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Lower-income countries fall behind in race for vaccines

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Inadequate supplies of Covid-19 vaccines for lower-income countries mean it could take years to inoculate some parts of the world, undermining global efforts to end the pandemic.

Desperate to vaccinate their populations against Covid-19, high-income nations, home to about 1bn people, have secured 4.2bn doses, approximately 74 per cent of total government orders, according to the latest weekly data compiled by the Global Health Innovation Center at Duke University of North Carolina. In contrast, lower-middle and low-income countries have secured orders for only 675m doses.

The shortfall means that while the UK aims to offer coronavirus vaccinations to all adults in Britain by September, in many parts of the world it could take as long as three years to inoculate the population during which time the virus will continue to circulate, experts have warned.

“We have a catastrophic supply problem [in low-income countries],” said Anna Marriott, health policy manager at Oxfam GB. “The longer the virus is able to travel the world, the greater the risk of mutations and the greater the risk that the vaccines we do have will become ineffective.”

Column chart of Confirmed number of doses purchased by country income level classification (million) showing Poorer countries fall behind in race for vaccines

Many low and lower-middle-income countries had planned to rely on the WHO-backed Covax facility, set up last year with Gavi, an alliance of vaccine partners, and the Coalition for Epidemic Preparedness Innovations, a foundation that takes donations to fund independent vaccine research.

The programme aimed to ensure the equitable, worldwide distribution of 2bn Covid-19 vaccine doses by the end of 2021. Poorer countries would get doses for free and no country would vaccinate more than 20 per cent of its population before every country had been given the same opportunity.

But Covax has struggled to mobilise the support needed from wealthy nations to subsidise the initiative. It has only secured orders for 1.07bn doses so far, while rich nations have preferred to sign bilateral supply deals.

“It’s not right that younger, healthier adults in rich countries are vaccinated before health workers and older people in poorer countries,” Tedros Adhanom Ghebreyesus, head of the World Health Organization said this week in a searing critique of rich countries and their response to the coronavirus pandemic.

Aurélia Nguyen of Gavi told the Financial Times that Covax had “line of sight” on 1.97bn vaccination doses and was on track to meet its goal of fair and equitable access to vaccines for developing countries. However, she declined to say how many doses would be delivered this year. This would depend on production volumes and on regulatory approval in each country where vaccines will be used, she said.

The uncertainty over Covax has forced developing economies and regional blocs such as the African Union into the commercial market to compete for their own supplies.

“The global situation we’re in is that we’re having to do what rich countries did earlier, hedging our bets with multiple bilateral [deals],” said Fatima Hassan, founder of Health Justice Initiative, a South African group seeking equitable access to vaccines.

“The company plays god,” Ms Hassan said of the vaccine manufacturers and the non-disclosure agreements that govern sales and mean that pricing information and supply volumes have remained closely guarded. “They fuel a lack of transparency . . . it shows quite clearly where power lies in this pandemic.”

Kate Elder, senior vaccines policy adviser at Médecins Sans Frontières, said that low-income countries faced “an artificially induced supply constraint”, explaining that a more collaborative approach to intellectual property could have made it easier for supplies of successful vaccines to be ramped up by other manufacturers.

“[Rich governments] enabled shortages by dumping funding into pharmaceutical companies without conditionality,” Ms Elder said. “We should be mandating the sharing of technology and knowhow to competent manufacturers, but we haven’t done that.”

In Peru, the government secured agreements this month for 38m doses from China’s Sinopharm and 14m doses from AstraZeneca © AFP via Getty Images

One exception is the production of AstraZeneca’s Covid-19 vaccine by the Serum Institute of India, which is set to provide important supplies for many developing economies. The deal is a consequence of the partnership between AstraZeneca and Oxford university, in which Oxford sought to ensure that “those countries who are most vulnerable to the worst effects of this global pandemic have early access to a vaccine”.

Carlos Felipe Jaramillo, the World Bank’s vice-president for Latin America, said he feared that the region would find itself in the worst of both worlds: behind high-income countries with the purchasing power to secure large quantities of vaccines, but not eligible for schemes such as Covax.

In Peru, one of the countries hardest hit by the virus where more than one in every 1,000 people has died of Covid-19, the government secured agreements this month for 38m doses from China’s Sinopharm and 14m doses from AstraZeneca. Talks with Pfizer, however, have stalled over the drugmaker’s request for a liability waiver that would absolve it of responsibility for any side effects. Pfizer did not immediately respond to a request for comment.

“A number of the presidents have told me how difficult it’s been,” Mr Jaramillo said. “These pharmaceuticals are asking for some very difficult conditions that might require changing legislation in the countries . . . I don’t think this will be smooth and quick.”

Additional reporting from Joseph Cotterill in Johannesburg, Michael Stott in London, Michael Peel in Brussels, Gideon Long in Bogotá and Andres Schipani in Nairobi



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Petrobras/Bolsonaro: bossa boots | Financial Times

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“Brazil is not for beginners.” Composer Tom Jobim’s remark about his homeland stands as a warning to gung-ho foreign investors. Shares in Petrobras have fallen almost a fifth since President Jair Bolsonaro said he would replace the widely respected chief executive of the oil giant.

Firebrand Bolsonaro campaigned on a free-market platform. Now he is reverting to the interventionism of leftist predecessors. It is the latest reminder that a country with huge potential has big political and social problems.

Bolsonaro reacted to fuel protests by pushing for a retired army general to supplant chief executive Roberto Castello Branco, who had refused to lower prices. This is politically advantageous but economically short-sighted.

Fourth-quarter ebitda beat expectations at R$60bn (US$11bn), announced late on Wednesday, a 47 per cent increase on the previous quarter. This partly reflected the reversal of a R$13bn charge for healthcare costs. Investors now have to factor the cost of possible fuel subsidies into forecasts. The last time Petrobras was leaned on, it set the company back about R$60bn (US$24bn at the time). That equates to 40 per cent of forecast ebitda for 2021.

At just over 8 times forward earnings, shares trade at a sharp discount to global peers. Forcing Petrobras to cut fuel prices will make sales of underperforming assets harder to pull off and debt reduction less certain. Bidders may fear the obligation to cap prices will apply to them too.

A booming local stock market, rock bottom interest rates and low levels of foreign debt are giving Bolsonaro scope to spend his way out of the Covid-19 crisis. But the economy remains precarious. Public debt stands at 90 per cent of gross domestic product. The real — at R$5.40 per US dollar — remains near record lows. Brazil’s credit is rated junk by big agencies.

Rising developed market yields will make financings costlier for developing nations such as Brazil. So will high-handed treatment of minority investors. It sends a dire signal when a government with an economic stake of just over a third uses its voting majority to deliver a boardroom coup.

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South Africa’s economy is ‘dangerously overstretched’, officials warn

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South Africa is pushing ahead with plans to shore up its precarious public finances as officials warn the economy is “dangerously overstretched” despite the recent boom in commodity prices.

Finance minister Tito Mboweni hailed “significant improvement” as he delivered the annual budget on Wednesday and said that state debts that will hit 80 per cent of GDP this year will peak below 90 per cent by 2025, lower than initially feared.

But Mboweni warned that President Cyril Ramaphosa’s government was not “swimming in cash” despite a major recent tax windfall. The Treasury now expects to collect almost 100bn rand ($6.8bn) more tax than expected this year after a surge in earnings for miners. This compares with a projected overall tax shortfall of more than 200bn rand. Still, the finance minister made clear that spending cutbacks would be necessary.

“Continuing on the path of fiscal consolidation during the economic fallout was a difficult decision. However, on this, we are resolute,” Mboweni said. “We remain adamant that fiscal prudence is the best way forward. We cannot allow our economy to have feet of clay.”

The pandemic has hit South Africa hardest on the continent, with 1.5m cases recorded despite a tough lockdown. An intense second wave is receding and the first vaccinations of health workers started this month. More than 10bn rand will be allocated to vaccines over the next two years, Mboweni said.

‘We remain adamant that fiscal prudence is the best way forward’ – South African finance minister Tito Mboweni © Sumaya Hisham/Reuters

Even before the pandemic’s economic hit, a decade of stagnant growth, corruption and bailouts for indebted state companies such as the Eskom electricity monopoly rotted away what was once a prudent fiscus compared with its emerging market peers. 

Government spending has grown four per cent a year since 2008, versus 1.5 per cent annual growth in real GDP. The country’s credit rating was cut to junk status last year. Despite this year’s cash boost, the state expects to borrow well over 500bn rand per year over the next few years. The cost to service state debts is set to rise from 232bn rand this year to 338bn rand by 2023, or about 20 cents of every rand in tax.

The fiscal belt-tightening will have implications for South Africa’s spending on health and social services. On Wednesday Mboweni announced below-inflation increases in the social grants that form a safety net for millions of South Africans. “We are actually seeing, for the first time that I can recall, cuts in the social welfare budget,” said Geordin Hill-Lewis, Mboweni’s shadow in the opposition Democratic Alliance.

The finance minister is also facing a battle with union allies of the ruling African National Congress over a plan to cap growth in public sector wages. South Africa lost 1.4m jobs over the past year, according to statistics released this week. The jobless rate — including those discouraged from looking for work — was nearly 43 per cent in the closing months of 2020.

The South African treasury expects the economy to rebound 3.3 per cent this year, after a 7.2 per cent drop last year, and to expand 2.2 per cent and 1.6 per cent next year and in 2023 — growth rates that are widely seen as too low in the long run to sustain healthy public finances.

“The key challenges for South Africa do however persist, clever funding decisions aside,” Razia Khan, chief Middle East and Africa economist for Standard Chartered, said. “Weak structural growth and the Eskom debt overhang must still be addressed.” 



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Turkey’s Uighurs fear betrayal over Chinese vaccines and trade

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For five days this month, Jevlan Shirmemmet and other Uighur activists protested outside the Chinese embassy in Ankara, where they demanded to know the whereabouts of missing family members in China’s Xinjiang province. But on the sixth day, Turkish police stepped in.

They prevented the activists from gathering outside the diplomatic mission, positioned themselves outside their hotel and accompanied them wherever they went.

The stand-off reflects the difficult balancing act that Turkey, which is home to tens of thousands of exiled Uighurs, must perform with Beijing, not least because it wants closer ties and investment and is reliant on China for supplies of coronavirus vaccines.

President Recep Tayyip Erdogan, who casts himself as a champion of oppressed Muslims around the world, has in the past been a vocal critic of China’s actions in Xinjiang, the north-western region where the Chinese Communist party has interned more than 1m Uighurs, Kazakhs and other Muslims.

“On the one hand, Turkey wants to stand up for us, we know that, we feel it,” said Shirmemmet, 29, whose mother has been detained in Xinjiang since early 2018. “But they aren’t able to. We feel like their hands are tied.”

Jevlan Shirmemmet’s mother has been detained in the Chinese province of Xinjiang since early 2018
Jevlan Shirmemmet protesting in Ankara. His mother has been detained in the Chinese province of Xinjiang since early 2018 © Jevlan Shirmemmet

Analysts say that the plight of China’s Uighurs poses a problem for Erdogan, who is seeking alternative global partners at a time when relations with the west are deeply strained. “They are Muslims, they are Turks, and Turkish voters are sensitive about the issue,” said A Merthan Dundar, director of the Asia-Pacific Research Centre at Ankara University. “The government cannot establish very close relations with China. But it doesn’t want to cut all ties.”

In years past, Erdogan was one of the most outspoken global Muslim leaders concerning the plight of Uighurs, who are seen in Turkey as part of a broader global family of Turkic peoples whose rights Ankara has a responsibility to defend.

But opposition parties have accused Erdogan’s government of toning down its criticism to avoid upsetting Beijing. “Europe and America have spoken out against the oppression of our Uighur brothers in China . . . But there is still not a sound from Ankara,” Meral Aksener, leader of the opposition IYI party, said last month. Turkish officials insist that they continue to raise their concerns with Beijing behind closed doors.

Some figures in Erdogan’s government have advocated for stronger ties with Beijing in order to lure Chinese capital at a time when foreign direct investment from western countries has dwindled.

Investment so far has been limited, with the value of Chinese investment in Turkey standing at $1.2bn in 2019 in terms of equity capital, according to central bank data, compared with more than $100bn from Europe.

A woman in eastern Turkey receives the CoronaVac vaccine. Turkey has ordered 100m doses of the Chinese-made jab
A woman in eastern Turkey receives the CoronaVac vaccine. Turkey has ordered 100m doses of the Chinese-made jab © Chris McGrath/Getty

Ankara is eager for more. The country’s sovereign wealth fund has been courting Chinese investment, and plans to open an office in China in the first half of this year. Ankara also has a swap agreement with China’s central bank that helped to boost the appearance of Turkey’s depleted foreign currency reserves by an estimated $2bn. 

The pandemic has added an extra complexity to the relationship. While Turkey has struggled to procure European-made vaccines, it has a deal in place for 100m doses of the CoronaVac jab made by Chinese drugmaker Sinovac Biotech. Delays to the shipments in December coincided with a decision by China’s parliament to ratify an extradition treaty between the two countries. Turkey has yet to ratify it.

Yildirim Kaya, a member of parliament from the opposition Republican People’s party, said that the ratification of the treaty by Beijing had created “a great deal of panic among Uighur Turks who have escaped from China to Turkey”. In a set of questions posed to the Turkish health minister, he demanded to know if Ankara had faced pressure to ratify the deal to speed up the delivery of the vaccines. Turkish foreign minister Mevlut Cavusoglu reacted angrily to such suggestions. “We don’t use Uighurs for political purposes,” he said. “We defend their human rights.”

Analysts are also sceptical that China would use the vaccine, of which Turkey has already administered 6.2m doses, as such crude leverage. Ceren Ergenc, an associate professor of China studies at Xi’an Jiaotong-Liverpool University in Suzhou, believes it is more likely that Ankara was doing Beijing a favour by signing a deal for a vaccine that had yet to be approved in China — and that still has question marks over its efficacy.

“It happened at a moment when China needed not necessarily the money but the prestige in the international system about the credibility of its vaccines,” she said. “There’s a kind of indebtedness or reciprocity — Turkey still needs financial support from China so it did this act of buying the Chinese vaccine that had at the time not yet undergone all phases of testing.”

In response to questions from the Financial Times, the Chinese embassy in Ankara said the recent protests had sought to “smear” China and that their actions had threatened the safety of the diplomatic mission. It strongly rejected the notion that it had used Turkey’s need for vaccine doses as political leverage as “absolutely unfounded conjecture and malicious misinterpretation”.

Still, the episode has left many members of the Uighur diaspora feeling deeply nervous about their place in Turkey. “China sees us as criminals,” said Mirzehmet Ilyasoglu, who joined this month’s Ankara protests to demand information about his missing brother, brother-in-law and four friends. “We hope that this [extradition] agreement won’t come before parliament, but if it is signed then our concern will grow.”



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