More than a year after the outbreak shut down the world, new lockdown measures are perceived as political failures. They have a negative impact on the economy but also on social cohesion and probably people’s mental health. Yet, as long as there is no treatment for Covid-19 and mass vaccination does not bring herd immunity, mobility restrictions and social distancing are the only solutions available. Hence, the race by governments to get access to effective vaccines in high volumes. As we speak, there are seven vaccines approved for full usage, six authorised for limited use, 23 in phase 3 development with large-scale efficacy tests, and more than 80 in phase 1 or 2. Therefore, it is likely that the number of available vaccines will double in the second quarter.
So far, 160 million people have been fully vaccinated according to OWD (University of Oxford), i.e., 2% of the world population, out of which 60% are living in the US or the European Union, which account for less than 10% of the world population (see Graph 1). A few countries are running ahead in the vaccine race, such as Israel, where 61% of the population has received at least one dose, the UK (46%) or the US (36%), but Europe is far behind, with 12% to 13% of the population who has received a jab. Emerging countries are even further behind, with less than 5% in India, Russia or Indonesia. China doesn’t officially have Covid cases… and we don’t have accurate vaccination numbers yet, but it’s unlikely that more than 5% of the 1.4 billion Chinese have got a first jab at the time of this writing. COVAX1 is running behind schedule, therefore the vast majority of the world population won’t be vaccinated by the end of the year. Moreover, variants, the low duration of immunity, and the likely resurgence of the outbreak over the coming years means that we might need to be vaccinated regularly to keep our immune system effective.
There are two consequences to this: (1) it will take years to reached global herd immunity, (2) vaccines are very powerful geopolitical weapons.
While through 2020, China came out more victorious from its successful management of the domestic health crisis and strengthened its influence as the leading economy in the global recovery, 2021 has been more favourable for the US and Europe.
The unprecedented technological innovation of mNRA vaccine development is leading to more domestic control of the virus and a strong comparative advantage in the geopolitics of vaccine diplomacy. Among the countries that have reserved enough vaccines to cover more than half of their population older than 15 years, 100% of vaccines reserved in Advanced Economies (AEs) are from these countries. For instance, in the US the breakdown is roughly 50% Pfizer/BioNTech and 50% Moderna. But in emerging economies, 32% of vaccines ordered are from China and 7% from Russia (see Graphs 2 and 3). For instance, in CEEMA 50% of vaccines reserved have come from China so far2.
In EM, 32% of vaccines ordered are from China and 7% from Russia.
The first strategic game for Europe and the US is to protect their own populations, close their markets by approving only AE products (see Russian SputnikV ban), and very quickly bring vaccines to Africa, Latin America and the Middle East to contain Chinese and Russian influence there. However, while AEs are still focusing on managing their domestic crises, China and Russia are taking advantage to fill the gap of short supply and long waiting periods in the emerging world, and, by this, consolidate diplomatic ties. The bilateral agreements between Russia and the EU’s eastern countries (Hungary, Slovakia, and possibly the Czech Republic3) to access Sputnik V is a good example. Most importantly, it sheds light on the soft-power that vaccines can procure. Indeed, Russia may gain inside support to lessen the likelihood of EU’s sanctions.4 Nevertheless, Chinese vaccines recorded disappointing results abroad (Brazil and Chile), and both countries still need to vaccinate their own population (China has set a target of 40% by the end of June), or risk further outbreaks. The US, whose vaccination campaign is successfully running ahead of schedule, is organising with the other “quad’s members” (Australia, India, and Japan) a common initiative to export vaccines in the Indo- Pacific that may counterbalance China’s influence.5
Vaccines are very powerful geopolitical weapons.
The second strategic game is around contracts, i.e., price, volume and copyrights and is happening within advanced economies. In Europe, AstraZeneca (AZN) produces half of jabs. Since the AZN vaccine has a lower efficacy rate and has lost some public support, European demand for US patented vaccines is very high. As an early and successful “investor”, the US wants to protect its return. The EU, which has been focusing on price and equal distribution but with the “wrong weapon”, is under huge internal pressure to accelerate vaccination rollouts and produce US vaccines in its own labs. Moreover, US pharma companies that are distributing available vaccines are now working on boosters, next-gen vaccines and paediatric trials, which will be key to reaching full immunity. The US have the best products and have vaccinated a larger share of their population, so they are on the road to victory in this Covid-19 vaccine geopolitical game.