MNI POLITICAL RISK ANALYSIS–Vax Decisions Dominate EUCO Summit

The European Council virtual summit gets underway today, with the issue of COVID-19 vaccines set to dominate talks once again. The summit is to start at 1300CET (0800ET, 1200GMT).

The three main issues likely to cause the most political disagreement are: whether vaccine export bans to certain countries should be imposed, how vaccines are apportioned within the bloc, and whether orders should be placed for Russia's Sputnik V vaccine.

• Vaccine Export Bans: The main target of any export ban would almost certainly be the UK. Up until last night the rhetoric surrounding this prospect had been overwhelmingly negative. However, a joint statement put out by the UK government and EU Commission, while vague, is at least a positive sign for the prospect of future cooperation on supply rather than blockades being imposed. At the Council level the Irish government is staunchly opposed to vaccine blocks due to potential issues regarding the Republic/Northern Ireland border. Vaccine producers such as Belgium, the Netherlands, and Sweden also opposing a ban due to their sizeable pharmaceutical production industries. Yesterday, UK Prime Minister Boris Johnson issued the pointed comment that firms making decisions on FDI in Europe will be looking at whether 'arbitrary blockades' are imposed on vaccine exports.
• EU Vaccine Distribution: The Commission's steering committee on vaccines has yet to determine how to distribute an additional 10mn doses of the Pfizer/BioNTech vaccine, with countries divided over how to portion out the doses. The five countries with the lowest number of vaccinations per 100 population (Bulgaria, Croatia, Latvia, Slovakia and the Czech Republic) and Austria (with a vaccination rate above the EU average) have all demanded a larger share of doses. EU Council President Charles Michel has sought to avoid having the Council summit become the forum for decisions on intra-EU vaccine apportionment, but this could prove unavoidable if brought up by member state heads.
• Sputnik V Approval: Germany in particular is applying significant pressure on the rest of the EU to place orders for Russia's Sputnik V vaccine, with EMA approval still pending. Should the EU submit large orders for the Russian vaccine this would likely cause notable concern in Washington, D.C., which has sought to dissuade the EU and its member states from reliance on Russia (primarily in the energy sector) in recent weeks. Should the EU become reliant on Russian vaccines this could present a major foreign policy concern for the US, and there is the prospect that President Biden brings up the subject when he dials into the Council Summit in the evening local time.