That those vaccine purchases are now under investigation by EU Public Prosecutors doesn’t seem to matter. The Commission wants a direct role in EU Member States’ purchases of gas and, if possible, weapons.
As winter fast approaches in the northern hemisphere, the European Commission is looking for a way to cushion the blow of the brutally self-destructive sanctions regime it itself has almost single handedly imposed on Europe’s largest energy provider, Russia. As luck will have it, the Commission’s new cunning plan will have the added bonus of further expanding its influence and power over economic policy and decision making in the EU.
This is one of the perverse paradoxes of Europe’s current predicament: the weaker the EU becomes, the stronger the Commission’s role within it grows, and the more centralized and unaccountable the bloc’s decision making becomes. As Politico notes in its recent article, Europe’s American President: The Paradox of Ursula von der Leyen, this process has dramatically accelerated under current Commission President Ursula von der Leyen — “with the Commission taking a lead role in big changes of direction, such as the issuance of common EU debt, the joint procurement of COVID vaccines and the introduction of Russia sanctions.”
Pooling Energy Demand
Now the Commission is trying to strong-arm EU Member States to accept joint purchases of gas for future gas storage. The ostensible goal of the plan is to secure better terms from energy suppliers as well as reduce the risk of EU countries outbidding each other for energy contracts. But it also represents yet another encroachment on member state sovereignty. As the German daily Süddeutsche Zeitung reported on Monday, if the plan is implemented, energy demand will be pooled through an EU energy platform operated by the Commission itself (machine translated):
The Brussels authority is likely to present a corresponding draft law as early as Tuesday, together with other initiatives aimed at lowering the high [gas] prices. These include, for example, a price cap on an important gas trading center… The 27 heads of state and government are to discuss the proposals at a summit at the end of the week. The EU energy ministers could adopt the new laws as early as November.
The energy platform is intended to bundle the purchasing power of the EU Member States when they buy [natural gas] in 2023 and 2024 in order to refill the storage facilities before the heating season. The states should secure better prices in negotiations with producing countries instead of outbidding each other. Large amounts are needed: the complete cessation of Russian supplies would mean that a gap of up to 100 billion cubic meters of gas would have to be plugged every year, the commission estimates.
Germany and the Netherlands are apparently already on board with the plan, though Germany has expressed reservations about the idea of capping gas prices. Berlin is concerned, quite rightly, that trying to cap the price of gas across the EU may leave the bloc struggling to attract sufficient supply from global markets, which is a problem they already face to the nth degree.
A Plan Long in Gestation
Of course, the frantic fiddling of the European politicians and bureaucrats who set this crisis in motion and have steadfastly refused to reverse course even as the crippling economic costs have mounted, is unlikely to make much of a difference at this stage. As Yves noted yesterday in her preamble to the post, “Is the UK About to Hit the Wall?”, the European Commission is dithering with the fantasy of technocratic fixes, which is likely to result in disruptive, unplanned rationing in the form of blackouts.
One of those technocratic fixes — the creation of a joint gas purchasing platform operated by the Commission — has been in gestation since at least shortly after Russia’s invasion of Ukraine. In April, the Commission launched a purchasing platform for voluntary joint orders, but it doesn’t seem to have caught on among most member states. So, Brussels now wants to make the purchasing platform mandatory for all member states.
According to the article in Süddeutsche Zeitung, the Commission wants to compel member states by EU law to use the platform to fill at least 15% of the volume of their gas storage facilities:
The fact that only around 15% of the demand will bundled is because there are already long-term contracts in place for a large share of the gas storage volumes. It is all about filling the remaining gaps and securing good deals along the way. There are a total of 160 underground storage facilities in the EU in 18 member states. Germany accounts for more than a fifth of the total capacity. Berlin had long expressed doubts as to whether joint purchases would work, but recently changed tack and called for the platform to be strengthened. This is happening now.
And the Commission already has a model of sorts to fall back on — its €71 billion vaccine procurement program:
As with the procurement of the COVID-19 vaccines, the commission would negotiate contracts with suppliers. The final decision as to whether to accept the offer or not would then be made by the individual governments.
This is where the flaws of the plan become glaringly apparent. As I have reported for NC since December 2021 (here, here, here and here), the European Commission’s purchase of 4.6 billion COVID-19 vaccines has been beset by a litany of procedural irregularities and alleged misconduct. Last Friday (October 14), the European Public Prosecutor’s Office (EPPO) announced it had launched an investigation into the purchases, citing the “extremely high public interest” in the matter as justification for taking the “exceptional” step of confirming the investigation on its website.
The #EPPO confirms that it has an ongoing investigation into the acquisition of COVID-19 vaccines in the European Union. This exceptional confirmation comes after the extremely high public interest. No further details will be made public at this stage. pic.twitter.com/4001sNZREN
— European Public Prosecutor’s Office (EPPO) (@EUProsecutor) October 14, 2022
Set up in 2021, the EPPO is an independent EU body whose mission is to investigate and prosecute financial crimes, including fraud, money laundering and corruption. Though the EPPO did not name who or which particular vaccine contracts are under investigation, two other EU watchdog agencies have already shone a light on one particular vaccine deal involving direct negotiations between Pfizer’s CEO Albert Bourla and Commission President Ursula von der Leyen.
Signed in 2021, it was the biggest vaccine procurement deal the Commission has signed — for up to 1.8 billion doses of BioNTech/Pfizer vaccine, worth up to €35 billion, according to leaked vaccine prices. Pfizer is far and away the largest provider of the EU’s COVID-19 vaccines, accounting for just over half of the 4.6 billion doses (enough for more than 10 doses for all EU citizens, including children) procured from global pharmaceutical companies.
One bizarre aspect of the 1.8 billion-dose deal is the extremely high price paid by the Commission. Normally, when a customer buys in much greater bulk, the price tends to go down. But in this case the price of the Pfizer BioNTech vacinnes went up by over 25% to €19.50, from the €15.50 the EU had paid for the initial vaccines delivered in late December 2020. The price of the Moderna vaccine went up by just under 15%.
Zero Transparency
A recent report by the Court of Auditors into the EU’s vaccine procurement strategy found that von der Leyen had directly participated in preliminary negotiations for the €35 billion vaccine contract. This deviated sharply from the negotiating procedure followed with other contracts, in which a joint negotiating team comprising officials from the Commission and member countries conducted exploratory talks.
The auditors asked the Commission to provide basic information on the preliminary negotiations (scientific experts consulted and advice received, timing of the talks, records of the discussions, and details of the agreed terms and conditions), but “none was forthcoming.”
Much the same happened with the furtive text communications between vdL and Bourla. In April 2021, as the preliminary negotiations were taking place and vdL was facing flak for failing to make the Commission’s advance purchase agreements with AstraZeneca legally airtight, the New York Times reported that much of the negotiations to seal a deal were conducted via phone and text messages between vdL and Bourla.
None of those communications have been made public. In fact, they appear to have been destroyed. When MEPs and the EU’s ombudsman Emily O’Reilly asked VdL to disclose the content of those messages, she straight up refused. When O’Reilly asked the Commission to undertake a thorough search for the text messages in question, the Commission responded by saying that it cannot and does not need to find the text messages.
To compound matters, when Pfizer CEO Albert Bourla was recently invited to clarify matters in front of a special European Parliament hearing, he refused to attend. In her final report, O’Reilly described the Commission’s handling of the matter as a “wake-up call for all EU institutions about ensuring accountability in an era of instant messaging”, underlining that it “leaves the regrettable impression of an EU institution that is not forthcoming on matters of significant public interest.”
Yet that institution now wants a direct role in procuring not only vaccines for all EU Member States, but also energy and possibly even arms. In July, the Commission presented plans for EU nations to jointly purchase weapons, once again arguing that pooling demand through a commission-run platform will allow EU Members to secure better terms from suppliers.
“By contributing with the European budget, we are creating an incentive for member states — many of which have announced a significant increase in defense spending — to buy together,” said the Commission’s Internal Market Commissioner Thierry Breton. “This will make it possible to spend public money better, and to boost our European industrial base.”
Of course, energy and arms — particularly arms, as US readers well know — are two industries where huge sums of money change hands, and often not in the most transparent of ways. Large sums of money can get lost in the process. Whatever the outcome of the EPPO’s investigation, the Commission’s handling of the COVID-19 vaccine purchases for the entire 27-nation bloc has amply demonstrated that it cannot be trusted to abide by even the most basic standards of transparency or accountability in its dealings with large corporations.