Washington caps year of drills to deter China with ten-day military exercise

By Tim Kelly

USS CARL VINSON (Reuters) – The United States on Tuesday completed ten days of joint military drills in Asian waters with Japan and other allies as it ups the ante on deterring China from pursuing its territorial ambitions amid growing tension in the region over Taiwan.

The ANNUALEX drill included 35 warships and dozens of aircraft in the Philippine Sea off Japan’s southern coast. The U.S. and Japanese forces were led by the nuclear-powered USS Carl Vinson carrier, which was also joined by ships from Canada, Australia, and for the first time, Germany. On Tuesday, the Vinson was being shadowed by a Chinese navy ship.

“We try to deter aggression from some nations that are showing burgeoning strength that maybe we haven’t experienced before,” U.S. Seventh Fleet commander Vice Admiral Karl Thomas said at a briefing aboard the carrier.

The exercise was meant to “tell those nations that maybe today is not the day,” he said.

Thomas was accompanied by the commander of the exercise, Japan Maritime Self-Defense Force Vice Admiral Hideki Yuasa. Home to the biggest concentration of American forces outside the United States, Tokyo is Washington’s key ally in the region.

Increasing pressure by China on Taiwan is causing concern in both Japan and the United States. Japan worries that key sea lanes supplying it will come under Beijing’s sway should it gain control of the island. That move would also threaten U.S. military bases in the region.

China, which views Taiwan as a breakaway province, says its intentions in the region are peaceful.

The ten-day exercise caps a year of drills between the United States, Japan and other countries, including Britain, France, Germany and the Netherlands.

London this year deployed its new $4.15 billion aircraft carrier the HMS Queen Elizabeth to the region, culminating in a visit to Japan in September along with two destroyers, two frigates and a submarine.

To get there, it sailed through the contested South China Sea, of which China claims 90%. Also in September, Britain’s HMS Richmond passed through the Taiwan Strait separating the island from mainland China, prompting a rebuke from Beijing.

Tokyo, in its latest annual defense strategy paper, identifies China as its main national security threat and said it had a “sense of crisis” regarding Taiwan as Chinese military activity around the island intensifies.

The British carrier joined a Japanese carrier, along with the Vinson – which operates F-35 stealth jets – and the USS Ronald Reagan, for a rare four-carrier training exercise in the waters around Japan.

(Reporting by Tim Kelly; Editing by Bernadette Baum)

Biden meets with France’s Macron, calls U.S. ‘clumsy’ in submarine deal

By Jeff Mason and Michel Rose

ROME (Reuters) -President Joe Biden on Friday called U.S. government actions “clumsy” during his first meeting with French President Emmanuel Macron since a diplomatic crisis erupted last month over a U.S. security pact with Britain and Australia.

Biden used the meeting at the G20 summit in Rome, Italy, to try to turn the page on a relationship that came under strain over the U.S.-Australia security alliance, known as AUKUS, which also includes the United Kingdom. The pact effectively canceled a 2016 Australian-French submarine deal.

The U.S. decision to secretly negotiate a new agreement drew outrage from Paris. France temporarily recalled its ambassador from Washington, canceled a gala in the U.S. capital and officials accused Biden of acting like former President Donald Trump.

“I think what happened was, to use an English phrase, what we did was clumsy. It was not done with a lot of grace,” Biden said. “I was under the impression certain things had happened that hadn’t happened. And – but I want to make it clear: France is an extremely, extremely valued partner – extremely – and a power in and of itself.”

Biden also said the United States does not have an older and more loyal ally than France and that there is no place in the world where the United States cannot cooperate with France.

“I was under the impression that France had been informed long before that the deal was not going through. I, honest to God, did not know you had not been,” Biden told Macron.

Macron said his meeting with Biden was “important” and that it was essential to “look to the future” as his country and the United States work to mend fences.

“What really matters now is what we will do together in the coming weeks, the coming months, the coming years,” Macron said.

Since the rift erupted, Washington has taken several steps to fix the relationship.

Biden and Macron spoke to each other last week. Secretary of State Antony Blinken also visited Paris, where he acknowledged the United States could have “communicated better.” Vice President Kamala Harris also announced that she would travel to Paris in November and meet with Macron.

Biden and Macron met at the Villa Bonaparte, the French embassy to the Vatican, which a French diplomat said was a significant mark of goodwill from Biden.

“It’s an important gesture,” the French diplomat said, adding that the United States recognized that it underestimated the impact of its actions.

France now wants to see if Biden follows his words with actions. “Trust is being rebuilt. This is one step. Tokens of goodwill were given, we’ll see whether they follow through over the long term,” the diplomat said.

(Reporting by Jeff Mason and Michel Rose in Rome, Writing by Nandita Bose and Patricia Zengerle in Washington, Editing by Franklin Paul, Heather Timmons, David Gregorio and Marguerita Choy)

Sydney to tighten COVID-19 curbs, Australian capital to enter lockdown

By Renju Jose

SYDNEY (Reuters) -Extra Australian military personnel may be called in to ensure compliance with lockdown rules in Sydney, the New South Wales state government said on Thursday, as the highly infectious Delta coronavirus variant spreads into regional areas.

The move comes as Australia’s capital city, Canberra, 260 km (160 miles) southwest of Sydney, announced a snap one-week lockdown from Thursday evening after reporting its first locally acquired case of COVID-19 in more than a year. Authorities later confirmed an additional three cases, all close contacts of the first case, an unnamed man.

Australia is battling to get on top of the fast-moving Delta strain that has plunged its two largest cities – Sydney and Melbourne – into hard lockdowns.

“We are making sure that we do not leave any stone unturned in relation to extra (military) resources,” New South Wales (NSW) state Premier Gladys Berejiklian said at a media conference in Sydney, the state capital.

Some 580 unarmed army personnel are already helping police enforce home-quarantine orders on affected households in the worst-affected suburbs of Sydney, Australia’s most populous city.

Several regional towns scattered across NSW have also been forced into snap lockdowns after fresh cases, raising fears the virus is spreading out of control.

Despite seven weeks of lockdown in Sydney, daily infections continue to hover near record highs. NSW on Thursday reported 345 new locally acquired cases, most of them in Sydney, up from 344 a day earlier.

Lockdown rules were tightened in three more local council areas in Sydney, limiting the movement of people to within 5 km (3 miles) of their homes.

Joe Awada, the mayor of Bayside Council, one of the areas placed under additional restrictions, questioned why more targeted curbs were not introduced.

“I mean to lockdown 200,000 residents because of three suburbs is not acceptable to me,” Awada told the Australian Broadcasting Corporation.

Officials also reported the deaths of two men in their 90s, taking the total deaths in the latest outbreak to 36. A total of 374 cases are in hospitals, with 62 in intensive care, 29 of whom require ventilation.

In Canberra, authorities said the one-week lockdown was needed as they were unsure how the man is his 20s acquired COVID-19.

Canberra has largely escaped any COVID-19 cases since the beginning of the pandemic, and confirmation of a Delta variant saw panic buying at the supermarkets and long lines at testing sites.

Neighboring Victoria state on Thursday reported 21 new locally acquired cases, up from 20 a day earlier, as 5 million residents of Melbourne, the state capital, prepare to enter a second week of lockdown.

Of the new cases, six spent time outdoors while infectious, a number which authorities have said must return to near zero before restrictions can be eased.

Australia has largely avoided the high coronavirus numbers seen in many other countries, with just over 37,700 cases and 946 deaths, and several states remain almost COVID-free despite the outbreaks in Sydney and Melbourne.

But the rapid spread of the Delta variant in New South Wales and a slow vaccine rollout has left the country vulnerable to a new wave of infections.

Only around 24% of people above 16 years of age are fully vaccinated.

(Reporting by Renju Jose; additional reporting by Colin Packham in Canberra, Editing by Stephen Coates, Richard Pullin and Sam Holmes)

U.S. and allies accuse China of global hacking spree

By Steve Holland and Doina Chiacu

WASHINGTON (Reuters) – The United States and its allies accused China on Monday of a global cyberespionage campaign, mustering an unusually broad coalition of countries to publicly call out Beijing for hacking.

The United States was joined by NATO, the European Union, Britain, Australia, Japan, New Zealand and Canada in condemning the spying, which U.S. Secretary of State Antony Blinken said posed “a major threat to our economic and national security.”

Simultaneously, the U.S. Department of Justice charged four Chinese nationals – three security officials and one contract hacker – with targeting dozens of companies, universities and government agencies in the United States and abroad.

The Chinese Embassy in Washington did not immediately respond to a request for comment. Chinese officials have previously said China is also a victim of hacking and opposes all forms of cyberattacks.

While a flurry of statements from Western powers represent a broad alliance, cyber experts said the lack of consequences for China beyond the U.S. indictment was conspicuous. Just a month ago, summit statements by G7 and NATO warned China and said it posed threats to the international order.

Adam Segal, a cybersecurity expert at the Council on Foreign Relations in New York, called Monday’s announcement a “successful effort to get friends and allies to attribute the action to Beijing, but not very useful without any concrete follow-up.”

Some of Monday’s statements even seemed to pull their punches. While Washington and its close allies such as the United Kingdom and Canada held the Chinese state directly responsible for the hacking, others were more circumspect.

NATO merely said that its members “acknowledge” the allegations being leveled against Beijing by the U.S., Canada, and the UK. The European Union said it was urging Chinese officials to rein in “malicious cyber activities undertaken from its territory” – a statement that left open the possibility that the Chinese government was itself innocent of directing the espionage.

The United States was much more specific, formally attributing intrusions such as the one that affected servers running Microsoft Exchange earlier this year to hackers affiliated with China’s Ministry of State Security. Microsoft had already blamed China.

U.S. officials said the scope and scale of hacking attributed to China has surprised them, along with China’s use of “criminal contract hackers.”

“The PRC’s Ministry of State Security (MSS) has fostered an ecosystem of criminal contract hackers who carry out both state-sponsored activities and cybercrime for their own financial gain,” Blinken said.

U.S. security and intelligence agencies outlined more than 50 techniques and procedures that “China state-sponsored actors” use against U.S. networks, a senior administration official said.

Washington in recent months has focused heavy attention on Russia in accusing Russian hackers of a string of ransomware attacks in the United States.

The senior administration official said U.S. concerns about Chinese cyber activities have been raised with senior Chinese officials. “We’re not ruling out further action to hold the PRC accountable,” the official said.

The United States and China have already been at loggerheads over trade, China’s military buildup, disputes about the South China Sea, a crackdown on democracy activists in Hong Kong and treatment of the Uyghurs in the Xinjiang region.

Blinken cited the Justice Department indictments as an example of how the United States will impose consequences.

The defendants and officials in the Hainan State Security Department, a regional state security office, tried to hide the Chinese government’s role in the information theft by using a front company, according to the indictment.

The campaign targeted trade secrets in industries including aviation, defense, education, government, health care, biopharmaceutical and maritime industries, the Justice Department said.

Victims were in Austria, Cambodia, Canada, Germany, Indonesia, Malaysia, Norway, Saudi Arabia, South Africa, Switzerland, the United Kingdom and the United States.

“These criminal charges once again highlight that China continues to use cyber-enabled attacks to steal what other countries make, in flagrant disregard of its bilateral and multilateral commitments,” Deputy U.S. Attorney General Lisa Monaco said in the statement.

(Reporting by Steve Holland, David Shepardson, Doina Chiacu and Lisa Lambert; Editing by Chizu Nomiyama and Grant McCool)

China, U.S. can coexist in peace but challenge is enormous – White House

By David Brunnstrom and Humeyra Pamuk

WASHINGTON (Reuters) – White House Indo-Pacific coordinator Kurt Campbell said on Tuesday that it was possible for China and United States to coexist in peace but the challenge was enormous and Beijing had become increasingly assertive.

At an event hosted by the Asia Society think tank, Campbell said President Joe Biden will host a summit later this year with the leaders of Australia, India and Japan – the so-called “Quad” grouping that Washington see as a means of standing up to China.

Asked when he expected a first meeting between Biden and Chinese leader Xi Jinping and whether this could come at the G20 summit in October, he replied: “My expectation will be that we’ll have some sort of engagement before too long.”

Campbell said the challenge for the United States would be to come up with a strategy that presented China with opportunities, but also a response if it takes steps “antithetical to the maintenance of peace and stability”.

There were likely to be “periods of uncertainty, perhaps even periods of occasional raised tensions,” he said.

“Do I think it’s possible that the United States and China can coexist and live in peace? Yes I do. But I do think the challenge is enormously difficult for this generation and the next,” he said.

He said Beijing had been increasingly assertive in recent times, taking on many countries simultaneously, a strategy that contrasted with how it operated in the 1990’s.

​ He criticized China’s approach to U.S. ally Australia.

“I’m not sure they have the strategic thinking to go back to a different kind of diplomacy towards Australia right now. I see a harshness in their approach that appears unyielding”

On Taiwan, the self-ruled U.S.-backed island China sees as part of its territory and wants to reclaim, Campbell maintained a cautious approach.

He said the United States supports having a strong unofficial relationship with Taiwan but does not support its independence.

“We fully recognize, understand the sensitivities involved here,” he said. “We do believe that Taiwan has a right to live in peace. We want to see its international role, particularly in areas like vaccines, and issues associated with the pandemic, they should have a role to play here, they should not be shunned in international community.”

(Reporting by David Brunnstrom and Humeyra Pamuk; Editing by Angus MacSwan)

Spy phones ‘in gangsters’ back pockets’ betray hundreds to police

By Colin Packham and Toby Sterling

CANBERRA/AMSTERDAM (Reuters) -A global sting in which organized crime gangs were sold encrypted phones that law enforcement officials could monitor has led to more than 800 arrests and the confiscation of drugs, weapons, cash and luxury cars, officials said on Tuesday.

The operation by the U.S. Federal Bureau of Investigation, Australian and European police ensnared suspects in Australia, Asia, Europe, South America and the Middle East involved in the global narcotics trade, the officials said.

Millions of dollars in cash were seized in raids around the world, along with 30 tonnes of drugs including more than eight tonnes of cocaine.

Australian Prime Minister Scott Morrison said the operation had “struck a heavy blow against organized crime – not just in this country, but … around the world”.

Operation Greenlight/Trojan Shield, conceived by Australian police and the FBI in 2018, was one of the biggest infiltrations and takeovers of a specialized encrypted network.

It began when U.S. officials paid a convicted drug trafficker to give them access to a smartphone that he had customized, on which he was installing ANOM, also styled An0m, a secure encrypted messaging app. The phones were then sold to organized crime networks through underworld distributors.

The FBI helped to infiltrate 12,000 devices into 300 criminal groups in more than 100 countries, Calvin Shivers of the FBI’s Criminal Investigative Division told reporters in The Hague.

COCAINE IN FRUIT

In a pattern repeated elsewhere, one Australian underworld figure began distributing phones containing the app to his associates, believing their communications were secure because the phones had been rebuilt to remove all capabilities, including voice and camera functions, apart from ANOM.

As a result, there was no attempt to conceal or code the details of the messages – which police were reading.

“It was there to be seen, including ‘we’ll have a speedboat meet you at this point’, ‘this is who will do this’ and so on,” Australian Federal Police Commissioner Reece Kershaw said.

“We have been in the back pockets of organized crime … All they talk about is drugs, violence, hits on each other, innocent people who are going to be murdered.”

The phones were such a hit that Italian mafiosi, Asian triads, biker gangs and transnational drug syndicates all began using them, providing the FBI and its partner forces around the world with a trove of 27 million messages.

Shivers said the FBI had been able to see photographs of “hundreds of tons of cocaine that were concealed in shipments of fruit”.

PRINTERS FOR GUN PARTS

Australian police said they had arrested 224 people, including members of outlawed motorcycle gangs, and disrupted 21 murder plots.

On Monday alone, they seized 104 firearms, including a military-grade sniper rifle, as well as almost A$45 million ($35 million) in cash, including A$7 million from a safe buried under a garden shed in a suburb of Sydney.

In Europe, there were 49 arrests in the Netherlands, 75 in Sweden and over 60 in Germany, where authorities seized hundreds of kilograms of drugs, more than 20 weapons and over 30 luxury cars and cash.

Finnish police not only detained almost 100 suspects and seized 500 kg of narcotics but also found a warehouse with 3-D printers used to manufacture gun parts.

The operation also revealed that gangs were being tipped off about police actions, which prompted “numerous high-level public corruption cases in several countries,” according to an affidavit from an FBI agent.

Kershaw said the Australian underworld figure, who had absconded, had “essentially set up his own colleagues” by distributing the phones, and was now a marked man.

“The sooner he hands himself in, the better for him and his family.” ($1 = 1.2893 Australian dollars)

(Additional reporting by Joseph Menn, Tom Allard, Jonathan Barrett, Essi Lehto, Riham Alkousaa and Caroline Copley; Writing by Raju Gopalakrishnan and Philippa Fletcher; Editing by Stephen Coates and Kevin Liffey)

Australia’s Victoria extends Melbourne COVID-19 lockdown for 2nd week

By Renju Jose

SYDNEY (Reuters) -The Australian state of Victoria extended on Wednesday a snap coronavirus lockdown in its capital of Melbourne for a second week, as it scrambles to rein in a highly contagious variant first detected in India, but will ease some curbs elsewhere.

Last Thursday’s lockdown in Australia’s second most populous state was to have run until Thursday, following the detection of the first locally acquired cases in three months, but infections rose and the number of close contacts reached several thousand.

“If we let this thing run its course, it will explode,” the state’s acting Premier James Merlino told reporters in Melbourne. “This variant of concern will become uncontrollable and people will die.”

“No one…wants to repeat last winter,” he added, referring to one of the world’s strictest and longest lockdowns that the southeastern state imposed in 2020 to leash a second wave of infections.

More than 800 people died in that outbreak, accounting for about 90% of Australia’s total deaths since the pandemic began.

Snap lockdowns, regional border curbs and tough social distancing rules have largely helped Australia suppress prior outbreaks and keep its COVID-19 figures relatively low, at just over 30,100 cases and 910 deaths.

Though Victoria’s daily cases have been in the single digits since the lockdown was imposed, officials fear even minimal contact could help spread the variant involved in the latest outbreak.

Six new locally acquired cases were reported on Wednesday, versus nine a day earlier, taking to 60 the tally of infections in the latest outbreak.

Health authorities have said the variant could take just one day to pass from person to person, versus the five or six days of contact required for transmission of earlier variants.

For now, Melbourne’s five million residents face a second week of being allowed to leave home only for essential work, healthcare, grocery shopping, exercise or a vaccination.

But this restriction is likely to be relaxed for people elsewhere in the state, depending on any local transmission in the next 24 hours, while other measures, such as mandatory masks, will stay.

The latest outbreak has been traced back to a traveler who returned from overseas, authorities have said. The individual left hotel quarantine in the state of South Australia after testing negative, but subsequently tested positive in Melbourne.

Casino operator Crown Resorts Ltd, Victoria’s biggest single-site employer with 11,500 staff, had said at the start of the lockdown it would stand down staff but pay them wages for rostered hours.

After Wednesday’s extension, Crown has said it would make only a “one-off discretionary” payment, however.

Since the early days of the pandemic, Australian employers have relied on federal subsidies to pay staff stood down during lockdowns, but the government ended that scheme in March.

Merlino, the acting Victoria premier, called for the federal government to reinstate the subsidies in light of the lockdown. Federal Treasurer Josh Frydenberg said the government was open to new support measures but would talk to officials in Victoria before committing to specifics.

(Reporting by Renju Jose with additional reporting by Byron Kaye; Editing by Kenneth Maxwell and Clarence Fernandez)

Biden looks abroad for electric vehicle metals, in blow to U.S. miners

By Ernest Scheyder and Trevor Hunnicutt

(Reuters) – U.S. President Joe Biden will rely on ally countries to supply the bulk of the metals needed to build electric vehicles and focus on processing them domestically into battery parts, part of a strategy designed to placate environmentalists, two administration officials with direct knowledge told Reuters.

The plans will be a blow to U.S. miners who had hoped Biden would rely primarily on domestically sourced metals, as his campaign had signaled last autumn, to help fulfill his ambitions for a less carbon-intensive economy.

Rather than focus on permitting more U.S. mines, Biden’s team is more focused on creating jobs that process minerals domestically into electric vehicle (EV) battery parts, according to the people.

Such a plan would help cut U.S. reliance on industry leader China for EV materials while also enticing unions with manufacturing work and, in theory, reduce pandemic-fueled unemployment.

The U.S. Commerce Department is organizing a June conference to attract more EV manufacturing to the country. Biden’s proposed $1.7 trillion infrastructure plan earmarks $174 billion to boost the domestic EV market with tax credits and grants for battery manufacturers, among other incentives. The department declined to comment.

“It’s not that hard to dig a hole. What’s hard is getting that stuff out and getting it to processing facilities. That’s what the U.S. government is focused on,” said one of the sources.

The approach would see the United States rely on Canada, Australia, and Brazil – among others – to produce most of the critical raw materials needed, while it competes for higher-value jobs turning those minerals into computer chips and batteries, according to the two sources.

Securing the full supply chain from metals to batteries does not require the United States to be the primary producer of the raw materials, said one of the sources.

A full strategy will be finalized after a year-long supply chain review involving national security and economic development officials.

Biden officials want to ensure the administration’s EV aspirations are not imperiled as domestic mines face roadblocks, the sources said, both from environmentalists and even some Democrats.

“It rings hollow when I hear everyone use this as a national defense argument, that we have to build new mines to have a greener economy,” said U.S. Representative Betty McCollum, a Democrat who has introduced legislation that would permanently block Antofagasta Plc’s proposed Twin Metals copper mine in Minnesota.

Ali Zaidi, deputy White House national climate advisor, said the administration was focused on a strategy that “leverages our domestic resources in a way that’s responsible”, noting that included recycling in the supply chain.

While U.S. projects from small and large miners alike will feel the impact, the pain from any blocked projects will fall disproportionately on smaller, U.S.-focused companies. Many large miners also have global projects that could benefit from the administration’s plan.

“We can no longer push the production of the products we want to places we cannot see and to people we will never meet,” said Mckinsey Lyon of Perpetua Resources Corp, which is trying to develop Idaho’s Stibnite mine to produce gold and antimony used to make EV battery alloys.

INVESTMENTS

The U.S. government in April became the largest shareholder in mining investment firm TechMet, which controls a Brazilian nickel project, a Rwandan tungsten mine and is a major investor in a Canadian battery recycler.

Washington also funds research into Canadian cobalt projects and rare earths projects in Malawi, among other international investments.

The State Department’s Energy Resource Governance Initiative (ERGI) is one of the main programs Washington plans to use to help allies discover and develop lithium, cobalt and other EV metals. To be sure, Washington is not ignoring domestic mining.

The U.S. Department of Energy has awarded grants to help old coal mines find ways to produce rare earths. U.S. officials have also funded MP Materials Corp, which owns the country’s only rare earths mine, though it relies on Chinese processors.

But the bulk of Biden’s approach is designed to sidestep battles with environmentalists and save capital for other fights, according to one administration source. During a visit to a Ford Motor Co plant in Michigan on May 18, Biden called for government grants for new EV battery facilities. He mentioned Australia’s lithium reserves during the tour, but not large U.S. supplies of the key battery mineral.

Republicans say Biden’s EV plans will be impossible to achieve without more U.S. mines.

“These ‘not-in-my-backyard’ extremists have made clear they want to lock up our land and prevent the mining of minerals,” U.S. Representative Lauren Boebert, a Colorado Republican, told a House Natural Resources Committee forum held the same day as Biden’s Michigan visit.

PLACATING LABOR

Biden’s approach comes with risks, including angering political supporters within the labor movement who want the administration to have an openness to resource extraction and the attendant jobs.

“Let’s let Americans extract these minerals from the earth,” said Aaron Butler of United Association Local 469 union, which does work for Rio Tinto Ltd’s proposed Resolution copper mine project in Arizona and endorsed Biden in the elections. “These are good-paying jobs.” Many of the skills that labor unions would use to build mines, including concrete and electrical work, can also be used to build EV metal processing plants.

The National Mining Association, an industry trade group, has been lobbying the White House and Congress to support domestic projects, arguing that the coronavirus pandemic showed the importance of localizing supply chains.

Biden’s White House is now quietly working to enlist labor support as it tries to build a case that its green policies are creating jobs, ahead of the 2022 midterm elections that could determine whether the strategy wins congressional backing, according to two organized labor sources familiar with the campaign Biden officials have reached out to unions across the country asking for specific job-boosting projects the administration can take credit for, the labor sources said.

(Reporting by Ernest Scheyder in Houston and Trevor Hunnicutt in Washington; Editing by Amran Abocar and Marguerita Choy)

AstraZeneca woes grow as Australia, Philippines, African Union curb COVID shots

By Reuters Staff

(Reuters) – Australia and the Philippines limited use of AstraZeneca’s COVID-19 vaccine on Thursday, while the Africa Union dropped plans to buy the shot, dealing further blows to the company’s hopes to deliver a vaccine for the world.

The vaccine – developed with Oxford University and considered a frontrunner in the global vaccine race – has been plagued by safety concerns and supply problems since Phase III trial results were published in December, with Indonesia the latest country forced to seek doses from other vaccine developers.

The Philippines suspended the use of AstraZeneca shots for people below 60 after Europe’s regulator said on Wednesday it found rare cases of blood clots among some adult recipients although the vaccine’s advantages still outweighed its risks.

Australia recommended people under 50 should get Pfizer’s COVID-19 vaccine in preference to AstraZeneca’s, a policy shift that it warned would hold up its inoculation campaign.

The African Union is exploring options with Johnson & Johnson having dropped plans to buy AstraZeneca’s vaccine from India’s Serum Institute, the head of the Africa Centers for Disease Control and Prevention told reporters.

AstraZeneca’s shot is sold at cost, for a few dollars a dose. It is by far the cheapest and most high-volume launched so far, and has none of the extreme refrigeration requirements of some other COVID-19 vaccines, making it likely to be the mainstay of many vaccination programs in the developing world.

But more than a dozen countries have at one time suspended or partially suspended use of the shot, first on concerns about efficacy in older people, and now on worries about rare side effects in younger people.

That, coupled with production setbacks, will delay the rollout of vaccines across the globe as governments scramble to find alternatives to tame the pandemic which has killed more than 3 million.

‘EXTREMELY RARE’

Italy joined France, the Netherlands, Germany and others in recommending a minimum age for recipients of AstraZeneca’s shot on Wednesday and Britain said people under 30 should get an alternative. South Korea also suspended use of the vaccine in people under 60 this week, while approving Johnson & Johnson’s shot.

AstraZeneca has said it is working with the British and European regulators to list possible brain blood clots as “an extremely rare potential side-effect”.

South Africa also paused AstraZeneca vaccinations last month because of a small trial showing the shot offered minimal protection against mild to moderate illness caused by the dominant local coronavirus variant.

AstraZeneca is grappling with production issues that have led to shortfalls of its shot in several countries.

Indonesian Health Minister Budi Gunadi Sadikin said on Thursday the country was in talks with China on getting as many as 100 million COVID-19 vaccine doses to plug a gap in deliveries after delays in the arrivals of AstraZeneca shots.

India has put a temporary hold on all major exports of AstraZeneca’s shot made by the Serum Institute of India (SII), the world’s biggest vaccine-maker, as domestic infections rise.

That has affected supplies to the GAVI/WHO-backed global COVAX vaccine-sharing facility through which 64 poorer countries are supposed to get doses from the SII, the program’s procurement and distributing partner UNICEF told Reuters last month.

Britain is slowing its vaccine rollout due to a shipment delay from India and is at loggerheads with the EU over exports. Australia has also blamed delays in its immunization campaign on supply issues in Europe.

AstraZeneca has cited reduced yields at a European factory behind the supply shortfall to the European Union.

Exclusive: EU denies blocking 3.1 million AstraZeneca shots to Australia

By Colin Packham

CANBERRA/BRUSSELS (Reuters) – The European Union on Tuesday denied blocking shipments of 3.1 million doses of AstraZeneca’s COVID-19 vaccine to Australia, as the bloc steps up scrutiny of vaccine exports to address shortages.

An Australian government source told Reuters that the EU had blocked 3.1 million shots and the country had little hope of getting the remaining 400,000 doses it has been promised on time.

The dispute underscores massive shortfalls of the AstraZeneca shot across the EU and complicates Australia’s inoculation campaign, which is more than 80% behind its original schedule.

“We cannot confirm any new decision to block vaccine exports to Australia or to any other country,” a European Commission spokesman told a news conference.

A Commission spokeswoman said the bloc had rejected only one of 491 COVID-19 vaccine export requests since it enhanced export transparency in late January, but added that seven requests were currently being reviewed – and therefore shipments were on hold until a decision was made.

She declined to say whether a new shipment to Australia was among those being reviewed. But an EU official said there was no request for export to Australia under review.

The only rejected request out of nearly 500 received has been so far a shipment of 250,000 doses to Australia in March. From Jan 30 to March 24, the EU exported 1 million doses to Australia, the Commission said in a press release.

The EU has repeatedly said that AstraZeneca may not be allowed to export from the EU until it fulfils its contractual obligations towards the bloc, a position that has led the company to refrain from submitting some export requests.

AstraZeneca did not immediately reply to a request for comment on Tuesday.

With inoculation rollouts running far behind those of Britain and the United States, the EU tightened its oversight of vaccine exports last month, giving it greater scope to block shipments. “They’ve blocked 3.1 million shots so far,” said the Australian government source, adding that it had only received 300,000 doses and a further 400,000 doses were scheduled to arrive by the end of April.

“We haven’t given up hope but we’ve stopped counting them in our expected supplies,” the source said. The person declined to be named because he is not authorized to talk about the matter.

WELL BEHIND SCHEDULE

Australia had until Tuesday only confirmed the block of 250,000 AstraZeneca doses from the EU, which Canberra said then would not delay its inoculation timetable.

An EU official said it was not responsible for AstraZeneca’s failure in upholding commitments to other countries. The drug maker aims to deliver only 100 million doses to the bloc by the end of June out of 300 million it had pledged.

It is unclear whether Australia plans to ask Britain or the United States to ship AstraZeneca doses.

Australian Prime Minister Scott Morrison said on Tuesday the missing shipments were responsible for it not meeting its inoculation schedule. “In early January, we anticipated we would have the 3.1 million vaccines. Those vaccines were not supplied to Australia,” Morrison told reporters in Canberra. “That is the reason.”

The AstraZeneca vaccine arriving from Europe were to underpin the early stages of Australia’s vaccine drive, supplementing 50 million shots of the vaccine that will be produced locally by CSL Ltd.

Australia has recorded just 909 coronavirus deaths since the pandemic began and said on Tuesday it would launch a quarantine and COVID-testing free travel bubble with New Zealand this month after effectively eradicating the virus by closing borders last year.

Australia’s vaccine program is running well behind schedule, having started much later than some other countries due to the low case numbers, and the AstraZeneca blockages leave it struggling to step up the pace.

Only about 670,000 people have been inoculated against an initial target of 4 million by end-March.

While the government blamed the slow rollout for supply issues from Europe, Australian state governments have also complained about slower-than-expected distribution and a lack of certainty on supplies.

(Reporting by Colin Packham and Renju Jose; Additional reporting by Francesco Guarascio in Brussels; Editing by Miyoung Kim, Nick Macfie and John Stonestreet)