Vaccine battle heats up with EU ready to halt U.K. shipments

The European Union is ready to start withholding Covid-19 shots from the U.K., risking a sharp deterioration in relations with London in a bid to turn around its lackluster vaccination campaign.

The EU will start reviewing, and likely rejecting, export authorization of AstraZeneca Plc coronavirus vaccines to the U.K. until the drugmaker fulfills its delivery obligations to the 27-nation bloc, according to a senior EU official.

The EU has contracts with the company that aren’t being respected, and any vaccines and ingredients produced in European factories will be reserved for local deliveries, said the official, who asked not to be named because the decisions are under consideration and haven’t been made public.

The conflict between the EU and the U.K. has been growing since Astra informed Brussels it wouldn’t deliver the number of shots it had promised for the first quarter. Both sides have blamed each other for export curbs and nationalism, posing a risk to the fragile post-Brexit trade relationship agreed on only in December.

U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen spoke last week and a new round of high-level diplomacy is expected among leaders ahead of a summit in Brussels.

The European Commission, the EU’s executive arm, said last week that it would restrict exports of vaccines to countries that don’t reciprocate or that already have high vaccination rates. The U.K. is the largest recipient of doses made in the EU, receiving 10 million of 42 million shots from the bloc so far.

EU leaders meeting this week will discuss the plan, and will ultimately have to decide if they should follow through with the proposed restrictive measures. Countries including Italy and France said they were open to exploring the export ban while others, such as Ireland, Belgium and the Netherlands, urged caution and warned about the impact on European companies, according to a diplomatic note seen by Bloomberg.

“All options are on the table—we are in the crisis of the century,” von der Leyen said last week. “We have to make sure that Europeans are vaccinated as soon as possible.”

Johnson and von der Leyen spoke by telephone hours after the vaccine restriction plan was floated, according to two people familiar with the call.

Johnson has called EU leaders about the dispute in recent days, including Dutch premier Mark Rutte and Alexander De Croo, his Belgian counterpart, and is prepared for more conversations before this week’s summit, a person familiar with the matter said.

Slow Rollout

Astra is now expected to deliver 30 million shots to the EU in the first quarter, less than half of what it initially committed to. The Astra vaccine is one of four approved in the EU.

The EU is struggling to overcome a slow start to its inoculation campaign and has pledged to immunize 70% of adults by the end of September. The bloc has administered 12 doses per 100 people, less than a third of what the U.K. has managed, according to Bloomberg’s Coronavirus Vaccine Tracker. The EU expects 360 million deliveries from all providers in the second quarter, almost four times as many as in the first three months of the year.

The EU isn’t alone in facing supply issues. The U.K. is facing a “significant” four-week cut to the supply of Covid-19 vaccines from late March, according to a letter sent to local health-service groups last week. A delayed shipment of the Astra vaccine from India and a batch requiring re-testing are behind the disruption.

U.K. Defense Secretary Ben Wallace told Sky News on Sunday that the EU should allow Astra to keep supplying Britain and warned the bloc would pay a heavy price if it tried to interfere with those shipments.

‘Political Pressure’

“The commission knows deep down that this would be counterproductive,” he said. “They’re under tremendous political pressure at the European Commission. It would damage the EU’s relations globally.” A spokesperson for Johnson’s office declined to comment and referred back to Wallace’s remarks.

It’s not the EU’s responsibility to help Astra deliver on its commitments to the U.K., according to the EU official.

Still, a spokesman for Pfizer Inc. warned that the free movement of supplies between the U.K. and the EU is critical to the production of its vaccine. Manufacturing of lipids—the fatty substance used to deliver the genetic material at the heart of the vaccine Pfizer makes with its German partner BioNTech SE—takes place at a secret location in the U.K. before shipping to the EU where the shots are completed.

The EU official added that there are no outstanding requests for U.K. exports from Astra’s production facility in the Netherlands, but should such a request be made, it will likely be rejected. A production plant in the Netherlands and one in Belgium produce ingredients for the Astra shot.

“The Netherlands in principle allows exports to continue until told otherwise by the European Commission,” a Dutch spokesman said on March 21. “It is of paramount importance that Brussels, London and AstraZeneca reach a deal promptly on the vaccines produced by the company in facilities falling under both contracts.”