by Toby Green
Tuesday, 8
June 2021
Debate
14:41

Who really benefits from the plan to ‘vaccinate the world’s poor’?

The proposal diverts more funds back to rich countries
by Toby Green
Credit: Justin Sullivan/Getty Images For The Clinton Foundation

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?

The new proposal is more evidence of how the response to Covid has seen global inequality explode. Small wonder that many people in LICs are so reluctant to take vaccines that countries like the Democratic Republic of Congo have had to return their doses: for many, they are part of the problems in their lives, not the solution.

Toby Green is the author of The Covid Consensus: The New Politics of Global Inequality (Hurst).

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  • 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…..

  • 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.

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