Europe’s Vaccine Wars: The First Shots in a Wider Trade War

On Friday, January 29 the European Union (EU) announced that it would stop the export of vaccines to Northern Ireland by invoking Article 16 of the Northern Ireland Protocol of the Brexit withdrawal agreement, further exacerbating the nationalist conflict over access to vaccines. Although the threat was rapidly withdrawn following protests issued by Dublin, London and Belfast, it was a further sign of developing tensions between the EU and the United Kingdom. Earlier in the same week the pharmaceutical giant AstraZeneca (AZ) told the EU that it could not keep its promise to deliver 100 million doses of vaccine by March. AZ said it would be able to deliver only 31 million doses during this period (since increased to 40 million) and expected further delays in the delivery of another 200 million ordered doses. AZ cited problems in its production facility in Belgium.

In response, the EU called for AZ to divert part of its production from two British plants in Oxford and Staffordshire to compensate for the shortfall, as the contract with AZ did not state that the EU order had to be fulfilled by plants in the EU. The UK rejected this, pointing out that it had signed an agreement with AstraZeneca three months earlier than the EU, relying on the classic capitalist formula of “first come, first served”.

The Anglo-Swedish firm AZ endorsed the British position, unleashing a wave of chauvinism in the British media, which loudly trumpeted that this was proof of the benefits of unshackling Britain from “Brussels bureaucracy”. British politicians were scarcely less triumphalist, with Michael Gove and Boris Johnson proclaiming that “our own vaccination program” continues as planned.

Within the EU there were suspicions that the company was selling vaccines intended for the European market to other parts of the world at higher prices. The UK was paying more, and other countries more still. According to the British Medical Journal of January 29, “South Africa’s government found itself on the defensive this week after a senior health official revealed that 1.5 million doses of the Oxford and AstraZeneca vaccine just purchased for use among health workers would cost $5.25 a dose, more than twice what the European Union is paying at $2.15.

“The EU figure is known because Belgium’s budget secretary inadvertently revealed the EU’s negotiated prices for every major vaccine on Twitter last month. The EU had undertaken to keep the prices confidential in return for discounts,” BMJ added. The EU’s lack of transparency, its backroom wheeling and dealing, had misfired.

The Oxford-AstraZeneca vaccine is much cheaper than others on the market (Pfizer-BioNTec, developed in Germany and manufactured in Belgium, and Moderna, manufactured in the USA, plus others currently in the approvals process) but neither the UK nor the US could match the EU’s $2.15 deal: they are expecting to pay about $3 and $4, respectively, per dose. While AZ loudly protested that it was not seeking any profit on the deals, this seems unlikely given the wide divergence in prices.

Pfizer also announced in December that it would not be able to deliver the promised 12.5 million doses of vaccine for the EU by the end of the year. And at the end of January Moderna announced that it would deliver 20% fewer vaccine doses than agreed with Italy. Frustrated by the delays, Hungary applied to China and Russia for vaccine supplies, breaking ranks with the EU’s common procurement policy. Delays and disruptions, and the consequent tensions between nation states, are inevitable as these capitalist enterprises haggle and compete to reduce costs through complex contract negotiations with suppliers and manufacturers as well as their end customers. In the short term, there are apparent winners and losers. By jumping the queue and brandishing wads of cash, within the first two months Britain was able to deliver a first shot of the two-shot vaccine to around 20% of its population, while across the EU the average was still around 4% (though more people had received a second shot).

In a rather obvious attempt to manage demand and expectations, the German and French governments, led by German Health Minister Jens Spahn, questioned the effectiveness of the AZ vaccine and said they would not allow it to be administered to the over-65s.

Nonetheless, the UK, the EU and the USA are among the richest regions of the world – so what chance do people in poorer countries have? They are right at the back of the queue, so the repeated declarations by liberal politicians that “nobody is safe until we are all safe” ring very hollow indeed.

We have dealt with the wider issues raised by the pandemic elsewhere. Capitalist states have responded to the Covid-19 pandemic with what can only be described as criminal negligence, putting the interests of business and the wealth of the financial elite ahead of any concerns for the public at large, and putting hundreds of thousands of lives at risk, not least those of front-line health and care workers. The undignified scramble to procure supplies brings further infamy on the capitalist system after the monumental multinational efforts by scientists, lab assistants and production workers to design, develop and manufacture the vaccines.

The trade war gathers speed

As well as exposing the utter absurdity of applying capitalist commercial principles in response to a global pandemic, the “vaccine war” has exacerbated a growing trade war between the European Union and the United Kingdom after Brexit.

Much of the British bourgeoisie had little to gain from Brexit, although not much to lose either. What they feared most was a no-deal exit, which would have meant trading on World Trade Organization (WTO) terms. The consequent tariffs would have imposed considerable costs, wiping out any gains from deregulation. By contrast, medium sized enterprises have been hit by non-tariff trade barriers such as VAT payments, T1 transport declarations and, in some sectors, time-consuming veterinary inspections. In January, the practical impact was the cessation or delay of exports of fish, meat and other foodstuffs. At Britain’s main fishing harbor, Peterhead in Scotland, rotting fish piled up on the quayside. Fishing companies marginally increased their share of the European catch but lost their biggest market. An irony, as the fishermen had been exploited as an emotional battering ram by the leading exponents of Brexit, such as Nigel Farage. His previously vocal “Fishing for Leave” website has disappeared without trace.

By the end of January, around 55% of lorries leaving the UK for the EU were empty, and in early February a Road Hauliers Association survey suggested that exports through British ports were down by 68%. The Guardian reported on January 20 that many European carriers were rejecting jobs in Britain altogether. For example, “Transporeon, a German software company that works with 100,000 logistics service providers, said freight forwarders had rejected jobs to move goods from Germany, Italy and Poland into Britain.” The Guardian also quoted a logistics professional as saying that a truck with a £200,000 cargo would need cash or a T1 financial guarantee document for £40,000 in VAT alone, a significant burden for transport companies with multiple trucks going to the UK.

Meanwhile the Byzantine workings of the Northern Ireland Protocol are putting jobs at risk in Great Britain and the province itself. Although Northern Ireland is formally part of the United Kingdom, it remains part of the EU’s customs union, which means goods moving between the two are subject to checks and controls – a situation that cannot continue indefinitely, although a united Ireland remains a distant prospect. A further tension exists in Scotland, where the population – and the ruling elite – is split down the middle between those who wish to remain part of the United Kingdom and those who wish to rejoin the European Union as an independent Scotland. Neither of which outcomes offers any perspective for the working class.

A significant section of the British bourgeoisie, which is now in the driving seat, sees its future as lying beyond the EU, where it has difficulty competing with German business in particular. It sees the solution as reducing the regulatory burdens imposed on it by the European Union such as the Working Time Directive. There has even been talk of turning the UK into a “Singapore on Thames”. Of course, this aspect was played down in the popular press, which has reveled in an orgy of xenophobia since well before the Brexit referendum of 2016. This extends far beyond simple “Brussels-bashing”.

The average British worker puts in 1,670 hours per year, compared with 1,354 hours by the average German worker. (And note: in Singapore the figure is 2,238 hours, the highest in the industrialized world – burnout and suicide due to work pressure are commonplace.) While foreign investment has succeeded in raising productivity in some sectors of the British economy, the Brexit project is to achieve competitiveness by avoiding EU norms, attacking working conditions and trade unions, as well as dodging international standards such as financial regulation.

Inevitably the daily demonization of foreigners and immigrants – and the incessant invoking of World War memes, reinforced in popular culture with recent films such as The Darkest Hour, Dunkirk and 1917 – meant that Brexit took on an irrational momentum of its own, beyond the competing economic interests within the capitalist class, gaining a broad popular base in the petty bourgeoisie and the lumpenproletariat.

Brexit is but one symptom of inter-imperialist rivalries that will adversely affect workers across Europe. On the other side of the Channel, President Emmanuel Macron of France took the opportunity in December to impose a 48-hour blockade on freight movements from Britain. This was ostensibly because of the outbreak of a new “UK variant” of Covid-19, but there are good reasons to suppose that the French authorities were flexing their muscles. Britain is highly reliant on freight movements, especially through the port of Dover, which handles around 22% of roll on-roll off (“Ro-Ro”, i.e. non-container cargo). Any threat to this route would also be devastating for Ireland, which is now investing in sea lanes as an alternative to the UK land bridge to the continent.

Moreover, Britain relies on imports of energy from the EU. The UK returned to being a net energy importer in 2004 and is now a net importer of all main fuel types. In 2019, 35% of energy used in the UK was imported. While electricity imports and exports can fluctuate significantly, the UK is highly dependent on suppliers in France, the Netherlands and Belgium, which contribute around a tenth of the British electricity supply (this rises considerably in South East England). President Macron has dropped strong hints that if the UK diverges from its obligations under the Brexit deal, France would be prepared to disrupt or halt supply.

The vaccine war, and the trade war that is gathering pace, expose the bankruptcy of an economic order based on capitalism and the nationalist division of the world economy. It is often said that a trade war is a prelude to a real war; it appears that the opening shots have come in the form of a vaccine.