‘It brought a knife to a gunfight’ – the EU’s mistakes in the battle for vaccines

As Europe faces a fresh wave of Covid-19 infections, the European Union's vaccine-purchasing strategy has come under fire as the US and UK surge ahead with their immunisation programmes.

The criticism is hard to bear for the EU – a major global vaccine exporter that is struggling to find supplies to inoculate its own citizens as a third wave of infection builds.

The UK has managed to administer 43 doses for every 100 residents and the US almost 37, but the EU has managed just 12.5. And yet, since February 1st, the EU has exported 41 million vaccine doses to 33 countries, including 10 million to the UK and almost one million to the US, which has blocked any vaccine exports going to the EU.

Until last week, even Canada and Mexico had to import vaccines from the EU as the US uses the Defence Production Act, a Korean War-era law, to stop US-made vaccines being sent abroad.

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The one-way flow has left EU member states fuming, heaping severe pressure on EU Commission president Ursula von der Leyen, who is threatening an export ban on vaccine-producing countries who do not reciprocate. This could see the EU move against US vaccine manufacturers Pfizer and Moderna whose factories in the EU feed global vaccine supply.

The EU has warned that it could halt exports of AstraZeneca’s Covid-19 vaccines should the British-Swedish pharmaceutical giant continue to fail to deliver on promised supplies. The company is expected to deliver just 30 per cent of the 90 million doses promised by the end of March.

Brussels has repeatedly bemoaned the lack of shipments of the Oxford/AstraZeneca vaccine from Britain where a "UK first" clause negotiated by the British government requires the company to fulfil Britain's order before it can send doses manufactured there overseas, including to the EU.

Last year the UK government refused to approve a tie-up between Oxford University and US pharma giant Merck because their proposed contract did not commit to supply the UK first.

Despite all of this, it has been the EU, one of the largest exporters of Covid-19 vaccines, that has been accused of "vaccine nationalism" when Italy blocked a shipment of 250,000 doses of coronavirus vaccine from being sent to Australia and as the EU threatens to ban vaccine exports.

The EU has been left fighting a difficult rearguard action. The slow vaccine rollout has brought into a question the sluggish, central procurement strategy pursued by Brussels and the failure to agree EU-first delivery agreements with manufacturers. The strategy has backfired as the EU naively failed to adopt a more cutthroat commercial approach to vaccine supplies from the outset and relied on the good faith of manufacturers.

"This argument that the commission brought a knife to a gunfight, that they were expecting everybody to behave nicely – perhaps there is an element of that," said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics and the German Marshall Fund.

The EU missed a trick because it is “poorly equipped” for an emergency of this nature, said Kirkegaard – it is “not a country” and could not take on a major political and financial risk by betting on a host of vaccines at the beginning. The EU suffered bad luck too, he said, striking its first vaccine deals with AstraZeneca, a contract marred with difficulties, and Sanofi, whose vaccine flopped.

Speed should have been of the essence but the EU was much slower out of the traps in authorising vaccines. A limited initial emergency budget and the slow bureaucratic process of securing consent from 27 member states meant that the bloc was always going to be outbid and outmanoeuvred by then US president Donald Trump and his $18 billion Operation Warp Speed budget for vaccines.

"We can see the typical problem of Europe: there was just nobody really pushing. In the US, you had the president pushing," said economist Guntram Wolff, a director of the Bruegel think tank in Brussels.

“The EU was naive in thinking that contracts would be delivered while the reality has been that companies have been under immense pressure by governments in countries they were located in to deliver first, especially the US.”

The EU made mistakes initially by not scaling production or “being forceful in ordering vaccines and making sure they are delivered quickly and early,” said Wolff.

“Basically, they should have been much more forceful with the companies,” he said.

Kirkegaard said the EU, as the world’s largest vaccine producer, would have been more vulnerable to trade retaliation if it had signed EU-first supply deals. The EU’s long-term strategic interest was on vaccinations globally so vaccine nationalism would have been counter-productive to that goal.

“For the EU to adopt a more explicitly vaccine nationalistic perspective – Trump used to say ‘America first’ and Biden is certainly saying ‘Americans first’ – would be very difficult because of the nature of the commission and the EU’s own long-term economic and trade interests,” he said.

Resolving liability issues on vaccines was also painfully protracted, while negotiating lower prices than the US and UK meant vaccine producers are financially incentivised to export more out of the EU.

The EU’s vaccine shortages have been amplified by the shortfall in supply from AstraZeneca because, as the cheapest vaccine at €1.78 a jab, it has made up a higher share of vaccines chosen by EU countries.

"Should the EU have been more mercantilist in its approach? Perhaps, but it wasn't necessarily what the member states were insisting on," said David O'Sullivan, the Irish former secretary general of the European Commission.

EU countries operated on the assumption that producers would deliver vaccines on schedule, relying on the good faith of vaccine producers.

“It was never thought that there was a need to place a kind of conditionality on the contracts, which maybe in retrospect one should have,” he said.

O’Sullivan believes the EU has lessons to learn from this episode.

“We will have to be a bit more self-centred in looking at this for the future, though it’s not in anyone’s interest because the interconnectivity of global supply chains for vaccines is such that it is not in anyone’s interest to be excessively nationalistic about this stuff,” he said.