had so many issues on it. I mean, it had everything on it. And every one of them is a complex issue. So every one of them sort of is kind of, how could you negotiate something that would come forward from that that could really get into or address all of the issues that were there? I think that the outcome document sort of, you know, is a good framework document, but then you have to pick each piece and go after it. I think that we need to continue the multilateral dialogues or conventions. I think we will have to think about more creative ways to do them because they're very expensive and look at ways to use all this new technology, electronic and whatnot, that we can do to connect. But you know, we just had -- on a different subject, we just had a multilateral convention developed for mercury, OK, that was successful, OK. And it was very interesting to me because it's a singular issue. Now granted there's multiple products and there's multiple sources and everything, but it was a very singular issue. And I think that was -- that's going to be something that I think we can look at as success. I think when you move over to the collection of issues that defines sustainable development, it's huge. It's huge. And so we have to sort of think about them as they're all connected. No doubt about it. But you have to sort of think about, so how do you make advances on them? And so I think that's why you have to have both the multilateral and the regional and all the other -- all the other approaches. And then your second question, which I had forgotten, was -- QUESTIONER: This is on the fact that many of the multilateral negotiations take place with ministers of the environment or, you know, at the undersecretary level. JONES: Right, right. And this is absolutely true. I participate in UNEP meetings, U.N. environmental program, and have really been struck by the environment ministers sometimes being somewhat isolated from the give-and-take of financial movements and power struggles and everything else that go along. And so I think one of the things you see -- and you certainly see it happening in climate -- is finance ministers are getting very involved, OK, which is really important. I also think that in having the Rio Conference this summer, one of the most important things was to rebalancing, to say sustainable development is not just environment. It's environment, it's economic and its social. And the convergence of the economic perspective of environmental issues is very important, and so the finance people, I believe, need to be sitting at the table. It's -- you know, on a more granular level it's -- the private sector has to be involved, because the private sector is sort of developing and making choices and they want -- you know, they're always looking at profit but they also have to sort of be involved in discussing, so what are the environmental impacts and how do we make choices? SO I think there's a recognition of that, and I think more and more that is happening. And certainly in settings when I'm traveling, I try to meet with multiple ministries. And I think many of my colleagues do that as well. So I think that's more of a trend that is happening, that environment is becoming less isolated in sitting over here and much more integrated in the discussions. LINDSAY: Oh, David, go ahead. QUESTIONER: David Hitchings from Northrop Grumman corporation. My question is, do you think you have enough sensors in the space, sky, sea and land not only for your scientists to understand the problems, but also for enforcing the treaties that you have already worked on? JONES: Probably not. (Laughter.) I mean, I think the sensor technology is developing at a rapid -- a rapid pace, OK? And I think that there is a general recognition that in terms of both understanding the environment as well as tracking what's happening, we're just in a whole new -- whole new world of possibility. I mean, if you look at -- I think -- what is it -- Google Forest 2.0 (sic: Global Forest Watch 2.0) or something like that, that's a collaboration with Google, World Resources Institute and the University of Maryland. I mean, they're going to be looking at forestry and what's happening in ways that we never even thought about before. I was at a meeting the other day with some ocean scientists who were talking about the fact that we now or very soon will have the capacity to begin to map the ocean that way. And of course, I was with a bunch of oceanographers, so they felt it was very unfair that space was getting more sensors than the oceans. But, you know, the technology is rapidly developing. I think this is a -- this is something where there's great potential. The challenge is, how do you coordinate it globally? How do you make sure all the data has open access, which is one of our themes over and over and over again, every place we go? And how do you make sure that you can sustain the infrastructure? I was -- as I said, in Malaysia; I was also in Australia last week, and in Australia, we talked a lot about, how do we make sure the continuity of the Earth observing systems that we have continue? And we come back to budgets. So that -- you know, you have this -- we just launched, I guess, Landsat 8, which was -- which was a really good thing to do. And all of that Landsat data is available, but there are other satellite systems where we have budget questions. So I think that -- I think the short answer is no, we can do more with sensors. I think it is a -- it's an area of great potential. But I think the coordination and the sustainability of infrastructure are very big issues we're going to have to talk about. LINDSAY: Secretary Jones has a meeting that she has to go off to, so we have time for one last question. Before I take it, I just want to remind all the participants that this session has been on the record. And we'll go to the back of the room. QUESTIONER: Madam Secretary, Bobby Charles, former assistant secretary for INL. JONES: Oh, great. QUESTIONER: And I wanted to just pose a question. I don't envy you -- the breadth of your reach and the budget problems. JONES: Thank you. QUESTIONER: But budget follows relevance, and as a former also DOD-related person, I wonder if any thought has been given to a model or a process by which you could identify resource triggers of national security crises. In other words, I particularly think of AFRICOM, where we know there are national security crises coming related to resources. Is there any comprehensive process under way -- a multilateral or U.S. or DOD and State to put a model of some kind into place that would be predictive rather than just kind of broadly looking at treaties? JONES: Somebody I heard give you an answer up here. And it's kind of taking information to that next step. It's sort of understanding the intelligence that's out there on the ground and trying to be prepared as best we can. We are certainly in discussions with AFRICOM as to what's happening -- what we're seeing on the ground -- in particular, you know, recently related to some reporting on wildlife trafficking and potential groups moving across Africa. And so, we're in those discussions, but that's sort of the first phase of your -- of an answer to your question. The next one, about modeling -- I think we have to sort of think a little further about that, because there's an interesting issue here, which is, across cultures -- between the conservation culture and the defense culture. This is a -- sometimes a sensitivity within countries, and it's one of the things we are working very hard to sort of bring down those barriers and sort of have real conversations about, how do you bring these communities together? I've worked on this in health with defense at times. It's very similar in the conservation area. So we're sort of having those conversations, but we're not far -- as far along as to say, you know, we have models and we're there yet. LINDSAY: Very good. Secretary Jones, thank you for such an excellent set of remarks. You've given us a lot to think about over the remainder of the day. (Applause.) JONES: Thank you, thank you all. (C) COPYRIGHT 2013, FEDERAL NEWS SERVICE, INC., 1120 G STREET NW; SUITE 990; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED. UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION. FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES. FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR EMAIL [email protected]. THIS IS A RUSH TRANSCRIPT.