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Brussels resists push for Covid vaccine deliveries before regulatory approval



Brussels is resisting a push by some EU member states for the Oxford/AstraZeneca Covid-19 vaccine to be delivered before it receives authorisation from the bloc’s medical regulator, as officials raise questions about the legal implications. 

Four countries — Austria, the Czech Republic, Denmark and Greece — wrote to the European Council president Charles Michel this week to float the idea of “pre-authorisation distribution”, allowing them to start immunising people the moment approval is received.

However, the European Commission has raised doubts about such a move, arguing that pharmaceutical companies are likely to be unwilling to shoulder the legal responsibility of releasing doses before the formal authorisation of the vaccine. 

The disagreement highlights growing anxiety around EU member states over the slow rollout of vaccines compared with some other rich countries, notably the US and UK, and the unorthodox measures some capitals are proposing to accelerate the process.

The concerns have been amplified this week as EU countries tighten travel rules in response to fears over the spread of highly transmissible coronavirus variants identified in the UK and elsewhere.

Earlier this month EU governments criticised Pfizer’s decision to temporarily cut supplies of the vaccine it developed with BioNTech to European countries, although the company insists the supply will be made up later and the move will help it increase production later in the year.

Tensions over the pace of the EU immunisation rollout boiled over in the leaders’ video summit on Thursday night, given the growing transmission of the new UK-identified strain of the virus in EU countries. 

The proposal for early pre-authorisation delivery of the Oxford/AstraZeneca jab would mean that countries would be ready to begin immunisation on the day the European Medicines Agency and the commission announce the approval of the new vaccine, which could be on January 29.

Danish prime minister Mette Frederiksen pressed the case for early distribution during Thursday night’s talks, said people briefed on the call.

Member states would undertake full responsibility for safe storage and any unintended use of the drug if this happened before it was authorised, according to the proposal. 

But this suggestion was met with scepticism elsewhere. Sandra Gallina, lead negotiator for the EU’s vaccine procurement scheme, told member states this week it was unlikely to be possible given tight rules surrounding vaccines that have not yet been authorised, diplomats said. She also predicted companies would not go along with such a move, they added. 

Ursula von der Leyen, commission president, echoed those doubts on the leaders’ call, according to people briefed on the discussion.

The commission said on Friday that requests for pre-emptive delivery should be handled “with caution” because of the various regulatory restrictions on delivering medicines before they had received regulatory authorisation.

“We are very much aware of, and understand, the need to have a fast delivery,” the commission said. “Member states need to see what it is they can do, as well, to facilitate this . . . taking into account all the legal constraints.” 

AstraZeneca, which is producing the vaccine developed with the University of Oxford, had no immediate comment. The jab is already being used in countries including the UK, where it won regulatory approval late last month. 

Brussels is working on other possible measures to speed up the process, such as arranging for regulatory protocols needed prior to the release of batches from factories to be done before the jab is authorised, officials said. The commission has also suggested it might be possible to save time by avoiding the need to translate the instruction booklet with the jabs into all EU languages.

The focus on the Oxford/AstraZeneca vaccine highlights its importance to the EU, given that the bloc did its deal to buy the BioNTech/Pfizer vaccine months later than the US and UK and so is likely to be receiving proportionally fewer early deliveries. The Oxford/AstraZeneca vaccine was the first pre-ordered by the European bloc and the 400m doses of the two-shot course would cover almost half the region’s 446m population. 

Some EU member states are also increasingly agitated by the bloc’s slower approvals for the new Covid-19 drugs, particularly compared with the UK and US. Both those countries have sped up the process by issuing emergency use authorisations, which shift liability for any problems from drugmakers to authorities. Hungary broke ranks this week and became the first EU country to issue a national emergency use authorisation for a coronavirus vaccine, in this case, Russia’s state-developed Sputnik V jab.

Concerns about the pandemic dominated the EU leaders’ call on Thursday. Mr Michel said after the call that leaders were “aware of just how serious the situation is”, and that member states may need to impose fresh restrictions on non-essential travel even as they avoid strict border closures. 

French president Emmanuel Macron is planning to introduce new coronavirus rules for travellers from the EU from Sunday morning, with Paris set to require visitors from inside and outside the bloc to have a negative Covid-19 test performed less than three days before they enter the country.

Additional reporting by Anna Gross in London

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ECB signals rising concern about eurozone bond market sell-off




The European Central Bank has indicated it will increase the pace of its emergency bond purchases to counter the recent sell-off in eurozone sovereign debt markets if borrowing costs for governments, companies and households continue to rise.

Philip Lane, chief economist of the ECB, said on Thursday that the central bank was “closely monitoring the evolution of longer-term nominal bond yields” and its asset purchases “will be conducted to preserve favourable financing conditions over the pandemic period”.

The ECB has pledged to ensure financial conditions encourage investment and spending, helping the eurozone economy to make a swift recovery and lifting inflation towards the central bank objective of just below 2 per cent.

To achieve this, Lane signalled that it would rely on its pandemic emergency purchase programme, under which it plans to spend up to €1.85tn on buying bonds by March 2022. There is just under €1tn of that amount left to spend.

“We will purchase flexibly according to market conditions and with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation,” he said.

Eurozone government bonds fell to their lowest levels for almost six months this week, and while Lane’s comments caused a brief rally on Thursday afternoon, prices then resumed their downward path.

Bond yields move inversely to prices, so the sell-off is pushing up the cost of borrowing for governments, which must sell vast amounts of extra debt this year to cover the cost of the coronavirus pandemic and its consequences.

Germany’s 10-year bond yield has risen to its highest level since last March, while the French equivalent returned to a positive yield for the first time since June and Italian sovereign yields hit their highest level since November.

ECB president Christine Lagarde said in a speech on Monday that policymakers were “closely monitoring” the rises. 

Isabel Schnabel, another ECB executive board member, said in an interview with Latvian news agency Leta published on Thursday: “A too-abrupt increase in real interest rates on the back of improving global growth prospects could jeopardise the economic recovery.”

Lane gave more detail of how the ECB defines “favourable” financing conditions, saying it would track the availability and cost of bank lending and market-based funding — in particular, the risk-free overnight index swap curve and the GDP-weighted eurozone sovereign bond yield curve, which have both risen in recent days.

He warned of the need to avoid “a mutually-reinforcing adverse loop” in which banks interpret lower borrowing demand as a negative signal about the economy and companies interpret a tightening of bank lending conditions as a worrying sign about the outlook. 

Eurozone bank lending to the private sector grew by just under €12bn in January, down 75 per cent from the average monthly loan growth last year according to data published on Thursday.

Much of the slowdown was because of a sharp fall in net lending to insurers and pension funds. Lending to non-financial companies also retreated slightly, while lending to households still grew but at its slowest rate since last April.

Krishna Guha, vice-president at Evercore ISI, said “ECB jawboning” was “having little effect” and “the next step — in our view presaged by Lane — is for the ECB to dial up the pace of its [bond] purchases”.

Last week the ECB spent a net €17.3bn on its emergency bond purchase programme, up slightly from the previous week but still well below the levels of last April, during the previous sell-off in government bond markets.

Frederik Ducrozet, strategist at Pictet Wealth Management, said the ECB was likely to wait until it was clear the bond market sell-off was a lasting shift before increasing its emergency bond buying above €20bn per week. But he said that “will bring the risk of disappointment [for investors] — because you have to walk the walk as well as talk the talk as a central bank”.

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Armenia’s prime minister claims military is plotting a coup




Armenia’s prime minister has claimed the country’s military is plotting a “coup,” and taken to the streets with his supporters after senior army figures in the former Soviet republic called on him to resign.

Nikol Pashinyan has faced months of protests demanding he step down after the defeat of Armenian forces in a six-week war with neighbouring Azerbaijan that ended in November.

The army weighed in on Thursday, calling on the prime minister to quit after he fired the first deputy chief of staff for criticising him.

A letter to the prime minister signed by 40 senior officers warned Pashinyan not to use force against demonstrators, but did not say whether the army would act to remove him from power.

“The current government’s ineffective management and serious mistakes in foreign policy have put the country on the brink of collapse,” the officers wrote on Facebook.

Pashinyan later fired the chief of the general staff, Onik Gasparyan, ordered police to secure government buildings in Yerevan and told his supporters in the capital’s Republic Square to avoid violent clashes.

Demonstrators at an opposition rally in Yerevan demand the resignation of Nikol Pashinyan. They cheered as a fighter jet flew overhead © Artem Mikryukov/Reuters

Describing the situation as “manageable” the prime minister denied he was planning to flee the country and said the army’s statement was an “emotional reaction” to a dispute over the defeat in the Nagorno-Karabakh conflict.

“We have no enemies in Armenia. I am calling for calm,” Pashinyan said, according to Russian news agency Interfax. “Of course, the situation is tense, but we need dialogue, not confrontation.”

He later took to the streets with several thousand supporters and a megaphone — an echo of the 2018 “velvet revolution” that swept him to power following a march across the country that galvanised popular support. A few thousand opposition supporters gathered at a different square and cheered as a fighter jet flew overhead.

Pashinyan has fought off calls for his resignation since signing a Moscow-brokered peace deal in November that cemented territorial gains for Azerbaijan in Nagorno-Karabakh. The mountainous enclave in the South Caucasus is internationally recognised as part of Azerbaijan, but is populated by ethnic Armenians who seized control after a war that broke out in the dying days of the Soviet Union.

Azerbaijan, a mostly Muslim country and a close ally of Turkey, launched an offensive in September with the aim of retaking the entire enclave. Armenia’s army was ill prepared for oil-rich Azerbaijan’s modern drone fleet and significant backing from Ankara.

More than 3,300 Armenian soldiers died in the conflict, with a further 9,000 wounded. Thousands of civilians were displaced, including some who set their own homes on fire as they fled land now under control of Azerbaijan.

Russia, the traditional regional power broker and Armenia’s most important ally, remained neutral even as several previous ceasefires failed and has deployed 2,000 peacekeepers to secure the region.

Pashinyan admitted the terms were “unbelievably painful for me and my people” but argued the concessions were necessary to prevent further losses.

The devastating defeat sparked fury among Armenians who stormed the country’s parliament and attacked its speaker, demanding the prime minister’s resignation.

Pashinyan backtracked on a pledge to step down after snap elections earlier this month and remained in office in the face of opposition from Armenia’s ceremonial president, three parliamentary opposition parties, and key church leaders.

The Kremlin said on Thursday it was “following events in Armenia with caution” but considered them “exclusively Armenia’s internal matter”.

Dmitry Peskov, President Vladimir Putin’s spokesman, told reporters Russia was “calling on everyone to be calm” and said “the situation should remain within constitutional limits,” according to Interfax.

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German accounting watchdog chief to step down in wake of Wirecard




The head of Germany’s accounting watchdog is to step down following mounting political pressure over corporate governance shortcomings exposed by the Wirecard fraud.

Edgar Ernst, the president of the Financial Reporting Enforcement Panel (FREP), said on Wednesday he would depart by the end of this year. He is the third head of a regulatory body to lose his job in the wake of one of Germany’s biggest postwar accounting scandals.

The collapse of Wirecard, which last summer filed for insolvency after uncovering a €1.9bn cash hole, triggered an earthquake in Germany’s financial and political establishment.

Felix Hufeld, president of BaFin, the financial regulatory authority, and his deputy Elisabeth Roegele were pushed out by the German government in January for failing to act on early red flags suggesting misconduct at Wirecard. Ralf Bose, the head of Germany’s auditors supervisor Apas, was fired after disclosing he traded Wirecard shares while this authority was investigating the company’s auditor, EY. The German government is also working to revamp the country’s accounting supervision and financial oversight.

Meanwhile, criminal prosecutors in Frankfurt are evaluating a potential criminal investigation into BaFin’s inner workings and on Wednesday asked the market authority to hand over comprehensive documents, the prosecutors office told the FT, confirming an earlier report by Handelsblatt. The potential scope of any investigation as well as the individuals who might be targeted is still unclear. BaFin declined to comment.

Ernst came under pressure as the parliamentary inquiry commission uncovered that he joined the supervisory board of German wholesaler Metro AG in an apparent violation of internal governance rules, which from 2016 banned FREP staff from taking on new supervisory board roles.

Last week, the former chief financial officer of Deutsche Post filed a legal opinion to parliament defending his move. He argued that his employment contract was older than the 2016 ban on board seats and hence trumped the tightened governance regulations.

The German government had subsequently threatened to ditch the private-sector body which currently has quasi-official powers.

In a statement published on Wednesday evening, FREP said that Ernst wants to open the door for a “fresh start” that would be untainted by the discussions around his supervisory board mandates. “FREP is losing a well-versed expert in capital markets,” the body said.

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