In Defense of EU’s COVID-19 Vaccine Strategy

By Dimitris Katsikas and Apostolos Fasianos - 16 April 2021
In Defense of EU’s COVID-19 Vaccine Strategy

Despite failures, the EU’s COVID-19 vaccine strategy constitutes a strong display of European solidarity.

In recent months, the EU has been criticized over its handling of the vaccines’ procurement process. Although part of that criticism has merit, as the President of the European Commission herself has acknowledged, it mostly concerns legal and administrative aspects of the process. In this context, it is necessary not to lose sight of the most important feature of EU’s approach to the procurement and distribution of COVID-19 vaccines. At the core of EU’s vaccine strategy is the common procurement of vaccines, which are then distributed among member states on a per capita basis. This approach has been crucial for ensuring EU member states’ equal access to vaccines. In addition to promoting a more efficient vaccination process in Europe, this approach has safeguarded EU’s own internal cohesion.

To illustrate the significance of the common approach towards the vaccination challenge, we conduct a simple thought experiment. We construct a counterfactual, to demonstrate how the distribution of vaccines in the EU would look like if there was no common procurement and distribution approach and member states procured vaccines in a manner similar to that of countries in the rest of the world.

To do this, we run a simple bivariate regression between per capita income and procured vaccine doses per capita for all countries with available data. The data used is from the Duke Global Health Innovation Center on Covid-19 vaccine advance market commitments. Given EU’s common procurement strategy, commitments are presented for the EU as a single entity. We use per capita income as our main explanatory variable, because of the highly positive correlation between recent available data on COVID-19 vaccine advance market commitments and the income classification of each country (for our sample of 65 developed and developing countries, we find a correlation of 0.82).

The association between the two variables is illustrated in Figure 1. As expected, our simple model estimates a positive and statistically significant association between the number of purchased doses and the country’s income, indicating the significance of economic capabilities in the race for vaccine procurements. Most of the commitments for vaccines have been made by high-income countries, while low and middle-income countries have not been able to secure enough quantities of vaccines to cover their populations. In other words, richer countries put in more orders for vaccines, ‘crowding out’ poorer countries. [1] It is interesting to note that this practice takes place irrespective of the pandemic’s intensity in these countries (depicted in the graph by the size of the circles).

Figure 1

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Source: Authors’ estimations using data from the Duke Global Health Innovation Center, and the World Bank.

Next, we relax the assumption of the common procurement process in the EU, and use the correlation coefficient of the regression as a distribution key, to predict the share of total doses that each member state would procure if they all acted on their own, without coordination. We assume that the total number of vaccines ordered by the EU as a whole, is the same. [2] The result can be shown in Figure 2, which displays the current distribution of vaccines measured as a share, for each country, of the total EU-procured doses (blue bars), compared to the distribution based on the correlation coefficient obtained from the global vaccine market (red bars). [3]

Figure 2

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Source: Authors’ estimations using data from the Duke Global Health Innovation Center, and the World Bank.

To better illustrate the redistributional effects of the exercise, we further calculate the percentage change in each country’s share in the counterfactual scenario, compared to the share they have today (Figure 3). It is evident that richer countries (Luxembourg, Ireland, Denmark, Netherlands, Sweden, Austria, Finland Germany, Belgium, and France) would get many more vaccine doses than is currently the case, at the expense of poorer member states like Bulgaria, Romania, Croatia, Poland, Hungary, Latvia, Lithuania, Greece, Portugal, and the Slovak and Czech Republics.

Figure 3

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Source: Authors’ estimations using data from the Duke Global Health Innovation Center, and the World Bank.

This finding may also help explain why some of the fiercest criticism against the European Commission’s handling is coming from countries like Germany, where it has become evident that the procurement of vaccines would have progressed faster, had they acted on their own. However, such an option would constitute a blow to EU’s cohesion, as it would work to the detriment of the poorer member states. Given the fallout from the handling of the Eurozone debt crisis and the acrimony and lasting loss of trust that it engendered vis a vis the EU, it would not be far-fetched to argue that failure to ensure the equitable access of vaccines to EU member states would have undermined EU’s integrity in an irreparable way.

A glimpse of the potential political fallout in the event of deviations from the common procurement and distribution approach was provided recently. The leaders of six EU member states wrote to the European Commission, denouncing violations of the per-capita distribution principle. Even though, as it turns out, the reported disparities were the result of these member states’ own decisions about the filling and distribution of their per-capita quotas among the different vaccines, the issue created acrimony among EU leaders in the European Council on the 25th of March, clearly displaying the dangers of an imbalanced distribution of vaccines. Moreover, frustration over the slow production and distribution rate of vaccines, has led some member states to pursue bilateral or plurilateral deals for boosting their manufacturing capacity.

Under conditions of a pandemic, going-it-alone policies, produce negative health and economic externalities. [4] In this sense, the distribution of the Covid-19 vaccines, to every person in the EU, irrespective of their economic capacity, is necessary to defeat the virus. This introduces a non-excludability criterion, based on both moral and economic (externalities) grounds. In other words, it constitutes a European public good whose provision should take place at the EU level.

With this in mind, the appropriate response in addressing the failures encountered to-date, is to learn from the mistakes committed and strengthen the EU process further, with the active participation of both EU’s supranational institutions and member states, and not to undermine it by turning to ‘vaccine nationalism’. In this context, bilateral and plurilateral initiatives for the procurement or production of vaccines, should, at the very least, be coordinated with the EU in order to ensure that there is no conflict of interests that undermine the European efforts, and that resources are not wasted in a multitude of replicated or even conflicting, small scale, national projects.

In contrast to the previous economic crisis, this time, the EU has acted fast and has displayed solidarity not only through its common vaccine strategy, but also by taking unprecedented steps in the area of fiscal support for member states’ distressed economies and health systems. Backtracking now, by succumbing to national political pressures, jeopardizes this progress achieved through significant economic and social cost in the previous decade.

 

 

Dimitris Katsikas is Assistant Professor of International and European Political Economy and Director of the Research Centre for Economic Policy, Governance and Development at the Department of Political Science and Public Administration at the National and Kapodistrian University of Athens. He is also ‘Stavros Costopoulos’ Senior Research Fellow and the Head of the Greek and European Economy Observatory at the Hellenic Foundation for European and Foreign Policy (ELIAMEP). His research focuses on international and European political economy and governance.

Dr. Apostolos Fasianos is a Lecturer in Economics at Brunel University and an A.G. Leventi Foundation Fellow at the Hellenic Foundation for European and Foreign Policy (ELIAMEP). Apostolos has worked as an economist at the Hellenic Ministry of Finance and the Central Bank of Ireland. From 2017 to 2020, he represented Greece in international fora including the EPC - Ageing Working Group committee at the European Commission and the Working Party 1 on Macroeconomic and Structural Policy Analysis at the OECD.

Photo by Artem Podrez from Pexels

 

Notes

1. Obviously, this finding also applies to the EU. EU’s vaccine procurement policy, as is the case with other high-income countries, is based on the placement of purchase pre-orders at a pace and scale which far outstrips that of medium and low-income economies, as evident from Figure 1. Although, this is a negative aspect of EU’s policy -not addressed in this article- it should be noted that in the authors’ view, the appropriate answer would not be the abandonment of EU’s policy, but rather its replication at the global level.

2. Although this would be unlikely if there was no common procurement policy, this assumption facilitates the comparison with the actual scenario without undermining the validity of the argument.

3. It should be noted that the purpose of this exercise is not to specify a complete model including all candidate regressors and robustness checks. Instead, we simply aim to illustrate the implications of a hypothetical, but realistic, scenario where vaccine procurement decisions are mainly driven by the economic capacities of individual member states.

4. Leaving large parts of Europe with limited access to vaccines, prolongs the duration of the pandemic. This in turn, increases the probability of new variants emerging, which could undermine the vaccines’ effectiveness, unleashing a new round of dispersion. Even if this -worst case scenario- does not occur, delays in tackling the pandemic across the EU would prolong the implementation of restrictive measures in some member states, which, given EU’s economic interdependence, would delay the recovery of the entire European economy.

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