June 8, 2021 - 2:41pm
The recent letter signed by over 200 former world leaders over the weekend about ‘helping to vaccinate the world’s poor’ has been met with a great deal of fanfare this week. Yet as always, the devil was in the detail: what was also being proposed was a mechanism to strangle the recovery of the world’s Low Income Countries (LICs).
Most of the focus was on the signatories’ plea to the G7 to pay two-thirds of the US$66 billion cost of the Covid vaccines for LICs. As Gordon Brown put it, this was just 30 pence per person in the UK — “a small price to pay for the best insurance policy in the world.” But how was the rest of the bill to be paid for?
The signatories suggested that the IMF could allocate what are known as “special drawing rights” (SDRs) to LICs so that they could pay the remaining third of the vaccine bill. SDRs are supplementary assets created by the IMF and allocated to members — often in times of trouble. In the wake of the 2008 financial crisis, almost $250 billion was allocated through this mechanism.
There was nothing original in this financing suggestion. In late March, the IMF already strongly supported SDRs of US$650 billion to be allocated across the world. But if funds are distributed in the same way as in 2008, only $7 billion would go to poor countries.
So what’s changed? The $22 billion proposed is an increase. Of course this money is urgently needed in LICs. It could at least start the ball rolling on the US$200 billion estimated by the IMF to be needed in poor countries to respond to the economic and broader health crisis triggered by the pandemic. Yet what is now proposed by world leaders is that all of this additional money should be hypothecated to global pharmaceutical companies: this will pay the cost of the Covid vaccines, for which Boris Johnson and EU leaders refuse to waive patent rights.
Instead of helping to refloat LIC economies, under this plan the money allocated by the IMF will revert to rich countries, further boosting their recovery. It will not help the recovery of LICs. And this is all assuming that the G7 does step in and shoulder two-thirds of the cost. Even if pledged, the chances of this happening in the midst of the Covid economic crisis and Johnson’s proposed cut to the aid budget are slim: a 2015 OXFAM study found that only 47% of aid pledges are ever realised. So what will make up the balance? IMF loans, anyone?
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SubscribeThanks for pointing this out – it’s good to be forewarned against the oncoming tsunami of sanctimony that is inevitable on this issue. I read the authors book ‘The Covid consensus’, and the collateral damage done by our Covid fixation on the world’s poor is rage inducing. Especially when you have to put up with the virtue signalling imbeciles on Twitter persisting with their delusion that they’re being altruistic by supporting lockdown whilst 0.5m children a month are put at risk of starvation (from the Covid consensus’). Clearly those black lives don’t matter so much then?
Covid 19 has largely been a first world problem due to a convergence with ageing populations and obesity epidemics. Pharmaceutical companies have grown wealthy off our need to mitigate it and our willingness to terrorise our populations to waiver all rational oversight and scrutiny of the response.
Let the pharma, tech, government complex in the West and China foot the entire bill; see if they believe their own hype.
I don’t disagree that Covid vaccination in poor countries is bad value for poor countries, though manily because for that money they could get far better health outcomes with things like clean water, sanitation etc.
But: “Small wonder that many people in LICs are so reluctant to take vaccines” ah so they’re against vaccines because of the inequality of the global financial system. Yes that makes total sense… I’m sure the 100s of millions in LICs who refuse not just Covid but other much more established and freely available vaccines to protect children from Measles, Polio etc are doing it because of inequality. Grow up.
The vaccinate the world campaign feels part of the at best idiotic ZeroCovid fanatics campaign. Covid ain’t Smallpox, no where near as deadly to the vast majority, and it mutates too much.
Bill Gates is beginning to unravel.
agree: people become healthy though good sanitisation, good and reliable justice (equality and trust for all) and good quality food (not the stuff produced in industry). Vaccinations mainly makes the industry healthy.
But I suspect that the reason behind vaccinating the world poor is in making sure that as much data as possible comes available by end dec 2022 when the covid vaccines trials finish….. if we are g.pigs, why should the poor not be g.pigs…. just fairness no?
The zeal for being vaccinated in the west is incomparable to LIC. I have declined the vaccine but I know of no one else who has. Such is the desire to resume the old normal with such haste. The needs of the west ( to be able to travel, enjoy, consume ) are far different from the LIC’s realities & is seeing to its own interests when passing out these free vaccines. Why does it behave that it knows best for the whole world ? That it’s ( interpretation of ) science ( smirk) is the redeemer of all human kind? LICs are not conducting dangerous lab experiments , resulting in an escaped virus! Their population is grappling with the basics. They deal with untimely death daily . This pretentious nature of why the west wants to dish out these vaccines is lost on many as most of us are in too much of a hurry to get back to where we were before the pandemic.
And then as the author says, there is the need to extract value for the development of the vaccines too.
Either you take the vaccine because it makes you feel safe, which is a perfectly reasonable argument, or you refuse it based on:
but, of course, we will be seen as putting society in danger
The acronym LIC (low Income Countries) is also used to mean:
LIC (Like I Care)
But my guess is these twists will continue coming for years as this huge Ferguson/Fouchi mess keeps giving.
Few people know of SDR (special drawing rights) which is the fiatish currency the IMF can print. I heard they printed $ one Trillion during the covid year, another of the Trillions which I believe will lead to the New Great Depression to soon come, hyperinflation or massive deflation.
But then I am likely wrong – many say the deflationary effect ot Tech making production increase at an exponential scale means this cash must be dumped into the system to prevent deflation, and can go on for ever (MMT), even needing greater amounts. Then UBI will be needed just to helecopter fiscal stimulus out to keep pace with increades production of goods and services, that AI is on its way of making pets of us, and will keep the food bowls full, and all the rest, as we just lounge about.
So I awoke today with a cough and feel like I an slightly sick, and I suppose with my rabid attacks on lockdown, and belief in Karma, it would be appropriate if it was…..
Not sure I understand what the problem is – rich countries pay 2/3 of the cost, the remaining 1/3 made up nominally by poor countries via IMF funny money, poor countries get the vaccines. Will getting their populations vaccinated for (essentially) free not help refloat those economies? Quite possibly not by much, but “poor countries stay poor” isn’t exactly a story. Surely it’s better than nothing?
Business as usual
Just another scam to rob me, so that the author can feel good.
Utter nonsense. SDRs do not revert anywhere, SDRs are exchanged for normally traded currency at a value determined by the basket of currencies that SDRs are based on. So the lic recive a Japanese yen, UK pounds, or US dollars in return for handing over their SDRs. The country receiving the SDR gains no benefit.
I think you mean the country redeeming the SDR get no benefit – but the point of this article is they may, by the resulting purchases which the LIC is directed to use them on.