Monday, March 22, 2021

Cutting through the noise on vaccines, some counter-intuitive truths (EN)

Without false modesty, this blog has been ahead of the curve on the AstraZeneca (AZ) covid vaccines affair. It exposed almost two months ago the arrogant lies of Pascal Soriot, AZ's CEO, in his attempts to bamboozle the EU into accepting that it should be treated as a second-class client, hinted at the likely foul play by the UK Government and at the toxic mix with Brexit politics. By March, statements made here - e.g. on the de facto vaccine export ban instituted by the UK or on the need to limit exports to ensure that AZ is serving fairly its EU contract - were part of the line taken by senior EU officials, such as European Council President Charles Michel, or European Commission President Ursula von der Leyen

On the other hand, this blog didn't hesitate to call out the ineptitude of some national leaders' comments on the AZ vaccine and of some national regulators' decisions on its roll-out - a stupidity compounded by last week's temporary suspension of the vaccine in almost half of the Member States, based on mainly political considerations, in spite of the advice of EU's own regulator. And it also criticised the Commission's short-lived intention to invoke Art.16 of the Northern Ireland protocol as a very consequential political gaffe, which gave a pretext for the UK to try to wriggle out of its legal obligations.

As the vaccine-related escalation between the EU and the UK is now in full swing, the ongoing war of narratives creates a lot of noise that can easily distract from the fundamentals. It's therefore timely to take a step back, look at the bigger picture and scratch a bit the surface to bring up some rather counter-intuitive insights. 

I will try to argue that:

  • the AZ (and broader covid vaccines) scandal is more of a political stake than an actual public health issue; 
  • in the medium term the EU's problem is not the shortage of vaccines, but a very different one;
  • UK's apparent triumph on the vaccines is far from vindicating Brexit, rather the contrary; and 
  • the EU is very well positioned for success in the longer term, but only if it manages to overcome its existential challenges in the short term.

There will be a lot of drama on vaccines, but the stakes are mainly political

When the European Council (heads of state and government from the 27 Member States) meet virtually later this week, they will have to make some consequential decisions, such as whether the EU should take the road trodden by the US and the UK (the latter in all but name) and ban the export of covid vaccines from the continent, at least for AZ as it is still far from fulfilling its contracted supply to the EU. In the meantime, the British Prime Minister is frantically calling national leaders of key EU countries to persuade them not to do such a thing, which would apparently slow down significantly the world-beating (I'm using the expression without any irony here) pace of vaccination in the UK. At immediate stake are the vaccines produced at Halix, a plant in The Netherlands, which both the EU and the UK claim.

All this drama could make you think that a lot of lives depend on those vaccines. But this isn't really the case. In the UK, the situation is already much better than it was two months ago, as the country - thanks to its lockdown rather than its vaccination success - has overcome the third wave of the pandemic. In the EU, on the other hand, the third wave is only starting and whatever is done on vaccines at this stage will not make a major difference, lockdowns will be needed to 'flatten the curve' once again and sadly many more deaths are unavoidable; moreover, the EU has used quite little to date from the few supplies of AZ vaccine that it has received, in part due to people's reluctance to take it after the mixed signals from national leaders. 

But why is there still so much drama then?

Basically because the stakes are very high in terms of political optics, as I explained already back in January and again last week

For the UK, its continued 'triumph' on vaccines is part of the narrative that justifies Brexit, diverting public attention from the many downsides of having left the EU's single market and customs union, including significant economic costs and possible threats to national unity and to peace in Northern Ireland. The stakes are very high for Boris Johnson's government, since 'getting Brexit done' was the slogan that won him the last elections and the vaccination roll-out is the only success story that he can boast of so far. 

For the EU, being seen across the continent as the 'sucker' of the vaccines saga can be devastating in terms of legitimacy, especially in the context of the deadly wave of the pandemic that is gathering speed. While the Brits start opening up and have clearly left the worst behind, Europe is again closing down and is set to suffer once more a large economic and human toll from covid. People will notice the contrast and will easily forget that the UK has already had more dead from covid than any EU country, or that the vaccines cannot help much in this wave, only later. The EU may well become the scapegoat for the perceived failure, damaging seriously its prospects and viability. A free-for-all in which individual countries bypass the EU by dealing bilaterally with the vaccine producers or inviting more non-EU approved vaccines from Russia or China can even spell EU's unravelling.

The EU has done rather well on vaccine procurement, but its problem lays elsewhere

The EU has certainly got quite a few things wrong and detailing them might deserve a separate post. In brief, it has been naive until recently and insufficiently vigilant assuming that the others (and in particular the UK) would play fair; it made a bad mistake mentioning Art.16 of the Northern Ireland protocol; it had disastrous communication and completely lost the narrative war last January, allowing itself to be depicted as the villain in the AZ scandal; and some national leaders like French President Macron made a fool of themselves and undermined the joint effort by denigrating the AZ vaccine.

But contrary to what you read in much of the media, the EU has done really well on vaccine procurement and production, considering the possible alternative scenarios. It was never set to achieve collective immunity by March, but by late summer. In the process, it ensured equal access to vaccines for all its 27 countries, and at the best prices available worldwide. Notwithstanding the media stories, its vaccine contracts are not inferior to those of the UK. In terms of production, suffice to say that most covid vaccines are manufactured in the EU and many non-EU countries, from Canada to Israel, from Australia to Mexico, from Moldova to Japan, have received EU-made vaccines. The EU is also the main contributor to the COVAX scheme designed to facilitate access to vaccines by poorer countries.

And the bottom line is: notwithstanding the high drama of the first quarter, and in spite of being shortchanged by AZ, the EU's vaccination drive remains by and large on track and is set to significantly accelerate in the second quarter - in fact, it is already accelerating as of late March.

In two-three months from now, the shortage of vaccines in the EU will only be a memory of the past. There will be sufficient vaccines. 

But the more likely problem is that there won't be sufficient people willing to take the vaccines available.

Indeed, vaccine skepticism is nothing new in Europe. It has been compounded during the covid crisis both by the mixed messages from political leaders, as well as by subversive foreign propaganda. In several EU countries, the proportion of respondents declaring themselves willing to take a vaccine against the coronavirus is well below the level of vaccination needed to achieve herd immunity against the virus. 

The EU should be able to immunise virtually all its adult population by the end of summer, in time for preventing a significant return of the pandemic in autumn. But the anti-vaxxer movement may hinder the vaccination drive.

UK's success on the vaccines doesn't vindicate Brexit, nor does it expose the EU as a failure

Here is what you can read in most of mainstream media, not to speak of tabloids: the UK's obviously superior vaccination drive vindicates Brexit and shows why a heavy bureaucratic machinery like the EU is bound to fail.

A more careful, less drama-driven analysis of the situation shows however a different picture.

The vaccine supply crisis, like the one with protective equipment last year or the ongoing global shortage of semiconductors show that the pre-covid model of efficiency-driven global supply chains is cracking. The talk and increasingly the action are now about on-shoring production, securing 'strategic autonomy' and access to critical resources, strengthening resilience against external shocks. The post-covid world will clearly not be as globalised and interconnected as it used to be, it will be more protectionist, more 'geopolitical' and less economically integrated. In fact, Trump's aggressive 'America first' politics and China's gaming of the system had already weakened the free trade, rule-based paradigm before covid, the trend has only accelerated since last year.

Against this background, regional integration - of the type represented by the EU - may well prove to be a relatively successful fallback level from globalisation. The size of its single market, with a common regulatory regime and no internal borders, can compete more efficiently with the US and China, the leading economies. At this scale, efficient supply chains with a high level of complexity and specialisation can still thrive.

On the contrary, individual countries wishing to become 'global' and trade with the whole world, as the post-Brexit UK aspires, may find life outside a trading block rather challenging. Certainly, the UK still has a global influence and will be able to punch above its weight on the world scene - but it will find itself in a weaker position in relation to the big actors, and will find it more challenging to navigate a less open, more fragmented international system. 

As a matter of fact, the vaccine saga is a good example. Nothing prevented the UK from going its own way on vaccine procurement while it was still inside the EU. Admittedly, as an EU member they wouldn't have been able to prevent AZ from shipping UK-made vaccines to other EU countries. But being outside now, it is vulnerable to export restrictions that the EU may decide to introduce. If on vaccines, where the UK is among the best positioned countries in the world (with world class research and industrial capacity), it cannot be self-sufficient and remains reliant on the EU, it will face bigger challenges in many other sectors.

The future belongs to the EU, but only if it can survive the present

In response to the covid crisis, after a rather wobbly beginning, the EU has been able to put together its largest recovery budget financed - for the first time ever - through common debt, has maintained consistent focus on its climate and digital agendas, and has taken steps for a more integrated health policy (traditionally an area managed by individual countries). I have argued above that even its joint vaccination effort is not the failure that it is painted by the media - in fact, it is still on track in spite of the setbacks, and much preferable to member states competing against each other for the scarce supplies.

Of course not everything has worked as intended. Many countries still introduced unilateral travel restrictions, against the commonly agreed recommendations. A couple of countries chose to unilaterally approve and use Chinese and Russian vaccines not cleared by the EU-level medicine agency. Quite a few chose to restrict the use of the AZ jab notwithstanding the advice from the same EU agency. And in line with long standing political habits, national leaders often tend to blame the EU for their own failings.

As explained above, the post-covid era may well vindicate the regional integration model pioneered by the EU as a viable alternative to globalisation, which is receding. But for the EU to get there, it needs two things: first, to survive and overcome the significant challenges that it faces in the short term, starting with the highly flammable politics of its perceived vaccination failures in the context of a new, deadly wave of the pandemic. The following couple of months will be turbulent, with the EU facing both an internal crisis of legitimacy, as well as a hostile external environment - including an increasingly toxic relation with its former member the UK.

Second, the EU really needs to bring its act together and learn from recent mistakes, from the unfortunate mentioning of Art.16 of the Northern Ireland protocol to the communication debacle since January. This "geopolitical Commission", as it likes to call itself, although it hasn't done too badly overall, needs to raise its game because the exceptional situation requires nothing less. 

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