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Jomo Kwame Sundaram


KUALA LUMPUR: The world should now be more aware of likely COVID-19 devastation unless urgently checked. Last week, the World Health Organization (WHO) announced an US$8 billion plan to quickly vaccinate many more people to expedite ending the pandemic.


New WHO plan

Perhaps frustrated after being ignored by rich country governments and major vaccine producers, the new WHO plan is relatively modest, but hopefully more realisable. Supported by UN Secretary-General Antonio Guterres, the Vaccination Strategy seeks to reduce vaccine apartheid by inoculating 40% in all countries before year’s end, and 70% by mid-2022.

WHO had urged governments to vaccinate at least 10% of their populations by September 2021. With almost 6.5 billion inoculations by then, almost a third of the world’s people were fully vaccinated. As noted by WHO Director General (DG) Tedros, “High and upper-middle income countries have used 75 per cent of all vaccines produced so far”.

Worldwide vaccination will also stem emerging new variants. But less than 0.5% of doses have gone to low-income countries, with less than 5% in Africa fully vaccinated. Thus, more than 55, mainly African countries have been largely left out in this ‘two-track’ vaccination effort.

Globally, about 1.5 billion vaccine doses are being produced monthly. The WHO Strategy deems this enough to achieve its targets, “provided they are distributed equitably”. Although more financing is still needed, it implies enough to procure most vaccines needed for poorer countries via COVAX and the African Vaccine Acquisition Trust (AVAT).

Despite the past, the DG believes the Strategy can succeed if countries and companies supplying vaccines prioritise delivery and donations to COVAX and AVAT. He also urges sharing know-how and non-exclusive licences to spread increased manufacturing capacity.


Intellectual property impediment

Intellectual property rights (IPRs) underlie the world pandemic divide today. Undoubtedly, those who innovate should be rewarded for their achievement. But US law does not prevent price gouging by IP owners. Worse, there are no strong incentives for commercial vaccine suppliers to eradicate the disease.

Unsurprisingly, Pfizer has already revised its business strategy for its main revenue stream to be from selling ‘boosters’ and other COVID-19 needs. WHO and other initiatives to encourage voluntary technology and knowledge sharing have gone nowhere as major companies refuse to share knowledge.

Nevertheless, genome sequencing in China in early January 2020 and the almost free use of crucial techniques to produce mRNA vaccines – such as NIH-owned patents and CRISPR technology – have expedited such vaccine development.

Earlier claims that developing countries are not capable of producing the new mRNA vaccines are no longer credible. South Africa and Brazil have already made them under licence. Independent assessments suggest many more – including others in Africa – can do so.

The October 2020 TRIPS waiver request by South Africa and India goes beyond the 2001 WTO approval of public health flexibilities. This allows production using patent compulsory licensing (CL) in extenuating situations during public health emergencies. But the waiver has been blocked, mainly by rich European governments.

The waiver was not mainly about vaccines. When the request was first made, the only vaccine available was Russian. The waiver request for temporary IPR suspensiononly for the pandemic’s duration – is for COVID-19 tests, treatments, equipment, vaccines and other needs, subject to strict conditions.

In the face of a global crisis demanding urgent action, the European Commission position – even a year later – is that TRIPS voluntary licensing (VL) is enough. It insists the waiver – and even CLare not needed even though both VL and CL require country by country, patent by patent negotiations and licensing.

As affordable COVID-19 supplies are still desperately needed, the scale and scope of the current challenge still need the waiver. But no developing country – or for that matter, patent holder – has either the means or time to negotiate to meet all the needed VLs urgently.


Achieving Global Vaccine Equity

For Boston University’s Global Development Policy Center, adequately addressing vaccine equity requires raising output, deemed necessary for a more equitable response. The BU proposal calls for a simultaneous 3-pronged approach to quickly scale up vaccine supplies via:

- the TRIPS waiver to surmount IP constraints to more production;

- requiring vaccine developers to share relevant technology and know-how;

- adequately financing efforts to produce and distribute much more.

The TRIPS waiver would also eliminate all IP barriers to meeting other COVID-19 related needs. By contrast, CL would still require many separate, often lengthy negotiations and licensing for every patent involved in making needed items.

Massively increasing donations – especially from vaccine-hoarding and producing countries – can get many more doses to the under-vaccinated. Big rich G7 countries are still very far from meeting their own modest billion dose donation target.

COVAX, ostensibly for more equitable access to vaccines, has achieved about 10% of its promise, far less than the two billion doses pledged by year’s end. The proposed WHO moratorium on booster shots should continue until equitable vaccine access has been achieved.

Socio-economic inequalities among and within countries have also frustrated pandemic containment. Unsurprisingly, worldwide vaccine inequalities have exacerbated adverse effects. Sadly, the international community has the means, but not the political will to do the needed.


US missing leadership chance

Half a year ago, President Biden announced the US would support a vaccine patent waiver. His vaccine summit before the UN General Assembly was promising, but again did not deliver much. He can still make a world of difference, uniting the world to defeat the pandemic.

Without White House leadership, urgently needed technology sharing will not occur. As Moderna received federal government funding, the US President is legally empowered to ramp up its output and supplies, e.g., on a cost-plus basis. He could also get Moderna to enable others to quickly make vaccines needed.

Washington can thus ensure Moderna does the needed. If Biden wants to lead the world, he still has a small window of opportunity to lead and win the war against COVID-19. Not doing so will mean millions more avoidable deaths. Only together can we rise to the greatest challenge of our times.



 
 
  • Oct 5, 2021
  • 0 min read

Jomo Kwame Sundaram


KUALA LUMPUR. As finance ministers and central bank governors gather next week for the IMF-World Bank annual meetings in the US capital, the first shots of a new putsch against multilateralism have been fired. The target: Kristalina Georgieva, Fund Managing Director (MD) since 2019.


Georgieva’s sins

She has tried to enhance multilateral coherence by aligning the Fund with the United Nations, as envisaged by then US President Franklin Delano Roosevelt. Like predecessor Christine Lagarde, the former Bank environmental economist is committed to the Sustainable Development Goals and addressing global warming.

Despite Trump administration opposition, she supported issuing IMF special drawing rights (SDRs) to help members cope with the pandemic. She thus enhanced countries’ scarce foreign exchange resources and seeks to accelerate mass vaccination to enable recovery.

Following the change at the White House in January, new US Treasury Secretary Janet Yellen agreed to issuing US$650 billion of SDRs. From Bulgaria, Georgieva is appreciated by many governments – especially those with little or no clout at the Fund – for expediting efforts to cope with the pandemic.


Gaming the business

The World Bank Group’s annual Doing Business Report (DBR) has long ranked countries by how ‘investment-friendly’ they seem, especially to foreign investors. Unsurprisingly, the DB index appreciates low corporate income tax rates and weak labour protection.

The DBR has long been considered problematic, attracting many criticisms, even from within the Group. But as its most widely read and influential annual publication, it was jealously defended by management for decades with promises of reform over many years.

Middle income country governments the world over now pay consultants well to help game their DB scores and ranking. They hope to thus attract more investments, especially from abroad. With financialisation, real economic criteria declined in significance as financial market indicators became more important.


Prosecution by innuendo

The WilmerHale law firm report about the DBR to the Bank executive board is cited by London’s right-wing Economist to demand Georgieva’s head. It covers improprieties involving the 2018 and 2020 DB indices for Azerbaijan, China and Saudi Arabia.

Her heinous crime: as the senior Bank executive responsible, Georgieva failed to lower China’s already low ranking. Instead, they insist she must resign for maintaining its 2017 rank of 78 in 2018! Her nefarious act was supposedly to get China’s support for the capital increase the Bank was seeking.

But China had long advocated such a capital increase, opposed by successive US administrations before Trump. In fact, while still at the US Treasury in 2018, current Bank President David Malpass had reversed US policy, recommending a capital increase.


The case falls apart

Reporting directly to Georgieva then, now retired Bank economist Shanta Devarajan – who led the Ease of Doing Business team – insists he was never pressured by her to change data or results.

“The changes to China’s score were either correcting coding errors or judgment calls on questions where judgment was required. I was comfortable that China’s score was comparable to previous years’ (and future years’) scores. At no point did I feel I was being pressured.”

“Georgieva’s direction was to verify the China numbers, making sure that China received credit for the reforms they undertook, without compromising the integrity of Doing Business. The Bank’s lawyers left out the latter phrase.” Instead, he complains of tendentious selective reporting of what he told WilmerHale.


Political bias

Former Bank Senior Vice President and Chief Economist, Nobel laureate Joseph Stiglitz has characterised using the report to attack Georgieva as a ‘hatchet job’. Like Stiglitz two decades before, Paul Romer received a Nobel laureate after being forced out as Bank Chief Economist. His sin: questioning DBR’s ‘integrity’.

Center for Global Development (CGD) research showed how supposed methodological tweaking improved Chile’s and India’s DB rankings to bolster rightwing regimes vis-à-vis their centrist rivals. Reacting angrily, another Bulgarian Simeon Djankov, DB index inventor, slandered the mainstream CGD as reformed Marxist”.

A year after Jamal Khashoggi’s brutal murder in October 2018, the Bank announced Saudi Arabia’s DB rank had risen 30 places. Malpass cited this upgrade at a well-attended Riyadh investment conference. Unsurprisingly, the WilmerHale report concludes the Bank leadership’s innocence in achieving this stunning progress.


Suppressing China’s rising ranking

After Georgieva left the Bank in 2019, China’s ranking did not fall, but instead rose sharply. With Trump appointee Malpass at the helm from 2019, China rose from 78 in both 2017 and 2018, to 31 in 2019 for DBR 2020, and to 25 the following year!

Malpass himself tried to change DB methodology to suppress China’s ranking. Apparently alarmed by China’s rapidly rising ranking, he cancelled release of the next report. Thus, in August 2020, the Bank “paused” publication of DBR 2021!

Over a year later, on 16 September, the Bank cleverly killed two birds with one stone. Terminating its long controversial DBR, it secured a public relations victory with civil society organisations without acknowledging their longstanding criticisms.


New China syndrome

Influential US economist Jeffrey Sachs has suggested that growing US anti-China hysteria is behind the campaign. Three Republican Congressmen want Georgieva sacked for not being anti-Beijing enough. They blame China for the US$650bn SDR issue besides making other allegations reflecting rising US paranoia about China.

The trio claim that her alleged bias shows “how the Chinese Communist party, in pursuing its self-interest, undermines multilateral institutions such as the fund, the World Health Organization, and the United Nations”.

US political influence in the Bank is widely presumed, with Washington’s approval believed to be decisive. Hence, it surprises no one that US$5.3bn went to the last Afghan regime led by a former Bank employee.

The charges against Georgieva are seen by much of the rest of the world as hypocritical. Firing Georgieva as IMF MD would thus further set back multilateralism, already undermined for decades, ironically, especially since the end of the Cold War.


Washington rules

For many since the end of the Cold War, the US either dominates or opposes multilateralism. For ‘sovereigntists’, the US must either control multilateral organizations or undermine them. Thus, under Trump, the US left the Paris climate agreement, World Health Organization, UNESCO and UN Human Rights Council.

Prioritising its domestic political agenda in a divided and partisan US Congress, the White House prefers to avoid unnecessary conflicts with Republicans and anti-China Democrats. Thus, the anti-Georgieva forces still hope to force her ouster.

If the White House sacrifices Georgieva in a cynical gambit to secure political support for its domestic agenda, it will also lose the chance of regaining ‘soft power’, international trust and multilateral leadership.



Relevant IPS readings

 
 

Jomo Kwame Sundaram


KUALA LUMPUR: US President Biden’s earlier support for a vaccine patent waiver raised hopes for his summit last week. However, it proved disappointing, not only for efforts to end the pandemic, but also for US leadership in these challenging times.

Most rich countries have opposed most developing countries’ request to temporarily suspend World Trade Organization (WTO) intellectual property (IP) rules to more quickly contain the COVID-19 pandemic. Expectations were high as Biden had supported a patent waiver, albeit only for vaccines.

With their IP, suppliers control production, supplies and prices. The industry claims it can meet all pandemic-related needs. But although it has no intention of meeting these needs, it insists the waiver is unnecessary. Hence, unless rich country governments stop opposing it, forthcoming WTO meetings will not achieve much.


Rich defend mRNA vaccine duopoly

COVID-19 vaccine supplies and prices are controlled by a few companies. Although BioNTech developed one of the two approved mRNA vaccines, it is now largely manufactured and marketed by Pfizer outside Europe.

BioNTech’s relationship to Pfizer is complementary, but not one between equals. By contrast, Moderna is a vaccine development start-up, with limited marketing and other capacities, especially outside the USA.

Meanwhile, able to pay more, rich countries have taken most vaccines, far, far more than enough. The duopoly initially sold more than 90% of their vaccines to rich countries, charging up to 24 times actual production costs.

Then, more vaccines started reaching MICs before recent efforts to push booster shots. Meanwhile, only 2.2% in low-income countries (LICs) have received at least one dose. Without drastic improvements, most in LICs will not be fully vaccinated before 2023.

Millions are dying as more dangerous variants emerge, confirming no one is safe until everyone is. Meanwhile, the October 2020 WTO waiver request to temporarily suspend IP rights for COVID-19 tests, treatments, equipment and vaccines has garnered broad support.


Vaccine technology not for sharing

Most global initiatives to make vaccines less unaffordable to MICs, such as COVAX, do not address the massive supply shortfall and high prices. Meanwhile, vaccine suppliers jealously protect their monopolies, claiming nobody else can safely produce them.

While at least 80 developing countries have been producing generic medicines and vaccines for decades, not all can produce the novel mRNA vaccines without access to new technical knowledge and materials. Yet, MSF has identified ‘mRNA vaccine-capable’ manufacturers in developing countries, including four in Africa alone.

MSF estimates such manufacturers can establish the capacity to produce up to 100 million doses annually within ten months for between US$127–270 million. But they would still need access to mRNA vaccine technology and reliable supplies.

But Pfizer and Moderna have both refused to share the needed. Now, instead of transferring technology or increasing vaccine supplies to developing countries, they have only contracted to supply vaccine ingredients to companies in rich countries and China.

State-subsidised super-profits Despite benefiting from taxpayer funds, legally enforced patent monopolies and low taxes, People’s Vaccine Alliance research shows the three have used their mRNA vaccine duopoly to secure super profits. Their vaccines sell for US$41 billion over production costs estimated at US$1.20 per dose.

As a charity has noted, “Instead of partnering … to make sure that we have enough vaccine doses for everyone, these pharmaceutical companies prioritize their own profits by enforcing their monopolies and selling to the highest bidder”.

Moderna and Pfizer pay little in taxes despite making many times more than the pre-pandemic average profit rate of 8% for Fortune 500 companies in 2019. In the first half of 2021, Moderna – which had never made a profit before – paid a 7% US tax rate while Pfizer paid 15%, still well under the US statutory rate of 21%.


Perverse incentives

This new situation has created various perverse incentives prolonging the pandemic. Suppliers can make a great deal more in the medium term from tests, treatments, protective, other equipment and booster shots, supposedly for new, more dangerous variants.

Pfizer – already a large, diversified pharmaceutical conglomerate – has recently been growing by taking over businesses selling COVID-19 needs. With the prospect of more profitable booster sales, vaccine suppliers have little incentive to rapidly end the pandemic.

With COVID-19 now endemic, they continue to limit access to their vaccine technology to ensure scarcity and set prices to maximise profits. Hence, despite not having developed its own vaccine, Pfizer is now dominant.


What Biden must now do

Meanwhile, Biden has been under growing pressure to do much more. Probably more than anyone else, economist Dean Baker has long shown how the US can lead international cooperation to fight the COVID-19 pandemic, making the case for an inclusive international vaccine summit half a year ago.

Baker has argued how existing patent arrangements are not only inequitable, but also inefficient and wasteful. He has shown patent advocates as not only self-interested, but also dishonest. Instead, direct public funding would better incentivise new drug development.

US law – specifically Section 1498 of its commercial code – allows the government to require patent licensing in emergencies. Moderna, Pfizer and their scientific personnel can thus be induced to help rapidly scale up production internationally to vaccinate the world.

Also, the waiver proposal must be swiftly approved by the WTO to quickly enable more affordable access to tests, treatments, equipment and other materials urgently needed to better fight the pandemic until it can be ended altogether.

At his summit, Biden vowed to expand vaccine output in Africa and Asia. He can still do the right thing. This could well open a new era of multilateral cooperation instead of the dog-eat-dog new Cold War we are lurching towards. Perhaps there is still hope.



Relevant IPS readings

 
 

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About Jomo

Jomo Kwame Sundaram is Research Adviser, Khazanah Research Institute, Fellow, Academy of Science, Malaysia, and Emeritus Professor, University of Malaya. Previously, he was UN Assistant Secretary-General for Economic Development, Assistant Director General, Food and Agriculture Organization (FAO), Founder-Chair, International Development Economics Associates (IDEAs) and President, Malaysian Social Science Association. 

In The Media

TheStar 26 June 2020

TheStar 26 June 2020

The Star 20 Sept 2019

The Star 20 Sept 2019

Political will needed to push for renewable energy

The Star 10July 2019

The Star 10July 2019

Malaysian businesses need boost

The Star 9 Oct 2019

The Star 9 Oct 2019

Subsidise public transport for bottom 40%

The Edge 26 Sept 2019

The Edge 26 Sept 2019

Call for measures to counteract global headwinds

The Edge 9 Oct 2019

The Edge 9 Oct 2019

Subsidise public transportation, not fuel

The Star 8 Oct 2019

The Star 8 Oct 2019

Subsidise public transportation for bottom 70%

TheEdge 2Oct 2019

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"We need to counteract downward forces"

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Read all editions of #NadiInsan from 1979 to 1983 free of charge at the Peoples History Center website.

 

Containing writings on socio-political issues, film and cultural commentary, as well as in-depth interviews, Nadi Insan is motivated by community activists and intellectuals in Malaysia.

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Berisi tulisan memperihal sosio-politik, ulasan filem dan budaya sehinggalah wawancara yang rencam, Nadi Insan digerakkan oleh aktivis masyarakat dan intelektual di Malaysia.

 

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