The Stalled Global Vaccine Drive

The West's Greed Could Come Back To Haunt It

A global initiative was launched to ensure that poorer countries would also have fair access to vaccines for the coronavirus once they were developed. Instead, the West is panic-buying the available stocks – and that could be devastating, politically, economically and in terms of human lives.

By Laura Höflinger, Katrin Kuntz und Fritz Schaap

Foto: Jagadeesh Nv / epa-EFE/ Shutterstock

Attendees at the meeting included members of the World Health Organization, the vaccine alliance Gavi, the heads of three major pharmaceutical companies and health experts from around the world.

The mood was hopeful. Britain had just launched its vaccination program. The end of the pandemic seemed to be within reach.

Then a journalist asked if Canada, which has secured more vaccine per capita than any other country in the world, planned to deliver those doses immediately. Or would it first do so after a large percentage of Canadians have been immunized? At what point would the country be willing to give up some of its abundance of vaccine?

The representative paused. People have to understand, she said hesitantly, that we are experiencing extraordinary times. She didn’t want to commit herself to a timeline.

It sent a clear message, especially to poorer countries. And it contained two warnings. 

First: Wealthy nations like Canada are perfectly willing to share their vaccines, but on terms set by the rich. Second: Once again, it might not be the people who most urgently need a remedy who get it first, but rather those who are willing to pay the most for it.

The coronavirus isn’t the first recent pandemic that has exposed inequality between the rich and the poor. During the deadliest phase of the HIV pandemic in the mid-2000s, 2 million people were dying per year, most of them in southern Africa. 

It took many years for life-saving drugs to make their way to the continent. One of the reasons: The Western pharmaceutical companies that developed the medications are eager for profits, and those drugs frequently cost as much as 10,000 a year per patient 20 years ago.

WHO Director General Tedros Adhanom Ghebreyesus: "Not 25 million, not 25,000, just 25.” Foto: Fabrice Coffrini / AFP

H1N1 followed in 2009. A swine flu vaccine was available just seven months after the first outbreak. 

But rich countries bought up the drug. The pandemic had already ended by the time poorer countries got access to the vaccine.

Things were supposed to be fairer this time. The international community established Covax, a consortium of private and government funders to distribute the vaccine. 

Under the tutelage of WHO, the Gavi vaccine alliance and the research alliance Coalition for Epidemic Preparedness Innovations (CEPI), Covax began its work in April 2020. The aim is to deliver 2 billion vaccine doses by the end of 2021. 

Almost every country on the planet has joined the initiative, with the United States as the most recent addition. 

"No one is safe, unless everyone is safe,” reads the initiative’s slogan.

But nine months later, there are few signs of solidarity. According to the Duke Global Health Institute, 16 percent of the world’s population has secured 60 percent of the available vaccines. 

Instead of relying solely on Covax, the European Union, Britain and Canada have ordered large quantities directly from manufacturers, thus blocking the market for now. 

Prices are rising. 

And now that the vaccination campaigns in Europe, the U.S. and elsewhere are being met with setbacks, few are particularly concerned about sharing at the moment.

Britain’s government plans to offer every adult a first dose of the vaccine by the autumn. 

Germany is aiming to have vaccinated almost two-thirds of its population by then. 

In Israel, which is vaccinating its people faster than any other country, the first teenagers are already getting their jabs. 

At the same time, countries like Ukraine, Mozambique or Colombia may have to wait until 2023 before enough vaccine is available for the blanket vaccination of their populations.

Meanwhile, frustration is growing, also at the World Health Organization. It is correct for governments to first vaccinate doctors, caregivers and the elderly, WHO Director-General Tedros Adhanom Ghebreyesus said in an emotional speech in mid-January. 

"It’s not right that younger, healthier adults in rich countries are vaccinated before health workers and older people in poorer countries.” 

He added that more than 39 million doses of vaccine have now been administered in at least 49 higher-income countries. 

"Just 25 doses have been given in one lowest-income country,” he said. "Not 25 million, not 25,000, just 25.”

The WHO head spoke openly about what many are thinking in Africa and everywhere else where there is neither the money nor the power to get the vaccine. "I need to be blunt,” Tedros, who is Ethiopian, railed. 

"The world is on the brink of a catastrophic moral failure.”

Officials at WHO fear the world could break into two vaccine blocs. 

On the one side, a small elite from countries that immunize their populations to a wide extent. These countries could boost their economies, open theaters and schools and international tourism could be boosted because these governments agree on travel corridors among themselves.

The other side would include large parts of Latin America, Africa and Asia, where the majority of humanity lives and where the pandemic would continue to rage.

But a delayed vaccination campaign in poor regions also poses dangers for rich countries. 

For one, the risk of additional mutations would loom for years to come, such as those recently discovered in Britain and South Africa - with the worst-case possibility of a mutation rendering existing vaccines useless. 

Additionally, the global economy would recover more slowly because supply chains in developing and emerging countries would occasionally be disrupted.

In a new study commissioned by the International Chamber of Commerce, economists have warned that inequitable distribution of the vaccines could cause between $1.8 trillion and $3.8 trillion in damage to the global economy – and that’s assuming that developing countries are able to vaccinate half their populations by the end of the year. 

In the worst-case scenario developed by the researchers, the populations of wealthy nations would be fully vaccinated by the middle of this year, but if poorer countries are excluded, the damage to the global economy could exceed $9 trillion. 

In other words, it would be worth everyone’s while to distribute the vaccine around the world as quickly and as equitably as possible.

But earlier this week, the European Commission declared that in the future, pharmaceutical companies would only be able to export vaccines from the EU with the approval of Brussels, unless they were humanitarian supplies. 

Shortly before that, pharmaceutical company AstraZeneca announced it would only be able to deliver 31 million doses of its vaccine to the EU by the end of March instead of 80 million. People all across the EU are angry that progress on vaccination has been so slow.

"There is enormous pressure on governments," says Krishna Udayakumar, director of the Duke Global Health Innovation Center, an American research institution. 

He says it is reasonable that the EU wants to ensure their own population can be covered and that they can be at the front of the line. "But at the same time, leaders need to realize what consequences their actions will have” for their countries.

His team warned months ago that wealthy countries now view the Covax initiative as little more than a bailout fund for countries that can’t otherwise afford the vaccines. 

But if countries like the U.S. or Germany reserve large quantities of vaccine, there is a risk that not much will be left over for Covax. 

"The problem is that they’re giving with one hand and taking with the other,” says Udayakumar.

What is happening right now is precisely what Covax had hoped to prevent. Instead of working together, countries are competing against each other to get vaccines. But they would have been better off pooling their market power, which would have resulted in lower prices and lower risk for each individual government. 

Poorer countries, meanwhile, would have gained access to discounted vaccines thanks to the subsidies from the richer ones. Ninety-two eligible countries are part of the Covax program.

Vaccines expert Kate Elder: "The slowness of the Covax facility flies in the face of global health!" Foto: MSF

But it is still unclear when the first vaccines will reach people in these countries. Covax hasn’t distributed a single dose so far. Richard Mihigo, one of the leaders of WHO’s vaccination efforts in Africa, says rich countries bought up almost all the vaccine while they were busy arranging funding for Covax.

Another problem is that the vaccine from AstraZeneca and Oxford University that Covas is primarily relying on has not yet received a recommendation from WHO and is therefore not available yet. 

The initiative did just sign an agreement with the German-American consortium BioNTech and Pfizer for up to 40 million vaccine doses. But it is not yet certain when those can be delivered. 

And even if a date is set, they will probably play only a minor role in global distribution because the Pfizer/BioNTech vaccine has to be stored at minus 70 degrees Celsius, making it impractical for large parts of the world.

A spokesman for the vaccination alliance Gavi, which is coordinating the purchase of the Covax vaccines, has pleaded for understanding for the huge task the world has set for itself: the distribution of 2 billion vaccine doses to 190 countries within a year. "Nothing like this has ever been attempted before in such a short time frame and we are working round the clock to ensure it is a success.”

But vaccination experts like Kate Elder have a different view. "The slowness of the Covax facility flies in the face of global health,” she says. Elder is a leading figure at Doctors without Borders’ Access Campaign, an initiative working to increase access to affordable medicines.

"We're hearing a lot of concerns from governments that depend on Covax,” Elder says, adding that there has been a lack of clear timelines and liability issues haven’t been clarified to the extent necessary. 

"There are many governments that were concerned about sending tremendous sums of public funding to Covax and also to Gavi as their down payment and not really having anything guaranteed in receipt." 

She is calling for agreements with pharmaceutical companies to be made public, and also says it needs to be clear where, when and how the vaccines will be delivered.

Meanwhile, many countries that can afford to buy vaccines through their own channels are already doing so. South Africa is awaiting delivery of doses of the AstraZeneca vaccine that are being produced in India. 

Reports in the media suggest that the country is paying almost twice as much as the EU per dose. The Seychelles has begun a vaccination campaign with vaccines that have been donated by the United Arab Emirates. 

The African Union has also ordered $270 million worth of vaccines from Pfizer, AstraZeneca and Johnson & Johnson.

According to Elder, poor countries are now facing a supply shortage that has been created artificially because of Covax’s structural failures – and they will now have to take what they can get on the world market, in some cases at higher prices.

Economists have warned that inequitable distribution of vaccines could cause up to $3.8 trillion in damage to the global economy.

This has prompted India and South Africa to call on the World Trade Organization to suspend intellectual property rights on medicines that can be used to fight COVID-19 during the pandemic. 

That would allow generic manufacturers in emerging countries to produce the drugs that were created in Western research laboratories without a license – and probably much more cheaply than in industrialized countries. 

In their formal submission to the body, they argued that the coronavirus has created a "global emergency.” At a time when countries are closing schools and factories, when democratic rights are being suspended, why should patent protection be sacrosanct?

Nearly 100 countries have signed on to the proposal. 

But the U.S., the EU, UK, Norway, Switzerland, Japan, Canada, Australia and Brazil are all blocking the drive. 

They claim that it’s not the patents that are the problem, but there are no factories available for increased production. 

And that companies like AstraZeneca and Johnson & Johnson are already foregoing profits.

In May, the head of the pharmaceutical company Pfizer, Albert Bourla, said that the protection of patents was the reason why investors provided money to develop diagnostics, drugs and vaccines. 

What Bourla didn’t mention, however, is that research on many of the vaccines, including his company’s, has been supported with billions in public funding. 

Experts like Anne Jung of the aid organization medico international, are critical of the fact that the companies have not been contractually obliged to share the results of their research in return.

Many industrial nations prefer their own solution, one that provides governments with more control – through donations like those proposed by Canada and France, for example. 

The European Commission also supports those proposals, at least in theory. One of the few countries that have so far pledged to donate alongside their own national vaccination campaign is Norway.

The vaccine stinginess could come back to haunt us because others will be happy to fill the vacuum left by the West. 

"We are seeing growing desperation on part of some lower middle-income countries,” says Duke Global Health Innovation Center’s Udayakumar. 

"Their populations are demanding protection rather sooner than later. But the only access these countries will get is often through vaccines where we don’t have a sufficient level of publicly available data on efficacy and safety.”

Countries like China and Russia are often the only ones supplying developing nations. India, which is home to some of the world’s largest vaccine factories, recently gave more than 3 million doses of vaccine to its South Asian neighbors. Prime Minister Narendra Modi said his country was prepared to "protect humanity.”

But India is acting no more out of pure altruistic interests than Russia or China. 

All three countries have recognized that vaccine diplomacy is no charity project. 

For them, it presents a one-time opportunity to increase their own influence and political weight in the world for decades to come.  

The American Abyss

A historian of fascism and political atrocity on Trump, the mob and what comes next.

By Timothy Snyder

The police forced the crowd out of the Capitol building after facing off in the Rotunda, Jan. 6, 3:40 p.m.Credit...Ashley Gilbertson/VII, for The New York Times

When Donald Trump stood before his followers on Jan. 6 and urged them to march on the United States Capitol, he was doing what he had always done. He never took electoral democracy seriously nor accepted the legitimacy of its American version.

Even when he won, in 2016, he insisted that the election was fraudulent — that millions of false votes were cast for his opponent. 

In 2020, in the knowledge that he was trailing Joseph R. Biden in the polls, he spent months claiming that the presidential election would be rigged and signaling that he would not accept the results if they did not favor him. 

He wrongly claimed on Election Day that he had won and then steadily hardened his rhetoric: With time, his victory became a historic landslide and the various conspiracies that denied it ever more sophisticated and implausible.

People believed him, which is not at all surprising. It takes a tremendous amount of work to educate citizens to resist the powerful pull of believing what they already believe, or what others around them believe, or what would make sense of their own previous choices. 

Plato noted a particular risk for tyrants: that they would be surrounded in the end by yes-men and enablers. 

Aristotle worried that, in a democracy, a wealthy and talented demagogue could all too easily master the minds of the populace. Aware of these risks and others, the framers of the Constitution instituted a system of checks and balances. 

The point was not simply to ensure that no one branch of government dominated the others but also to anchor in institutions different points of view.

In this sense, the responsibility for Trump’s push to overturn an election must be shared by a very large number of Republican members of Congress. Rather than contradict Trump from the beginning, they allowed his electoral fiction to flourish. 

They had different reasons for doing so. One group of Republicans is concerned above all with gaming the system to maintain power, taking full advantage of constitutional obscurities, gerrymandering and dark money to win elections with a minority of motivated voters. 

They have no interest in the collapse of the peculiar form of representation that allows their minority party disproportionate control of government. The most important among them, Mitch McConnell, indulged Trump’s lie while making no comment on its consequences.

Yet other Republicans saw the situation differently: They might actually break the system and have power without democracy. The split between these two groups, the gamers and the breakers, became sharply visible on Dec. 30, when Senator Josh Hawley announced that he would support Trump’s challenge by questioning the validity of the electoral votes on Jan. 6. 

Ted Cruz then promised his own support, joined by about 10 other senators. More than a hundred Republican representatives took the same position. For many, this seemed like nothing more than a show: challenges to states’ electoral votes would force delays and floor votes but would not affect the outcome.

Pro-Trump extremists tried to scale the walls of the Capitol building in Washington to bypass barriers and get inside, 2:09 p.m.Credit...Ashley Gilbertson/VII, for The New York Times

Yet for Congress to traduce its basic functions had a price. An elected institution that opposes elections is inviting its own overthrow. Members of Congress who sustained the president’s lie, despite the available and unambiguous evidence, betrayed their constitutional mission. 

Making his fictions the basis of congressional action gave them flesh. Now Trump could demand that senators and congressmen bow to his will. He could place personal responsibility upon Mike Pence, in charge of the formal proceedings, to pervert them. 

And on Jan. 6, he directed his followers to exert pressure on these elected representatives, which they proceeded to do: storming the Capitol building, searching for people to punish, ransacking the place.

Of course this did make a kind of sense: If the election really had been stolen, as senators and congressmen were themselves suggesting, then how could Congress be allowed to move forward? 

For some Republicans, the invasion of the Capitol must have been a shock, or even a lesson. For the breakers, however, it may have been a taste of the future. Afterward, eight senators and more than 100 representatives voted for the lie that had forced them to flee their chambers.

Rioters threatened and chased Officer Eugene Goodman inside the Capitol, 2:13 p.m.Credit...Ashley Gilbertson/VII, for The New York Times


Post-truth is pre-fascism, and Trump has been our post-truth president. When we give up on truth, we concede power to those with the wealth and charisma to create spectacle in its place. 

Without agreement about some basic facts, citizens cannot form the civil society that would allow them to defend themselves. If we lose the institutions that produce facts that are pertinent to us, then we tend to wallow in attractive abstractions and fictions. 

Truth defends itself particularly poorly when there is not very much of it around, and the era of Trump — like the era of Vladimir Putin in Russia — is one of the decline of local news. Social media is no substitute: It supercharges the mental habits by which we seek emotional stimulation and comfort, which means losing the distinction between what feels true and what actually is true.

Post-truth wears away the rule of law and invites a regime of myth. These last four years, scholars have discussed the legitimacy and value of invoking fascism in reference to Trumpian propaganda. 

One comfortable position has been to label any such effort as a direct comparison and then to treat such comparisons as taboo. More productively, the philosopher Jason Stanley has treated fascism as a phenomenon, as a series of patterns that can be observed not only in interwar Europe but beyond it.

My own view is that greater knowledge of the past, fascist or otherwise, allows us to notice and conceptualize elements of the present that we might otherwise disregard and to think more broadly about future possibilities. 

It was clear to me in October that Trump’s behavior presaged a coup, and I said so in print; this is not because the present repeats the past, but because the past enlightens the present.

An angry mob confronted the police as it tried to gain entry into the Capitol, 2 p.m.Credit...Ashley Gilbertson/VII, for The New York Times

Like historical fascist leaders, Trump has presented himself as the single source of truth. His use of the term “fake news” echoed the Nazi smear Lügenpresse (“lying press”); like the Nazis, he referred to reporters as “enemies of the people.” 

Like Adolf Hitler, he came to power at a moment when the conventional press had taken a beating; the financial crisis of 2008 did to American newspapers what the Great Depression did to German ones. The Nazis thought that they could use radio to replace the old pluralism of the newspaper; Trump tried to do the same with Twitter.

Thanks to technological capacity and personal talent, Donald Trump lied at a pace perhaps unmatched by any other leader in history. For the most part these were small lies, and their main effect was cumulative. 

To believe in all of them was to accept the authority of a single man, because to believe in all of them was to disbelieve everything else. 

Once such personal authority was established, the president could treat everyone else as the liars; he even had the power to turn someone from a trusted adviser into a dishonest scoundrel with a single tweet. 

Yet so long as he was unable to enforce some truly big lie, some fantasy that created an alternative reality where people could live and die, his pre-fascism fell short of the thing itself.

A bust of George Washington had a Trump hat placed on it, as intruders charged through the building, 2:34 p.m.Credit...Ashley Gilbertson for The New York Times

Some of his lies were, admittedly, medium-size: that he was a successful businessman; that Russia did not support him in 2016; that Barack Obama was born in Kenya. Such medium-size lies were the standard fare of aspiring authoritarians in the 21st century. 

In Poland the right-wing party built a martyrdom cult around assigning blame to political rivals for an airplane crash that killed the nation’s president. 

Hungary’s Viktor Orban blames a vanishingly small number of Muslim refugees for his country’s problems. But such claims were not quite big lies; they stretched but did not rend what Hannah Arendt called “the fabric of factuality.”

One historical big lie discussed by Arendt is Joseph Stalin’s explanation of starvation in Soviet Ukraine in 1932-33. 

The state had collectivized agriculture, then applied a series of punitive measures to Ukraine that ensured millions would die. 

Yet the official line was that the starving were provocateurs, agents of Western powers who hated socialism so much they were killing themselves. 

A still grander fiction, in Arendt’s account, is Hitlerian anti-Semitism: the claims that Jews ran the world, Jews were responsible for ideas that poisoned German minds, Jews stabbed Germany in the back during the First World War. 

Intriguingly, Arendt thought big lies work only in lonely minds; their coherence substitutes for experience and companionship.

In November 2020, reaching millions of lonely minds through social media, Trump told a lie that was dangerously ambitious: that he had won an election that in fact he had lost. This lie was big in every pertinent respect: not as big as “Jews run the world,” but big enough. 

The significance of the matter at hand was great: the right to rule the most powerful country in the world and the efficacy and trustworthiness of its succession procedures. The level of mendacity was profound. 

The claim was not only wrong, but it was also made in bad faith, amid unreliable sources. 

It challenged not just evidence but logic: Just how could (and why would) an election have been rigged against a Republican president but not against Republican senators and representatives? 

Trump had to speak, absurdly, of a “Rigged (for President) Election.”

Outside the Capitol, the crowd cheered as rioters stampeded into the building, 2:10 p.m.Credit...Ashley Gilbertson/VII, for The New York Times

The force of a big lie resides in its demand that many other things must be believed or disbelieved. 

To make sense of a world in which the 2020 presidential election was stolen requires distrust not only of reporters and of experts but also of local, state and federal government institutions, from poll workers to elected officials, Homeland Security and all the way to the Supreme Court. 

It brings with it, of necessity, a conspiracy theory: Imagine all the people who must have been in on such a plot and all the people who would have had to work on the cover-up.

Trump’s electoral fiction floats free of verifiable reality. It is defended not so much by facts as by claims that someone else has made some claims. 

The sensibility is that something must be wrong because I feel it to be wrong, and I know others feel the same way. When political leaders such as Ted Cruz or Jim Jordan spoke like this, what they meant was: You believe my lies, which compels me to repeat them. 

Social media provides an infinity of apparent evidence for any conviction, especially one seemingly held by a president.

On the surface, a conspiracy theory makes its victim look strong: It sees Trump as resisting the Democrats, the Republicans, the Deep State, the pedophiles, the Satanists. 

More profoundly, however, it inverts the position of the strong and the weak. Trump’s focus on alleged “irregularities” and “contested states” comes down to cities where Black people live and vote. 

At bottom, the fantasy of fraud is that of a crime committed by Black people against white people.

It’s not just that electoral fraud by African-Americans against Donald Trump never happened. It is that it is the very opposite of what happened, in 2020 and in every American election. 

As always, Black people waited longer than others to vote and were more likely to have their votes challenged. They were more likely to be suffering or dying from Covid-19, and less likely to be able to take time away from work. 

The historical protection of their right to vote has been removed by the Supreme Court’s 2013 ruling in Shelby County v. Holder, and states have rushed to pass measures of a kind that historically reduce voting by the poor and communities of color.

The claim that Trump was denied a win by fraud is a big lie not just because it mauls logic, misdescribes the present and demands belief in a conspiracy. It is a big lie, fundamentally, because it reverses the moral field of American politics and the basic structure of American history.

When Senator Ted Cruz announced his intention to challenge the Electoral College vote, he invoked the Compromise of 1877, which resolved the presidential election of 1876. Commentators pointed out that this was no relevant precedent, since back then there really were serious voter irregularities and there really was a stalemate in Congress. 

For African-Americans, however, the seemingly gratuitous reference led somewhere else. The Compromise of 1877 — in which Rutherford B. Hayes would have the presidency, provided that he withdrew federal power from the South — was the very arrangement whereby African-Americans were driven from voting booths for the better part of a century. 

It was effectively the end of Reconstruction, the beginning of segregation, legal discrimination and Jim Crow. It is the original sin of American history in the post-slavery era, our closest brush with fascism so far.

If the reference seemed distant when Ted Cruz and 10 senatorial colleagues released their statement on Jan. 2, it was brought very close four days later, when Confederate flags were paraded through the Capitol.

A videographer for The Daily Caller, a right-wing website, after being pepper-sprayed during the mayhem at the Capitol, 3:45 p.m.Credit...Ashley Gilbertson/VII, for The New York Times

Some things have changed since 1877, of course. Back then, it was the Republicans, or many of them, who supported racial equality; it was the Democrats, the party of the South, who wanted apartheid. 

It was the Democrats, back then, who called African-Americans’ votes fraudulent, and the Republicans who wanted them counted. This is now reversed. 

In the past half century, since the Civil Rights Act, Republicans have become a predominantly white party interested — as Trump openly declared — in keeping the number of voters, and particularly the number of Black voters, as low as possible. Yet the common thread remains. 

Watching white supremacists among the people storming the Capitol, it was easy to yield to the feeling that something pure had been violated. It might be better to see the episode as part of a long American argument about who deserves representation.

The Democrats, today, have become a coalition, one that does better than Republicans with female and nonwhite voters and collects votes from both labor unions and the college-educated.

Yet it’s not quite right to contrast this coalition with a monolithic Republican Party. 

Right now, the Republican Party is a coalition of two types of people: those who would game the system (most of the politicians, some of the voters) and those who dream of breaking it (a few of the politicians, many of the voters). 

In January 2021, this was visible as the difference between those Republicans who defended the present system on the grounds that it favored them and those who tried to upend it.

In the four decades since the election of Ronald Reagan, Republicans have overcome the tension between the gamers and the breakers by governing in opposition to government, or by calling elections a revolution (the Tea Party), or by claiming to oppose elites. 

The breakers, in this arrangement, provide cover for the gamers, putting forth an ideology that distracts from the basic reality that government under Republicans is not made smaller but simply diverted to serve a handful of interests.

At first, Trump seemed like a threat to this balance. His lack of experience in politics and his open racism made him a very uncomfortable figure for the party; his habit of continually telling lies was initially found by prominent Republicans to be uncouth. 

Yet after he won the presidency, his particular skills as a breaker seemed to create a tremendous opportunity for the gamers. Led by the gamer in chief, McConnell, they secured hundreds of federal judges and tax cuts for the rich.

Trump was unlike other breakers in that he seemed to have no ideology. His objection to institutions was that they might constrain him personally. He intended to break the system to serve himself — and this is partly why he has failed. 

Trump is a charismatic politician and inspires devotion not only among voters but among a surprising number of lawmakers, but he has no vision that is greater than himself or what his admirers project upon him. 

In this respect his pre-fascism fell short of fascism: His vision never went further than a mirror. He arrived at a truly big lie not from any view of the world but from the reality that he might lose something.

Yet Trump never prepared a decisive blow. He lacked the support of the military, some of whose leaders he had alienated. (No true fascist would have made the mistake he did there, which was to openly love foreign dictators; supporters convinced that the enemy was at home might not mind, but those sworn to protect from enemies abroad did.) 

Trump’s secret police force, the men carrying out snatch operations in Portland, was violent but also small and ludicrous. Social media proved to be a blunt weapon: Trump could announce his intentions on Twitter, and white supremacists could plan their invasion of the Capitol on Facebook or Gab. 

But the president, for all his lawsuits and entreaties and threats to public officials, could not engineer a situation that ended with the right people doing the wrong thing. Trump could make some voters believe that he had won the 2020 election, but he was unable to bring institutions along with his big lie. 

And he could bring his supporters to Washington and send them on a rampage in the Capitol, but none appeared to have any very clear idea of how this was to work or what their presence would accomplish. 

It is hard to think of a comparable insurrectionary moment, when a building of great significance was seized, that involved so much milling around.

A woman who had been pepper-sprayed leaned on the eastern door to the Capitol’s rotunda, 3:47 p.m.Credit...Ashley Gilbertson/VII, for The New York Times

The lie outlasts the liar. The idea that Germany lost the First World War in 1918 because of a Jewish “stab in the back” was 15 years old when Hitler came to power. 

How will Trump’s myth of victimhood function in American life 15 years from now? 

And to whose benefit?

On Jan. 7, Trump called for a peaceful transition of power, implicitly conceding that his putsch had failed. Even then, though, he repeated and even amplified his electoral fiction: It was now a sacred cause for which people had sacrificed. 

Trump’s imagined stab in the back will live on chiefly thanks to its endorsement by members of Congress. In November and December 2020, Republicans repeated it, giving it a life it would not otherwise have had. 

In retrospect, it now seems as though the last shaky compromise between the gamers and the breakers was the idea that Trump should have every chance to prove that wrong had been done to him. 

That position implicitly endorsed the big lie for Trump supporters who were inclined to believe it. It failed to restrain Trump, whose big lie only grew bigger.

The breakers and the gamers then saw a different world ahead, where the big lie was either a treasure to be had or a danger to be avoided. The breakers had no choice but to rush to be first to claim to believe in it. 

Because the breakers Josh Hawley and Ted Cruz must compete to claim the brimstone and bile, the gamers were forced to reveal their own hand, and the division within the Republican coalition became visible on Jan. 6. The invasion of the Capitol only reinforced this division. 

To be sure, a few senators withdrew their objections, but Cruz and Hawley moved forward anyway, along with six other senators. More than 100 representatives doubled down on the big lie. Some, like Matt Gaetz, even added their own flourishes, such as the claim that the mob was led not by Trump’s supporters but by his opponents.

Trump is, for now, the martyr in chief, the high priest of the big lie. He is the leader of the breakers, at least in the minds of his supporters. By now, the gamers do not want Trump around. 

Discredited in his last weeks, he is useless; shorn of the obligations of the presidency, he will become embarrassing again, much as he was in 2015. Unable to provide cover for their gamesmanship, he will be irrelevant to their daily purposes. 

But the breakers have an even stronger reason to see Trump disappear: It is impossible to inherit from someone who is still around. 

Seizing Trump’s big lie might appear to be a gesture of support. In fact it expresses a wish for his political death. 

Transforming the myth from one about Trump to one about the nation will be easier when he is out of the way.

As Cruz and Hawley may learn, to tell the big lie is to be owned by it. Just because you have sold your soul does not mean that you have driven a hard bargain. 

Hawley shies from no level of hypocrisy; the son of a banker, educated at Stanford University and Yale Law School, he denounces elites. Insofar as Cruz was thought to have a principle, it was that of states’ rights, which Trump’s calls to action brazenly violated. 

A joint statement Cruz issued about the senators’ challenge to the vote nicely captured the post-truth aspect of the whole: It never alleged that there was fraud, only that there were allegations of fraud. Allegations of allegations, allegations all the way down.

A mixture of tear gas discharged by police and fire-extinguisher residue discharged by pro-Trump extremists hung in the air of the Rotunda as the crowd milled about, 2:38 p.m.Credit...Ashley Gilbertson/VII, for The New York Times

The big lie requires commitment. When Republican gamers do not exhibit enough of that, Republican breakers call them “RINOs”: Republicans in name only. 

This term once suggested a lack of ideological commitment. It now means an unwillingness to throw away an election. 

The gamers, in response, close ranks around the Constitution and speak of principles and traditions. The breakers must all know (with the possible exception of the Alabama senator Tommy Tuberville) that they are participating in a sham, but they will have an audience of tens of millions who do not.

If Trump remains present in American political life, he will surely repeat his big lie incessantly. Hawley and Cruz and the other breakers share responsibility for where this leads. 

Cruz and Hawley seem to be running for president. Yet what does it mean to be a candidate for office and denounce voting? 

If you claim that the other side has cheated, and your supporters believe you, they will expect you to cheat yourself. By defending Trump’s big lie on Jan. 6, they set a precedent: A Republican presidential candidate who loses an election should be appointed anyway by Congress. 

Republicans in the future, at least breaker candidates for president, will presumably have a Plan A, to win and win, and a Plan B, to lose and win. No fraud is necessary; only allegations that there are allegations of fraud. 

Truth is to be replaced by spectacle, facts by faith.

Trump’s coup attempt of 2020-21, like other failed coup attempts, is a warning for those who care about the rule of law and a lesson for those who do not. His pre-fascism revealed a possibility for American politics. 

For a coup to work in 2024, the breakers will require something that Trump never quite had: an angry minority, organized for nationwide violence, ready to add intimidation to an election. 

Four years of amplifying a big lie just might get them this. To claim that the other side stole an election is to promise to steal one yourself. It is also to claim that the other side deserves to be punished.

Informed observers inside and outside government agree that right-wing white supremacism is the greatest terrorist threat to the United States. Gun sales in 2020 hit an astonishing high. History shows that political violence follows when prominent leaders of major political parties openly embrace paranoia.

Our big lie is typically American, wrapped in our odd electoral system, depending upon our particular traditions of racism. Yet our big lie is also structurally fascist, with its extreme mendacity, its conspiratorial thinking, its reversal of perpetrators and victims and its implication that the world is divided into us and them. To keep it going for four years courts terrorism and assassination.

When that violence comes, the breakers will have to react. If they embrace it, they become the fascist faction. The Republican Party will be divided, at least for a time. 

One can of course imagine a dismal reunification: A breaker candidate loses a narrow presidential election in November 2024 and cries fraud, the Republicans win both houses of Congress and rioters in the street, educated by four years of the big lie, demand what they see as justice. Would the gamers stand on principle if those were the circumstances of Jan. 6, 2025?

To be sure, this moment is also a chance. It is possible that a divided Republican Party might better serve American democracy; that the gamers, separated from the breakers, might start to think of policy as a way to win elections. 

It is very likely that the Biden-Harris administration will have an easier first few months than expected; perhaps obstructionism will give way, at least among a few Republicans and for a short time, to a moment of self-questioning. Politicians who want Trumpism to end have a simple way forward: Tell the truth about the election.

America will not survive the big lie just because a liar is separated from power. It will need a thoughtful repluralization of media and a commitment to facts as a public good. 

The racism structured into every aspect of the coup attempt is a call to heed our own history. Serious attention to the past helps us to see risks but also suggests future possibility. 

We cannot be a democratic republic if we tell lies about race, big or small. Democracy is not about minimizing the vote nor ignoring it, neither a matter of gaming nor of breaking a system, but of accepting the equality of others, heeding their voices and counting their votes.

Timothy Snyder is the Levin professor of history at Yale University and the author of histories of political atrocity including “Bloodlands” and “Black Earth,” as well as the book “On Tyranny,” on America’s turn toward authoritarianism. His most recent book is “Our Malady,” a memoir of his own near-fatal illness reflecting on the relationship between health and freedom. Ashley Gilbertson is an Australian photojournalist with the VII Photo Agency living in New York. Gilbertson has covered migration and conflict internationally for over 20 years. 

Bucket list

Why everyone is now an options trader

On average last year almost 30m equity options changed hands each day

In the bucket shops of early 20th-century America, ordinary punters could bet on the direction of share prices with a tiny down-payment. 

The punters liked this, because it gave them a lot of notional exposure for a minuscule outlay. 

The bucket shops on the other side of the wagers loved it, too, because hour-to-hour fluctations in the price meant punters often got wiped out. No stock certificates ever changed hands. This was betting, pure and simple.

This brings us to the rapid growth of the present-day options market. On average last year almost 30m equity options were traded each day on American exchanges, a rise of more than 50% from 2019, according to occ, the world’s largest clearer of such derivatives. In recent weeks, the volume has regularly risen above 40m a day (see chart).

It is customary in polite society to discuss options in the language of insurance. The price of an option is known as a premium, for instance. And the need for insurance is one rationale for the growth in options. 

But impolite society, the natural habitat of Buttonwood, has a big say, too. Much of the surge in demand for options comes from small investors seeking long-odds bets on single stocks. The bucket-shop punter is back.

To understand the connection, start with the idea that options are rights that carry no obligation. A financial option is the right to buy or sell an asset—a basket of stocks, say—at a specified price (the strike price) on or before a specified maturity date. 

Call options are rights to buy; they are profitable to own if the price of the underlying asset rises above the strike price. 

Put options are rights to sell; they pay off when the price of the underlying asset falls. The owner is not obliged to exercise the option; she will do so only when the option is “in the money”: ie, when the strike price is breached.

The key influences on premiums are the gap between the asset’s strike price and its current price, time and expected volatility. A small gap is more likely to be closed than a large one, so options with strike prices close to prevailing prices cost more. 

Options with a strike price some distance from the actual price are said to be “out of the money” and are cheaper. Similarly, options with a more distant maturity are more expensive than near-dated options. 

The key variable, though, is volatility. The more violently the price of the underlying asset fluctuates, the more chance there is that an out-of-the-money option will move into the money. When you own options, volatility is your friend.

The range of options you can trade on a stock is a function of investor demand, says Hugh Selby-Smith of Talaria Capital, a Melbourne-based asset manager. If you want an option on, say, a Mexican retailer, you may have to ask an exchange to list an option series for you. 

But a high-profile stock, such as Tesla or Apple, will have 57 varieties of contract already listed. Tesla calls expiring on Friday January 15th were available this week at $5 intervals.

The positions are staggering. There were some 27,000 contracts with a strike price of $1,000, for instance. (Tesla’s share price was around $860 on January 13th.) This kind of call option—deeply out-of-the-money and close to expiry—is favoured by the new cohort of retail investors that has rapidly emerged in America and elsewher. 

It has the features of a long-odds sports bet. For a small outlay a call option can pay off handsomely if the stock price suddenly surges. If not, the option expires, worthless, like many a bucket-shop bet.

There are two sides to a market, of course. The specialist traders and hedge funds on the other side of these trades are content to take the premiums from options buyers and to manage the risks of occasional big losses should the punters’ bets pay off. 

One hedge for a call option is simply to own the stock, which is why long-only equity funds are increasingly being drawn into the market to juice up their returns. 

“A lot depends on your book,” says a seasoned options trader. If you’ve taken in a lot of put-option premiums, you might write some call options to even things out. Or you could balance the risk from an expensive-looking option—with, say, a round-number strike price of the kind favoured by retail investors—using a cheaper-looking option with a nearby strike price.

This new wave of options trading seems unlikely to recede. Technology has made access to financial markets ever easier for small investors. Equity options are like bucket-shop bets. Institutional investors are increasingly being drawn in to act as bookmakers. 

One way or another, everybody is an options trader now.

The US inflation pressure cooker may be steaming

Investor reappraisal of rising price risks produces some surprising investment results

Gillian Tett 

     © Ingram Pinn/Financial Times

What was the best-performing asset class in 2020? 

If you think “tech stocks” or “bitcoin”, think again. Instead, as the Bridgewater hedge fund recently wrote to its clients, “among the more interesting and least recognised outcomes” of 2020 was that US inflation-linked bonds beat other assets by delivering a 35 per cent return, on a risk-adjusted basis, as investors hedged against inflation risks.

This is a notable straw in the wind. It might seem bizarre that anyone should fret about American inflation now. 

Data on Wednesday showed that annual US consumer price inflation was a measly 1.4 per cent in December. Wage growth is also weak, unemployment high and economic activity dragged down by the pandemic. Even if growth resumes in 2021, recent decades suggest that the twin forces of globalisation and digitisation should keep prices in check. 

Most notably, the internet has unleashed new global forms of price competition for goods, services and labour. It may well continue to do so, given that Covid-19 has accelerated the digital shift. Today, almost everyone has become adept at online shopping, while companies have discovered many employees can work remotely. So the competitive pressures that keep a lid on inflation seem to be rife.

However, the reason why investors have rushed to hedge against inflation is due to a concern that inflation might prove to be a “black swan” event, with a low-probability but high-impact risk. 

In recent years, most investment portfolios have been constructed on the assumption that interest rates and inflation will stay low indefinitely. This means that if anything rocks this consensus, there will be a nasty market whiplash. Indeed, right now, there are at least three factors that should give investors pause for thought.

The first is short-term reflation risk. Although economic growth is currently weak due to the pandemic, the incoming administration of president-elect Joe Biden seems poised to unleash more fiscal stimulus. If this hits the economy as the Covid-19 vaccine becomes widely available, there might be a surge in economic activity later this year.

If rising demand then collides with supply-side bottlenecks — which is likely because the lockdown has destroyed capacity in some sectors — prices could jump in some areas, especially leisure and services. Esther George, the head of the Kansas Federal Reserve warned as much this week.

Other Fed officials, such Lael Brainard, argue that any such price jumps will be temporary. Maybe. But the second issue for investors to consider is that the structural factors that kept inflation low in recent decades — particularly globalisation and digitisation — may shift. 

As Charles Goodhart and Manoj Pradhan argue in a new book, demographic pressures in places such as China could create labour shortages and thus wage growth. Increased trade protectionism might raise service and goods prices, too. Globalisation’s recent past may not be a good guide to its future.

The third and perhaps most important issue is the stance of the US Federal Reserve. 

Another factor that kept US inflation expectations low in recent years was the sunny assumption that the Fed’s 2 per cent inflation target left it committed to act preemptively if inflationary pressures grew. But that assumption increasingly seems wrong.

One reason is that Fed officials now say 2 per cent is not a ceiling but an average long-term target, meaning they may let inflation rise above 2 per cent for periods. Another is that political and economic pressures could make it increasingly hard for the Fed to act pre-emptively, since any rise in interest rates also increases the cost of servicing the government’s ever-swelling debts.

“In the old regime the Fed was trying to arrive on time. Now they are saying we are not going to arrive on time but instead . . . be late by design,” Bill Dudley, former head of the New York Fed told me. “When interest rates start going up, the debt-service problem will finally come evident . . . You have to worry about the pressure on the Fed to not tighten as much as they need to.” 

In the long term, all this means that the chances of a future inflationary shock are rising too, as Mr Dudley and some other Fed officials recognise. “We are in this La La Land right now where the Fed’s quantitative easing is providing support for financial markets [and] markets are just not focused on the end of QE,” Mr Dudley warns. “But at some point the Fed will have to hint that it is moving into another regime.” 

When that occurs, “there could be a taper tantrum”, adds Mr Dudley, referring to the 2013 market swings that occurred when Ben Bernanke, then Fed chair, gave the mildest of hints that the central bank might cut, or taper, its QE programme. 

Indeed, there is every chance that the next tantrum will be orders of magnitude worse, given that the Fed has so explicitly encouraged investors to bet on rates staying so low for at least two more years (which I consider to have been a mistake).

Thankfully, that risk probably lies in the future. The Fed’s tone is still dovish. But what is here now is a shift in inflation probabilities from “very low” to “not so low”. Investors are thus correct to hedge their bets, however gloomy the news about the pandemic. 

After all, something else we learnt in 2020 is that the unthinkable sometimes does become unexpectedly real.

Latin American companies step up where governments fall down

Why some businesses are delivering social services in the world’s most unequal region

Michael Stott 

Children sing together at an Innova school in Lima, part of a chain founded by businessman Carlos Rodríguez-Pastor © Reuters

When Carlos Rodríguez-Pastor took control of a large Peruvian bank in 1995 after the death of his father, he could have followed the well-trodden path of the Latin American business scion, enjoying the profits from the family business in refined luxury surrounded by a coterie of fellow plutocrats.

His approach was different. 

“In a country with as much inequality as ours, you have to do more than look out for shareholders and serve customers,” Mr Rodríguez-Pastor explains. 

“You have to ask yourself how what you are doing is affecting your country.”

So once he had secured the success of Intercorp, his core business, Mr Rodríguez-Pastor started to examine areas neglected by successive Peruvian governments. 

The Andean nation of 32m was languishing near the bottom of the international Pisa scores of education quality and he saw an opportunity to offer good-quality private education for as little as $100 a month to the country’s emerging middle class — the same people he served with his banking, retail and property businesses.

Carlos Rodríguez-Pastor: ‘You have to ask yourself how what you are doing is affecting your country’ © Karel Navarro/Bloomberg

Mr Rodríguez-Pastor looked at Singapore, a world leader in education, to learn lessons. 

With the help of a Silicon Valley design firm, Ideo, he came up with academies featuring innovative “blended learning”, where children are taught in purpose-built schools using a mix of online and classroom methods. 

Ten years later, Mr Rodríguez-Pastor’s Innova schools have won awards, been cited in a Harvard Business Review case study, have expanded into Mexico and are opening in Colombia. 

He has moved into other areas where Peru’s state has left gaps, starting a health clinic and considering offering rural internet services.

Luis Alberto Moreno, who headed the Inter-American Development Bank from 2005 to 2020, sees Mr Rodríguez-Pastor as an example of a new generation of socially aware Latin American business tycoons.

“Nowadays they are much more conscious that either they attack these social issues or the issues will attack them,” Mr Moreno says. “They realise that you can’t have a successful business in a disastrous society. The previous generation didn’t see that.” 

Haves and have-nots

Fresh business thinking was overdue in Latin America. 

The world’s most unequal region, according to the UN Economic Commission for Latin
America and the Caribbean (Eclac), its economies have been dominated since colonial times by businessmen who carved out lucrative niches in mining, farming, banking or agriculture and parlayed their financial clout into political influence.

Julio Mario Santo Domingo, whose $8.5bn fortune made him one of Latin America’s wealthiest men, typified the region’s oligarchs. 

He inherited a business empire and grew it until at one point he had cornered Colombia’s beer market, ran the national airline, assembled cars and controlled a newspaper and radio station. 

Yet Santo Domingo lived mainly in a Park Avenue building in New York and by the time he died in 2011 had long sold most of his Colombian assets.

The private sector is being faced with the question of why it is not helping everyone up the ladder

Woods Staton, Arcos Dorados

While the Santo Domingo empire was at its zenith in the 1990s, Colombians would grumble privately that Julio Mario had not done enough for his country with his huge wealth, although the family did run charitable foundations and his son Alejandro has a stronger philanthropic streak. 

Julio Mario’s unauthorised biographer, Gerardo Reyes, even described him as an example of what not to do. 

Yet most Latin American countries still have their local Santo Domingos: there are around 100 billionaires and 14,000 ultra high net worth individuals, with investable assets of at least $30m; the swankier districts of Miami are their unofficial capital. 

Latin America also has more than 80m people living in extreme poverty, according to Eclac, following a sharp increase during the coronavirus pandemic.

“The private sector is being faced with the question of why it is not helping everyone up the ladder at a time when differences between rich and poor have grown,” says Woods Staton, the Colombian-born executive chairman of Arcos Dorados, the world’s largest McDonalds franchisee, which operates more than 2,200 restaurants in Latin America and the Caribbean. 

“Unless we businesspeople do something about it, we will find ourselves more and more seen as the culprit.”

One example of Mr Staton’s approach: Arcos Dorados did not fire any of its more than 100,000 staff during the pandemic, even though restaurants had to close in most countries and only takeaways were allowed. 

“We had some government help but all executives and top brass were on 50 per cent of salary,” Mr Staton says. 

“Everyone pitched in.”

A McDonald’s in Lima. Franchise operator Arcos Dorados has retained all staff during the pandemic, while putting executives on half-pay © Paolo Aguilar/EPA-EFE

Arcos Dorados is also looking at how to improve the sustainability of its products and promote social inclusion. 

“Most countries in Latin America just accepted that you had the rich and the poor and there was nothing you could do about it,” Mr Staton says. 

“People now are starting to realise that we have a real problem.”

Critical moment

That awareness has arrived at a critical moment. 

Beyond the toll of human life, Latin America has suffered greater economic damage from coronavirus than any other region of the world, according to the IMF. 

The World Bank estimates that more than a decade of progress in lifting people out of poverty has been lost.

The pandemic offers the region a choice: it could spur socially aware businesspeople to join policymakers in promoting long-overdue reforms to improve equality and public services, or the region could lapse back into old vices of political populism and crony capitalism.

Carlos Felipe Jaramillo, World Bank vice-president for Latin America and the Caribbean, says corporate social responsibility has been a frequent topic at recent private sector conferences. 

“During the pandemic people have seen so explicitly these disadvantages of the poor, and the inequality in such a clear way, that I think there’s a rising awareness that this needs to be addressed and the private sector needs to play a role,” he says.

Technology may provide one route. Start-ups all over Latin America are addressing deficiencies in areas such banking, healthcare and education. 

Mercado Libre, for example, the Amazon rival that is now Latin America’s most valuable company, had to build its own infrastructure as it grew, according to founder and CEO Marcos Galperín.

“Latin America is so fragmented and policies change so dramatically from one administration to the next that it’s very hard to get continuity on the policies that require government investment across many decades,” he told an FT Global Boardroom event last year. 

“So I think the private sector and the entrepreneurs and investors need to really focus on building this themselves and create an opportunity out of the challenges we have.”

His sentiments are shared by Mr Rodríguez-Pastor, who notes with satisfaction that his Peruvian school chain has performed well enough to attract a recent visit from a foreign nation keen to learn from his model. 

It was Singapore.

Egypt’s Last Chance

Cairo’s window to influence Ethiopia’s dam project is closing fast. 

By: Allison Fedirka

What options does a nation have when its future depends on another country’s decisions about a resource the other country controls? 

That’s what Egypt has to figure out. Ethiopia’s decision to build a dam on the Blue Nile threatens Egypt’s freshwater supplies. 

To stop the project, Cairo has tried rattling sabers at Addis Ababa, or attracting the support of a major power, but to no avail. What it has left, as stated in GPF’s 2021 forecast, is to lean on local partners and encourage Ethiopia’s ethnic divisions to try to secure for itself a better negotiating position with Addis Ababa. 

Whether this course of action can or will work is an open question, but other options are in short supply.

A Lifeline

In a country that is almost entirely desert, the Nile River is a natural lifeline. Over 90 percent of Egypt’s population lives along the banks of the river and its delta. 

Yet of the Nile River’s two major tributaries, the one that contributes roughly 85 percent of the water flowing into Egypt, the Blue Nile, starts far away, in the highlands of Ethiopia, before traversing through Sudan and finally into Egypt. 

And this supply is in jeopardy because Ethiopia wants to use the Nile’s waters to generate power to fuel its booming economy. The result is a zero-sum struggle for a vital resource: The construction and filling of the Grand Ethiopian Renaissance Dam will enable Ethiopia, a traditional enemy of Egypt, to regulate the Nile River’s flow, thereby compromising the security of the water flowing into Egypt.

Egypt and Ethiopia have a long history of friction over the Nile, including a failed Egyptian military invasion in 1875. Multiple water agreements were signed throughout the 20th century, but none sufficed to ensure the security of Egypt’s water supply. 

What makes this year different is that Egypt’s window to act is closing fast. Ethiopia steadfastly built up the GERD in parallel with negotiations with Egypt and Sudan about everything from the dam’s construction to the rate at which its reservoir would be filled. 

These discussions have been fruitless for Cairo, which failed to stop the GERD’s construction or reduce its size and has not convinced Addis Ababa to change its stance on the filling period. 

Construction is complete, and filling the reservoir is expected to take between five and 15 years, with the dam reaching full power-generating capacity as early as 2023. 

Egypt’s focus has therefore shifted to delaying the filling timeline, but with the clock ticking, Cairo may be compelled to do more.

Hung Out to Dry

But what can it do? A military incursion is out of the question. The Egyptian military lacks the logistical capabilities for an aerial attack on the dam and would encounter fierce resistance from Ethiopia’s air force and air defenses. 

Moreover, the domestic position of Egypt’s government is tenuous. In recent years, Egypt’s economy has been lackluster, requiring it to draw on loans from the International Monetary Fund and generating calls for structural reform.

Without a credible threat of military action, Egypt has had to attract Ethiopia to the bargaining table, and it’s starting from a position of weaknesses. As a result, Cairo has sought allies to improve its position. But here, too, Egypt’s choices are few and far between. 

Plenty of countries are intensely interested in what happens in Egypt and the surrounding areas, but most of them have more pressing needs. Russia and the United States are obvious backers for Egypt to try to recruit, due to their interests in the region and their overall strength. 

But the recent U.S. push to improve ties with other North African countries is creating more options for Washington besides relying on Cairo. And Russia, which needs to maintain its naval access to the Mediterranean, already has strong defense links with Algeria and a partnership with one side in Libya’s civil war. 

Thus, neither Washington nor Moscow needs Cairo’s help at the moment to secure its strategic needs. It is also better for them if the Nile River issue remains a limited spat between Egypt, Sudan and Ethiopia, rather than a new front in their own tense competition. 

This is why both the U.S. and Russia have offered to mediate the dispute but have refused to pick a side.

Smaller players in the region are no more interested in coming to Egypt’s defense. The Gulf countries would rather weaken Egypt, especially in light of their emerging reconciliation with Israel. 

Sudan, as another downstream country affected by the GERD, has its own interests in negotiations with Ethiopia, and it also just reached a U.S.-brokered agreement with Israel and has no interest in rocking the boat. 

Ethiopia’s neighbors in the Horn of Africa (Eritrea, Djibouti and Somalia) are generally reluctant to back Egypt because of Ethiopia’s reach into their economies, their shared borders and the importance of Ethiopia for stability in the horn.

Weakening Ethiopia From Within

That leaves as potential allies South Sudan and disgruntled ethnic groups within Ethiopia itself. Egypt must walk a fine line and not take any action that is too overt or threatening. 

But it can capitalize on border clashes between Ethiopia on one side and Sudan and South Sudan on the other, as well as ethnic conflicts within Ethiopia that could undermine the central government.

There are several scenarios that could work in Egypt’s favor. At the end of 2020, the Ethiopian military had to go into the country’s Tigray region to suppress a massive uprising and restore government control. 

Those operations sent refugees pouring into Sudan and reactivated a long-standing territorial dispute between Ethiopia and Sudan. This has resulted in multiple low-level clashes between Sudanese troops and Ethiopian militias, and the governments remain in close contact in an effort to avoid escalation.

Farther west, there was a recent bout of unrest in Ethiopia’s Benishangul-Gumuz region, which not only borders Sudan and South Sudan but also has the Blue Nile flowing through it. Ethiopian security forces had to take steps to quell the unrest here as well. 

Most recently, there were operations in the West Wellega Zone in the Oromia region that resulted in the arrest of 265 militiamen in the past two months. This area matters because the dominant ethnic group in the region, the Oromo, accounts for nearly a third of Ethiopia’s population and was the source of the 2018 unrest that unseated the government.


Addis Ababa has not lost control of these ethnic disputes, but Cairo will continue to monitor them and others in hopes of gaining new leverage in negotiations over the dam. 

Lacking a credible military threat, a great-power backer or regional support, Egypt has no other hope but to try to capitalize on Ethiopia’s border and ethnic disputes.