Faced with a Covid-19 vaccine emergency, the EU made an enemy of everyone

European Commission president Ursula von der Leyen and her team have done real damage to the EU and its self-image as a champion of open markets and the rule of law. PHOTO: REUTERS

BRUSSELS (BLOOMBERG) - As soon as the plan was published, senior officials in Brussels could see that their boss had made a terrible mistake.

They understood the rationale for vaccine restrictions on shots shipped from the European Union, but they could hardly believe that Ursula von der Leyen had missed the bigger picture and how the proposals would land in Ireland.

The European Commission president had been among those insisting through four years of Brexit negotiations that Irish border checks could jeopardise the island's peace settlement. Less than a month after the trade deal with Britain went into effect, the EU was now the one threatening to put up barriers and unilaterally trigger emergency clauses in its accord with Britain.

As opprobrium rained down, officials who had painstakingly negotiated those agreements and were barely consulted on Dr von der Leyen's decision sensed the EU's moral authority being shredded. The proposals swiftly united in condemnation natural enemies across the sectarian divide in Northern Ireland as well as the World Health Organisation (WHO) and the pharmaceutical industry.

The events leading up to the decision to control exports show Dr von der Leyen's team buckling under the immense pressure to fix its vaccination programme. Beginning the week under fire for moving too slowly, they ended up possibly making things much, much worse by moving too fast.

On top of the faltering vaccine programme, which is likely to cost thousands of lives and billions in lost output, Dr von der Leyen and her team have done real damage to the EU and its self-image as a champion of open markets and the rule of law.

Question of competence

Several officials lamented that her predecessor, Mr Jean-Claude Juncker, would never have let events run out of control in such a way and wondered whether Dr von der Leyen would be forced to bring back some of his advisers to steady the ship. One speculated that EU Health Commissioner Stella Kyriakides is likely to be made the scapegoat.

Even those close to Dr von der Leyen acknowledge mistakes were made. In a sign of the lack of foresight at play, officials in Dublin found out about the move only on social media. Some worry the furore may have done permanent damage to the complex arrangements designed to prevent the return of a hard Irish border by handing a free hit to critics of the Brexit agreement and the EU.

One official in Brussels said this is what happens when policymaking is done too quickly.

Dr von der Leyen's spokesman, Mr Eric Mamer, said it is an institutional reality that all decisions go through the president's Cabinet and the college of commissioners. No decisions are taken without college consensus, he added.

Chaotic mud-slinging

As Dr von der Leyen and her team fought to contain the crisis, their thinking was shaped by a burning sense of injustice at how AstraZeneca has handled its vaccine contract worth an initial €336 million (S$540 million).

Bloomberg spoke to officials across the EU bureaucracy and national governments, most of whom expressed frustration, anger and sadness at the way the commission has handled the situation. But they all signalled a strong conviction that AstraZeneca chief executive officer Pascal Soriot had done them wrong, with some even suggesting the company had breached its contract with the bloc.

An exercise that began life as an expedition to bring transparency and gather evidence against the company has quickly spiralled into chaotic mud-slinging that some fear could lead to a trade conflict in the middle of a pandemic.

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AstraZeneca triggered the crisis just over a week ago when it revealed it was cutting back planned vaccine supply to the EU by a reported 60 per cent to 31 million doses following disruption at a plant in Belgium. At the same time, deliveries in Britain have mostly met expectations, helping the British vaccination programme race ahead of the continent.

The most recent data show that the EU has administered 2.6 doses per 100 people, compared to Britain's 12.5 doses and the United States' 8.8. News of the delays sent a jolt of fear and outrage across the continent.

"Vaccine diplomacy has turned into vaccine hijacking," said Croatian Premier Andrej Plenkovic.

AstraZeneca has indeed used its EU supply chain to fulfil the British contract. The British vaccines task force said in December that some of Britain's initial supply would be coming from Germany and the Netherlands, while German MEP Peter Liese said that even in recent days, vaccines going to Britain were being bottled in Germany.

The EU is determined to take a closer look at those movements.

The Commission's health services told ambassadors from member states this week that millions of vaccines had been shipped out of the EU in recent months to countries including Britain, China, Israel and Canada, according to a diplomatic cable of the meeting seen by Bloomberg.

Some EU officials suspect that AstraZeneca was responsible for a portion of those shipments and should have kept back doses for European buyers. But they do not have the evidence to prove it because the data is not broken down by manufacturer.

Export controls

Getting that information was the goal last Monday when the commission's trade service began drafting plans for a system that would have obliged companies to simply flag their exports. It would also require firms to provide data for exports carried out since December, clearing up just how many doses AstraZeneca has already exported.

"We're not planning to impose an export ban or export restrictions," EU Trade Commissioner Valdis Dombrovskis told reporters last Tuesday. "It's a matter of transparency."

That was also the moment Mr Soriot chose to go on the offensive with an extensive interview to European newspapers including La Repubblica in Italy. He said the delays were partly due to the EU signing its supply contracts after Britain, and rejected accusations of profiteering.

"I'm European, I have Europe at heart," he said. "So we want to treat Europe as best we can. You know, we do this at no profit, remember?"

By Tuesday evening, pressure began to mount from Germany, first, and then France, for a more stringent approach.

By Wednesday morning, the tensions between the two sides were so bad that they could not even agree if a phone call scheduled for that evening was going ahead.

Mr Soriot's interview enraged officials and member states. Ambassadors were told at a briefing that day that the claims he made were shocking and not in line with contractual obligations, a diplomatic note seen by Bloomberg says.

At a press conference later, health commissioner Kyriakides rejected the drugmaker's first come, first served arguments. "That may work at the neighbourhood butchers, but not in contracts," she said.

At that point, Dr von der Leyen decided that the commission needed to flex its muscle and the focus shifted to a tougher regime that would oblige companies with contracts to supply the EU not just to notify, but to obtain permission before exporting doses outside the bloc.

Series of blunders

Still, EU commissioners, who normally take decisions collectively, were deeply divided on whether to adopt it. Ultimately, the decision to go for a stronger approach was taken by Dr von der Leyen and her Cabinet.

And so began a mad rush to draft a plan ahead of a self-imposed Friday deadline. The haste and pressure to deliver led to a chain of blunders.

Reporters were invited to a technical briefing last Thursday before a proposal was even finalised, something the Commission almost never does.

On Friday morning, the EU published its contract with AstraZeneca, with confidential sections clumsily redacted in a way that meant the information was easily uncovered by amateur sleuths online. Mr Dombrovskis and Mrs Kyriakides were wheeled out to present the new regulations before several elements, including its decision-making clauses, were properly fully firmed up.

While the crucial sections on Northern Ireland were a late addition to the document, all relevant senior officials had been involved and had sight of the plan before it went live. Final sign-off was the responsibility of Dr von der Leyen's office.

Dr Michel Barnier, who led Brexit negotiations, was not involved in the decision, a person familiar with the process said. Another said that other members of the Brexit task force were called in only at the end of the process and asked about how to notify Britain on a measure that had already been agreed.

When the mechanism finally hit the Internet, Irish Taoiseach Micheal Martin and British Prime Minister Boris Johnson were both outraged by the decision to usher in temporary export vaccine controls between the EU and Northern Ireland, and voiced grave concerns.

Dr von der Leyen quickly spoke to both Mr Martin and Mr Johnson over the phone to try to clear things up. The EU removed the regulation from its website and was forced to backtrack in a statement just before midnight. She followed up with a series of late night tweets.

But the whole episode was red meat to the hard-line Brexit supporters in Britain. Mr Tom Tugendhat, a moderate MP from Mr Johnson's Conservative Party, said it had laid bare EU attitudes and shown how little goodwill there was.

While the EU's executive arm will not trigger the controversial clause, it did not entirely remove the threat, warning in its follow-up statement that it will consider using "all instruments" if the vaccine export bans are circumvented.

An updated version of the plan published on Saturday morning does not include the sections on Northern Ireland, but does still hint at suspicions that AstraZeneca could exploit the Irish border as a back door to ship Covid-19 shots from the EU into Britain.

Manufacturers will have to provide information on all vaccine doses distributed since Dec 1, including those sent to Northern Ireland.

And Dr von der Leyen is left to pick up the pieces after one of the most difficult episodes of her tenure.

Ms Lucinda Creighton, a former minister for European affairs in Dublin, offered a succinct assessment of the week's events.

"Disaster," she said in a Twitter post.

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