The Vaccine Race Matters

T he race to vaccinate has major political and economic consequences. Handling the process competently is a sign of the trustworthiness of governments in a crisis. And the sooner national populations feel comfortable going out into the world again, the sooner national economies can begin sprinting toward a real recovery.

Israel is the obvious vaccine champion so far and is rapidly reopening. But among other world powers, a split is happening.

As I write, 12 percent of the U.S. population is now fully vaccinated for COVID-19. Nearly 60 million Americans — roughly 22 percent of the population — have received at least the first dose. In the United Kingdom, 38 percent of the population has received the first dose of the vaccine. And Israel is doing even better. But in France, fewer than 8 percent have the first dose. In Germany, just 8.23 percent have. Rates are even worse in other member states of the European Union.

Europe is crashing into a vaccine debacle. And its leaders are now so desperate, they are threatening to bring about wartime measures and seize factories, patents, and intellectual property in order to divert vaccines that are partially produced within the European Union from leaving for the United Kingdom, which contracted for them.

“We want to see reciprocity and proportionality in exports, and we are ready to use whatever tool we need to deliver on that,” said the president of the European Commission, Ursula von der Leyen. “This is about making sure that Europe gets its fair share.”

The talk of reciprocity and fair share is meant to address fury over the slow rollout of vaccines in Europe. The Oxford-AstraZeneca production troubles have European leaders expecting fewer vaccines than they contracted to receive, according to their reading of the contract. Meanwhile, Pfizer is exporting vaccines from European plants to other nations, including the U.K. Von der Leyen threatened to halt this.

Such a move has very serious consequences. If the EU tries to seize medicines that the United Kingdom contracted to buy legally, the U.K. could retaliate by putting export controls on raw materials used to produce vaccines for Europeans, slowing down the EU’s response even more.

And that’s just the consequence with the United Kingdom. Capital markets are already losing confidence in Europe’s political institutions — the arbitrary seizure of pharma resources brings about frightening risks. Ambrose Evans-Pritchard writes that capital is leaving Europe:

HSBC says outflows reached half a trillion euros in the fourth quarter, an annualised pace of 20pc of GDP. It quickened to €250bn (£214bn) in the single month of December. The scale is breathtaking. It happened before the vaccine debacle condemned Europe to an extra quarter of economic recession and social despair.

Europe’s vaccine rollout has been further retarded by member states, against the guidance of the European Medicines Agency, withdrawing their authorization for the Oxford-AstraZeneca vaccine. It put some member states in the awkward position France was in, where President Emmanuel Macron was threatening to sue AstraZeneca for not producing enough of a vaccine his government had just forbidden the French from using. The move is also likely to increase vaccine hesitancy.

How did Europe get here? Its failure to organize. Israel and the United States were extremely aggressive in seeking out pharmaceutical contracts. Both states privileged speed over efficiency and price. Europe had trouble negotiating at all. A handful of larger EU member states were closing in on a deal in which the European Commission took the process over — trying to use it to re-establish a unity that seemed broken at the start of the COVID crisis when European states shut their borders with each other. The EU decided its best strategy was negotiating as a massive bloc, and driving the price low. This meant signing contracts — months after the United States and United Kingdom. The contracts were complicated by the demands of 27 states being included in them, a reflection of lost trust.

Europe looks positively silly post-Brexit. Within a month of putting the last signatures on that divorce, the European Commission nearly broke a protocol it demanded for Northern Ireland for export controls. It had to walk that back, humiliated by a brushback from London, Dublin, and Belfast. Now it is threatening to break its trade commitments again. In the process, European governments have made embarrassing remarks and spread misinformation about vaccines merely for political reasons.

This is going to undermine vaccine take-up and delay reopenings until the summer or even later. Ultimately, the most tragic result is that this misgovernance will end with more deaths from COVID, a stalled recovery, and broken trust.

The political and economic consequences can be dramatic. For all of Trump’s bluster and bizarre statements about the COVID crisis, his government began laying the foundation for Operation Warp Speed in February of 2020, and the results are that Americans are already entering the post-pandemic period.

Every day that Europe lags behind, more economic benefit will accrue to the United States and even the United Kingdom. With the financial meltdown of the 2000s, the migrant crisis of 2015, and COVID, this is the third major crisis in a generation that the European Union has botched. Markets will render their judgment, and investment will move to competitors.

But perhaps more fatefully, voters in Europe will have their say. Angela Merkel’s Christian Democratic Union — which has dominated Germany since the end of World War II — is at its lowest ebb of popularity. Emmanuel Macron took big risks around COVID. He will own the spring outbreak and any Parisian lockdown he might impose in its wake. In many European countries — Germany, France, Italy, and Ireland — the governments are led by mainstream parties that are making their desperate stands against right- or left-wing populist challenges.

America and the U.K. may be entering a roaring ’20s. In Europe, it comes as a howl of pain.