European Vaccine Squabbles as UK Flounces Out

Blain’s Morning Porridge – March 17^th 2021 – European Vaccine Squabbles as UK Flounces Out

“The heart of an Irishman is nothing but his imagination.”

Happy St Patrick’s Day!

This morning – Europe’s vaccine rollout is in tatters as a result of stupid politics and a desire to blame the UK, while the UK has just sent a very unsubtle message about Europe looking after itself. Its a silly playground squabble that needs to be resolved quickly, but at its heart is the usual European problem: Britain vs France.

First up – congratulations to New Zealand for retaining the America’s Cup, beating the Italians 7-3 in the 13 race series early this morning (UK time).

I haven’t yet watched today’s final race, but was woken by an excited Kiwi far too early. (He knew I’d have been trying to avoid finding out the result.) “Well done boys”.. as the Kiwi skipper told his crew. There is talk the Kiwis will accept the challenge for the next contest from the UK’s Team Ineos (with the Royal Yacht Squadron as “challenger of record”). The gossip is they are hatching up a plan to move the next America’s Cup competition to the Solent here in the UK with a “Round the Island” format – an 80 mile blast around the Isle of Wight, replicating the original America’s Cup race in 1851. Now… that would be interesting.  While the Kiwi’s officially say the race will remain in N-Zed, money talks…

Back in the real world… Vaccine Wars and Britain in a Huff

Let me apologise for not writing about bond markets, the likelihood Central Banks will let inflation ride, the ongoing relative strength of equity investments, and therefore the likelihood the market retains its current valuations for longer… but we need to talk about Yoorp, again, this morning.

One of my key market mantras is: outcomes are seldom as bad as we fear, but never as good as we hope. We have a bias to overweight our expectations of utter disaster, but mankind being a social animal, the reality is common sense usually prevails to create workable compromises. Societies that don’t compromise – don’t last long.

Tensions over vaccines, Brexit and the new UK global strategy are all coming to a head – and they need to be resolved. They probably will be, but someone is going to have to step down before punches get thrown. When it comes down to compromise in Europe, there are two key issues: Europe’s stupid vaccine blockade, and the UK’s equally daft new Global Strategy – each the result of a silly playground tussle.

Let’s start with the vaccine warAt some point in the next 100 years, historians will look back to 2021 and wonder what all current fuss is about. Today’s European blockade of the proven AstraZeneca vaccine, and all the attendant stupidity of denying the vaccine when it is most needed, will likely become a footnote in the annals of the Global Financial Crisis 2007-2031.

Vaccine wars will be little remembered – much like when the UK and France nearly went to war in 1898 in Africa. British and French spheres of influence clashed on the White Nile. A French military exploration party intent on extending French trade from West to East Africa ran into a British Army with gunboats led by Lord Kitchener aiming to link the continent North to South, from Cairo to Cape Town.

Apparently it was all very friendly.. the officers and men of the two forces getting on splendidly – just like the professional medics, doctors and researchers trying to solve Covid today. But the diplomatic stakes were enormous and it all kicked off between London and Paris. It came close. The fact Kitchener outnumbered the French by 10-1 rather decided the result. Pleasantries on the Nile were exchanged and the French marched off, back into the desert and back towards the setting sun. The French diplomatically withdrew and stored up the insult of the Fashoda Incident as yet another perfidious British commercial slight to French interests.

Cut to 2021 and the French are upset again.

The French believe they invented vaccination and are rather miffed some upstart UK pharmaceutical company, AstraZeneca, and a University no one has ever heard of called Oxford, has developed a world beating vaccine in nearly record time. And after the Brits Brexited Europe, how very dare they expect to sell their vaccine in Europe.. even if AZ is effectively giving it away at zero profit?

French efforts to develop a vaccine trundled along very slowly and bureaucratically. None of this Anglo-Saxon rush to find solutions for them. Paris knew best. But, the prestigious Pasteur Institute gave up completely after going down a very traditional route with a vaccine based on a well-worn measels based model.  It failed completely.

That left Sanofi, but its jab has been repeatedly delayed, slowed down by testing delays and a conservative approach described as lacking urgency. Its facilities in Germany are now producing the Pfizer jab instead. There is no doubt the slowness of the European Commission to order vaccine doses for Europe was driven by French assurances they could provide a cheaper internal European vaccine solution – they failed, and now Europe and the EC is trying to cover up.

There is still a French firm in the race, Valneva, but interestingly they couldn’t get any funding in France! It’s activated virus tech was first supported by the UK grants and money rather than the French government.

Now the French are doing what they usually do – blaming everyone else. Macron and the rest now saying its unfair competition, spreading fake-news about the efficacy of the AZ vaccine, complaining brilliant French scientists are being poached in a coordinated brain-drain, and blaming London for the lack of any significant French Biotech venture capital infrastructure. The reality is the French were complacent and slow at all key stages – but they will never admit that.

Let’s not forget the first Covid vaccine was rushed through by the highly innovative  Turkish/German BoiNTech. (Sure enough, this morning we learnt the BioNTech jab also came under attack from French regulators on its mRNA technology.) While the Brits backed any and all promising approaches the French held back on orders, delayed clinical trials and approached everything with a convention bureaucratic mindset.

And they lost. And now Europe is suffering for it.

Despite every single competent medical authority on the planet stating and reinforcing the AZ vaccine is safe and should be used immediately, there has been a coordinated rejection by Europe’s political leaders. Even the European Commission was urging nations to proceed with the AZ vaccine. Tellingly, the head of the Italian medical regulator admitted their decision to pause the vaccine was a “political one”.

Why?

Vaccine nationalism is at the heart. Why is a British company offering its world saving product at zero-profit being rejected? Here in the UK, vaccine development is driving the greatest peacetime effort to protect society – and we are giving it away at zero-profit. Yet, as Europe’s vaccination programme went into meltdown, yesterday, the French Minister for Industry stated AZ’s CEO is on a “hot-seat, and he knows it” – warning of dire repercussions for the company’s failure to kow-tow to Europe’s delivery demands, and now accusing them of delivering a dangerous deadly product.

The Torygraph reported: “Professor Dame Clare Gerada, one of the UK’s leading doctors and a former president of the Royal College of GPs, accused Europe’s leaders of “weaponising” fears over the jab and said they should “get a grip”.

The French can go reproduce themselves.

I was speaking to a UK vaccinator yesterday. Despite all the negative press about how unsafe Europeans say the AstraZeneca jab is, the Brits he was injecting yesterday were generally happy to receive it. The success of vaccinations in the UK is showing considerable success in terms of crashing infection and death numbers – although there are areas where the number of BAME people refusing to be vaccinated remains stubbornly high, leading to fears such areas will become reservoirs for future Covid mutations and new infections – much like Europe will become.

Meanwhile…. A new UK Global Perspective?

The other big news yesterday – and a product of the deepening Brexit divide – was Boris Johnson announcing a new “Global Britain” strategy which was long on a pivot towards Asia/Pacific, identified China as a threat to do business with, and painted Russia as a clearly defined enemy.

What it specifically did not say was anything about maintaining or strengthening the UK’s commitment to remaining the second strongest component within NATO. The surprise announcement to increase nuclear warheads and spend more on non-conventional threats – while running down conventional land forces, sounded like a clearly unworded warning to Berlin.

Retiring the UK’s minesweepers was a subtle point. Who is going to keep the supply lines across the Atlantic from the US open if not the Royal Navy? It would take two Russian minelaying trawlers to block 90% of Europe’s port capacity to receive US reinforcements should the Russians decide to get “outward bound”.

European politicians will be acutely aware that without a strong UK military component, Europe’s defence is untenable. “Airstrip One”, the unsinkable aircraft carrier moored off the European coast, is a critical logistical and strategic component to the strong US NATO presence in Europe. Europe is showing signs of being unwilling to submit to US pressure on China trade – but kow-towing to Washington is what may be required in return for a strong US commitment to Nato. Never forget that Germany’s fundamental political aim in Europe boils down to a strong alliance to defend it from a still vengeful Russia.

Yesterday’s defence paper from the UK, and a realisation on just how badly France has played Europe on vaccines, may well force a rethink in Germany about the European relationship with the UK. It may happen.. I have a feeling there will be new Governments in Germany and France in the near future…

Five Things To Read This Morning

Investors Chronicle – Is AstraZeneca a victim of vaccine nationalism?

Torygraph – EU Leaders turn on each other in vaccine row

FT – Greensill cashed out $200mm before collapse

Bberg – Ray Dalio says its time to buy stuff amid stupid bond economics

WSJ – Putting the risk into risk free Treasuries

Out of time, and back to the day job…

Bill Blain

Shard Capital