Vaccine dithering exposes fault lines within EU

‘If the people of Europe decide their leaders have yet again failed them, the political backlash could be severe’

Could the vaccine crisis turn into an existential issue for the European Union? Before we dismiss this question as verging on hyperbole, it's worth noting that I am not the only one asking it. Tyler Cowen, Bloomberg commentator and professor at George Mason University, is one of several analysts wondering if the latest crisis is raising questions about EU legitimacy.

The EU has been slower than most major economies to fund vaccine development and to approve their use. Accusations are heard about bureaucratic sluggishness and failure to understand diversification of risk.

The UK's relative success had many drivers. Oxford University scientists gathered early and had years of development work behind them. They self-funded initial efforts while the search for additional investment and a manufacturing partner got under way.

The UK government got involved and vaccine nationalism was a concern from the start – but the big worry was Donald Trump’s America, not the EU.

After looking at possible manufacturing candidates, AstraZeneca was chosen, hundreds of millions of pounds committed and a government contract signed at the end of last April. The EU backed too few horses – some of which which have failed – and signed a deal with AstraZeneca much later in 2020.

In another deal, the UK, last August, signed a contract for 60 million doses of the Novavax vaccine. Approval, assuming it is granted, will likely be rapid. The EU has yet to buy any. There has been no satisfactory explanation of why the European Medicines Agency has taken – and is taking – so long with its approval process.

The UK's approach started with the appointment of the head of the vaccine effort, Kate Bingham. As a venture capitalist, she understood that early stage funding of multiple potential candidates was vital. When it's a health crisis, you also throw enough money at the problem until something works: both Bill Gates and Dolly Parton also understood this simple truth, putting their own money into vaccine development. AZ's vaccine has so far cost around £8.2 billion.

Venture capitalists will recognise the merits of funding lots of start-ups in the hope of finding the next Facebook or Apple. You know that some investments will fail but the payoff from one or two working out is enormous. It’s called a diversified portfolio. The EU has put up less VC-style funding than the UK. It’s worth remembering that the UK is one-sixth the size of the EU.

In a moment of serendipity, Dominic Cummings’ departure, following a row with Boris Johnson’s girlfriend, may also have played a role. Back in the Autumn, someone in Downing Street was furiously briefing against Bingham, seeding nonsense stories designed to do her harm. Someone wanted to wrest control back to the centre, away from Bingham.

Silent prayers of thanks are now being said following the decision, however reached, to stick with Bingham and, crucially, to devolve vaccine distribution to the NHS. The lesson here is that bureaucratic centralisation isn't necessarily the answer.

Brussels stands accused of responding with power grabs to problems that it is unqualified to solve.

The FT's trade expert, Alan Beattie, notes that the British erroneously assumed that, because the EU responded chaotically to the earlier financial and migration crises, it would be a pushover during Brexit negotiations. The Brexiteers failed to realise that there is no bloc better and more ruthless at trade negotiations than the EU.

Equally, it never dawned on the EU that the British, so hopeless during the pandemic, could make such a success of vaccination development and distribution. The British government may well be useless at most things but the civil service and the NHS, particularly the public health experts, are not.

This columnist has, I hope, impeccable pro-EU credentials. I have yielded to no one in my anti-Brexit polemics. So I survey the damage the EU is doing to itself with great sadness. The vaccine war has, like no other event, united Britain against Brussels. And I worry about yet more inadequacy in the face of crisis.

The EU flailed around – failed – during the Great Financial Crisis, causing harm to countries like Greece and Ireland. Fiscal austerity was a mistake, compounded by monetary errors from the ECB. It was quite a moment to see the FT earlier this year apologise for its role in calling for austerity a decade ago.

EU failure in the wake of yet another crisis will have consequences. And failure isn’t just about vaccines.

The EU made much last year of its €750 billion fiscal boost to economies laid low by the pandemic. Relative to anything the US is doing, this is too small. Relative to anything it should be doing, it is too small. Already, there are mutterings about how the deployment of the cash is too slow.

Cowen's point is a good one: if the people of Europe decide that their leaders have yet again failed them, the political backlash could be severe.

Those of us worried about populism celebrated Joe Biden's triumph. Europe, with all of its populist history, has Marine Le Pen snapping at Macron's heels in the polls and has plenty to worry about on its eastern fringes. Italy is, once again, in political chaos.

Brussels needs reform and the EU economy needs Biden-style fiscal radicalism aimed at ending economic insecurity.