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21 December 2020

2021’s Covid-19 recovery risks excluding developing economies

Unequal vaccine distribution and stimulus support are creating a “walled garden” for the rich world.

By Jeremy Cliffe

The past days have brought alarming news about the Covid-19 pandemic from around the globe. Record new infections have been recorded in some East Asian countries, including South Korea and Thailand. Germany, previously admired for its Covid-19 response, has lost control of the numbers and entered a new hard lockdown on 16 December. Australia has imposed new restrictions following an outbreak in the Sydney urban region. Last Thursday, Brazil recorded more than 1,000 new cases in one day for the first time in three months.

In countries that celebrate Christmas, authorities are concerned about the potential for large movements of people, travelling to be with relatives in indoor spaces (especially in the mid-winter northern hemisphere), to spread the virus beyond its current hotspots. On Saturday, Boris Johnson – citing a new strain of the virus that seems to spread especially fast – imposed a new lockdown in London and much of south-east England. Since then, a succession of countries in Europe and beyond have stopped flights from the UK; France has even temporarily suspended lorry traffic.

So it is hard to overstate how much hope is being invested in the vaccines that are beginning to be rolled out. Britain, the US, Canada and Saudi Arabia are already administering the first doses of one developed by BioNTech and Pfizer. On Saturday, Benjamin Netanyahu launched Israel’s inoculation programme by receiving his dose on live television; today the US president-elect Joe Biden will do the same and the European Medicines Agency has today approved the vaccine in the EU, where it will be rolled out subject to approval by the EU Commission. Further vaccines will soon be on their way: the US Centre for Disease Control has approved a second vaccine by the firm Moderna; in the week of 28 December the UK is expected to be the first country to approve a third vaccine, developed by Oxford University and AstraZeneca; and China plans to have issued 50 million doses of its domestically developed vaccines by 15 January.

So a light is visible at the end of the tunnel. There may be hard months to come, with lockdowns necessitating further stimulus programmes to keep economies afloat (which was the elephant in the room of Johnson’s announcement, as my colleague Stephen notes), but it seems reasonable to hope that some form of normality will have been re-established by the second half of 2021 – and with it, some have suggested, an almighty economic bounce-back as all the pent up demand is released. Yet the closer one looks at that international picture, the more it becomes clear that this recovery will be uneven and risks leaving much of the Global South behind.

For one thing, the rich world has bought up more than its fair share of the anticipated supply of promising vaccines, with some countries having secured claims to doses far exceeding their own population needs (typically hedging their bets by closing deals with multiple producers). At the current rate, Canada will be able to inoculate its population five times over, Britain four times and the EU twice.

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[see also: Why the UK beat the EU to approving a Covid-19 vaccine]

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On 9 December, the People’s Vaccine Campaign, a coalition of international development organisations including Amnesty International, Global Justice Now and Oxfam, reported that rich countries comprising 14 per cent of the world’s population had bought up 53 per cent of the supply of promising vaccines and that nearly 70 poor countries would be able to vaccinate at most one in ten members of their population by the end of 2021. Even the Oxford/AstraZeneca vaccine, whose producers have pledged to distribute 64 per cent of their doses in developing world economies and which, unlike its rivals, does not require specialist refrigeration equipment, is unlikely to reach more than 18 per cent of the world’s population next year, the alliance has said.

Last Friday brought good news with the announcement that COVAX, an international initiative funded primarily by the EU that aims to make vaccines available to 190 participating countries including 92 low- and mid-income economies, had now secured nearly two billion doses of promising vaccines. But even this translates into just 20 per cent population coverage by the end of 2021, and does not take into account financial, contract and supply uncertainties hampering the scheme. Internal COVAX documents leaked to Reuters warn that billions of people in the Global South could be left without vaccines until as late as 2024. Not for the first time this year, China has stepped into the space where effective leadership from the West might once have been, moving to provide its vaccines (the efficacy and safety of which are still not known) to countries in Southeast Asia, Africa and South America in a gesture of potentially major geopolitical significance.

Then there is the economics. The sorts of stimulus programmes in place in the rich world are often beyond the means of fiscally weaker governments in developing economies. As shutdowns continue, or are reimposed, over the coming months and then governments seek to propel their economies out of the crisis as vaccination rates rise and societies reopen, that too could create inequality between the two. As Gordon Brown writes in the Financial Times: “The aid, debt relief and enhanced multilateral bank lending that might have compensated for the collapse in tax revenues [in low-income countries] have been slow to build, leaving their healthcare and anti-poverty programmes underfunded and their demand suppressed”.

The risk, then, is that the great recovery of 2021 is confined to the walled gardens of the rich world, where populations are protected by vaccinations and where stimulus-supported economies power out of the crisis, while developing economies are excluded. The UN’s Human Development Index report for 2020, published on 15 December, showed an unprecedented global fall in human development this year, wiping out almost a previous decade’s worth of progress. This includes a spike in global hunger (which had already been rising from a low of 628 million undernourished people in 2014) from 688 million in 2019 to between 780 million and 829 million this year. The UN predicts this figure could reach 900 million by 2030, essentially wiping out all progress since the mid-1990s.

It is a grim prospect on which to end a grim year. But the world can act. First, the rich countries that have secured the majority of the promising vaccine doses should stagger the take-up of their claims; delaying the vaccination of low-risk groups so that high-risk ones in poorer countries can be protected first. Second, they should donate their excess claims; as Canada and France have already started pledging to do so. Third, there should be a global move, as the People’s Vaccine Campaign and a coalition of states led by India and South Africa are arguing, to waive certain intellectual property rights so that cheaper, generic versions of the vaccines can be made available faster to the world’s poor. Finally, as Brown argues, a G20 summit should meet after Biden’s inauguration and agree that the IMF should issue additional special drawing rights (international reserve assets) and allocate them disproportionately to poor countries to help them finance economic recoveries.

The alternative, to swing shut the gates of those walled gardens and lock them shut for years, is short-sighted. More than that, it is morally indefensible.

[See also: Vaccine Nationalism is a “complete delusion”]