The EU sledgehammer is coming down. The European Council is preparing to invoke emergency powers of Article 122 against AstraZeneca and Big Pharma within days.
This nuclear option paves the way for the seizure of intellectual property and data, and arguably direct control over the production process – tantamount to war-time occupation of private companies. This is Europe First pushed to another level. It takes the EU into the territory of 1930s methods and an authoritarian command economy.
Charles Michel, President of the European Council, is being badgered by member states to take action before the escalating vaccine crisis mutates into a political crisis as well and starts to topple governments. He is offering them the most extreme option available in the Lisbon Treaty.
Article 122 allows the EU to take emergency steps “if severe difficulties arise in the supply of certain products”, or “if a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”.
Mr Michel raised the idea in a letter to four prime ministers on Wednesday night. He is now canvassing all 27 leaders. The clear intention is to hold AstraZeneca’s feet to the fire.
“We can do this very quickly,” said one EU official. “We have to be prepared. That does not mean we will necessarily use it.”
The process requires a proposal from the Commission, followed by a qualified majority vote in the Council. Article 122 could be activated within days.
Germany has become the hardest of hard-liners, departing ever further from its traditional role as a good global citizen and defender of markets. The dirigiste economy minister, Peter Altmaier, says he favours seizing control of the production process and ordering companies to manufacture vaccines at multiple sites, with a gun to their head. Germany has moved a long way from the Wirtschaftswunder of Ludwig Erhard.
Lost in this squalid saga is the relevant fact that AstraZeneca is not making money out of the vaccine. It is producing it at cost as a service to the world. It has produced a miracle in 10 months as its exhausted staff are working gruelling hours to lift output as fast as they can. Their reward is a police raid at the behest of the European Commission.
Britain is vaccinating rapidly today because the Government began preparing the ground last February, three months before it ordered the AstraZeneca vaccine. It bathed the pharma companies with love. It fast-tracked clinical trials. It waived normal liabilities rules. It did not haggle over prices.
The EU spent one-seventh as much per capita launching the process. It failed to suppress its bureaucratic and legalistic urges. It treated Big Pharma as a foe. It tried to win tactical victories.
It drifted through 2020 and failed to adapt to the nature of the emergency. The empty vaccination centres in France, Spain, Portugal, and Germany are the result of a planning failure that dates back 11 months.
Brussels is again losing sight of the core imperative, this time playing a legal ‘gotcha’ game to distract attention. Its release of AstraZeneca’s contract does show that the company should supply doses, if necessary, from manufacturing sites in the UK, but the wording is loose and generic. It does not substantiate the “crystal clear” claims of Ursula von der Leyen.
On the contrary, the text confirms AstraZeneca’s claim that the company is bound only to make "Best Reasonable Efforts" to meet targets. The Commission’s redacted version blanked out details on the delivery schedule. As a publicity stunt, it is a damp squib. Commercial Pharma barristers will eat the Commission’s lunch if this ever gets to a genuine court.
Such biblical exegesis is in any case a parody of Brussels bureaucratism. To reduce this drama to a legal technicality is to compound the error that led to today’s impasse. The EU’s lawyers have been the problem all along.
The Commission itself is aware of the dangers ahead. It is almost the ‘moderate’ in the EU system at this juncture, trying to restrain near-hysterical politicians and to limit action (for now) to an ‘export authorisation mechanism’.
It still hopes to defuse a diplomatic crisis with the UK, the US, Canada, and the World Health Organization. It wants to head off lasting damage to Europe’s reputation as a safe venue for free markets and commercial contract law. “Producing a vaccine is an extremely complicated endeavour that involves very sophisticated tools,” said Eric Mamer, the Commission chief spokesman.
The corporate backlash is building. The International Chamber of Commerce in Brussels warned that export bans could lead to retaliation and “very rapidly erode existing supply chains.”
Belgium is in the cross-fire. It lent its police to the AstraZeneca raid, but in doing so it has endangered its reputation as a biotech and pharma hub. Belgian premier Alexander de Croo has been gently reminding fellow leaders that mass-producing a coronavirus vaccine in an emergency is not as easy as “making bread”.
It is hard to see what can be achieved by resorting to Article 122. Muscling in on vaccine plants or seizing intellectual property will not conjure extra doses within a meaningful time-frame. It is more likely to set off a downward spiral.
Nor is it clear what can be achieved by ordering AstraZeneca to divert doses from its UK plants. If the company complied, it would be in breach of an even more explicit contract with the British Government. And Britain calls the shots.
Brussels can shut off shipments of the Pfizer-BioNTech jab to the UK (by now just a fifth of the daily vaccines). But that would be injudicious. Europa may later need Valneva and Novavax doses manufactured in this country.
The EU’s demarche is a misreading of British public emotion, not for the first time. This nation might well respond with altruism to a request for shared doses, if asked in a spirit of fraternal solidarity. It reacts very badly to threats.
Downing Street does not want a fight. It wishes to be reasonable. The European Council would be well advised to dial down its rhetoric and seek a cordial way out of a disaster of its own making. It would be courting fate to push this dispute into the geo-political realm.