Lithuania Fever in Taiwan: Can China Break It?

Lithuania Fever in Taiwan: Can China Break It?

What do rum, milk, beer, and chocolate all have in common? Other than a fun night and an upset stomach, they all are recent purchases that have found their way from the Baltic country of Lithuania to Taiwan. The uptick in Lithuanian imports stems from Taiwanese citizens gesturing their support towards Vilnius, which has shown support of Taipei, in defiance of Beijing. Moreover, this support is not limited to purchases by private consumers. The Tsai Ing-wen administration announced a number of initiatives to help Lithuania as it confronts Beijing’s economic coercion. On January 5, for instance, the Tsai administration announced a $200 million fund to invest in projects in Lithuania and on January 11 announced a $1 billion fund for joint ventures. The Tsai administration presumably wants to enhance unofficial ties with Lithuania in order to increase its international engagement and to solidify ties with a member of the European Union and a fellow democracy. As Beijing attempts to punish Vilnius for its efforts to strengthen ties with Taipei, the Tsai administration has identified new economic opportunities to fill the void left by Beijing’s pullback.

Taiwan has developed a “Lithuania fever” in its attempt to provide support to democratic states facing increasing Chinese pressure to disassociate from Taiwan. This is not the first time Taipei has extended good will to its friends, but it is the first full-court press at this level to reassure partners that Taiwan is worth the trouble. Whether Taiwan continues to support Lithuania—and whether Vilnius stands its ground—will likely shape how some other countries decide to respond to Beijing vis-à-vis economic and political relations with Taiwan. Slovenia, another small European country watching Beijing’s treatment of Lithuania, has begun exploring its own ties with Taipei. Slovenian Prime Minister Janez Janša proclaimed: “It’s difficult to listen to a capital with a one-party system lecturing about democracy and peace around the world.”

A New Friendship at the Expense of Another

The string of recent purchases and support began in summer 2021 after Vilnius and Taipei announced that each country would open reciprocal, unofficial representative offices in the respective capitals. The announcement was nothing particularly out of the ordinary. Lithuania did not, after all, announce the establishment of formal diplomatic relations with Taiwan. Vilnius simply opened a de facto embassy in Taipei; most major countries have an unofficial diplomatic presence in Taiwan, and Taiwan has a similar presence across the world. However, the notable difference is the name chosen for Taiwan’s office in Vilnius: Taiwanese Representative Office in Lithuania. Taiwan’s representative offices abroad normally use “Taipei” instead of a variant on “Taiwan” to avoid a storm with Beijing. Lithuania is set to open its office in Taipei later in 2022.

Significant protests from Beijing ensued, while Taiwan expressed overwhelming support, both of which have continued—and intensified—from 2021 into 2022. Beijing announced that it had lowered its diplomatic relations with Vilnius and demanded that the Lithuanian ambassador to China leave the country. According to reports by the Financial Times: “the Chinese government had demanded Lithuania’s remaining diplomats in Beijing hand in their diplomatic IDs to the foreign ministry to have their diplomatic status lowered. The move raised concern in Vilnius that the officials could lose diplomatic immunity, putting their safety at risk if they remained in China.” An NPR reporter noted that the decision to close the Lithuanian embassy and order diplomats to leave China was made so quickly that some Lithuanians left their pets behind.

As Lithuania’s relations with China deteriorated, Taiwan sent a business delegation to Lithuania, and Lithuania sent a delegation of lawmakers to Taipei. Beijing, in turn, imposed economic restrictions on Lithuanian goods by revoking its status as a “country of origin,” which prevents Lithuanian products from entering China. Beijing even pressured German businesses to exclude Lithuanian companies from providing services and components by threatening to prevent any European products that had elements made in Lithuania added to the blanket ban.

The Issue Goes “Viral”

The United States and European Union, as well as individual European countries, have expressed their support for Lithuania. Lithuanian government officials have met with high-level Biden administration officials at an unusual frequency—an uptick that would not likely have occurred without its support for Taiwan and pushback from China. The U.S. Export-Import Bank provided Lithuania with a $600 million export credit agreement in November 2021 as Beijing ramped up economic pressure on Vilnius. When announcing the agreement, Lithuanian Foreign Minister Gabrielius Landsbergis said, “We are expanding economic relations with our strategic partners and looking for various new alternatives for Lithuanian companies, which are currently facing economic pressure from non-market economies.”

Before Lithuania and Taiwan made their announcement about the opening of their offices, Brussels had shelved a potential investment agreement with China. This, in part, reflected growing skepticism about the reliability of Beijing as an economic partner due to its pattern of using economic pressure points to gain leverage against certain parties and sanctioning members of the European Parliament. Months later, Beijing began a multifaceted pressure campaign against Lithuania—giving credence to skepticism. As the spat continues, and as other countries (namely, Australia and South Korea, but also the Czech Republic) have already faced economic pressure from Beijing, Brussels should make clear that no new economic agreements are possible in light of China’s continued economic coercion against EU members. Further, the EU should work towards helping affected Lithuanian industries. The onus is on Beijing to prove to the international community—and in this case, the European Union—that it can act as a reliable economic partner. However, it looks unlikely that Beijing will blink first as the Lithuanian situation escalates.

Heads of state must understand that Beijing’s red line has extended. Since the election of Tsai Ing-wen in 2016, Beijing has sought to stop the expansion of Taiwan’s international space—politically, militarily, and economically—and Chinese government officials try to use domestic disagreements within target countries to leverage the PRC position. In the Lithuania case, internal frays over the Taiwan issue are beginning to develop. Lithuanian President Gitanas Nausėda recently came out and said, “I think it was not the opening of the Taiwanese office that was a mistake, it was its name, which was not co-ordinated with me.” That logic, however, is inconsistent with Beijing’s responses at large to countries and their deals with Taiwan. President Nausėda may have been told by Chinese officials that changing the name would solve mounting problems, but Lithuania would likely have faced a similar situation even if the offices were announced with a less “offensive” name.

The name of the office is the supposed sticking point, but the reality of the matter is that Beijing wants to prevent the expansion of Taiwan’s international space. The mere opening of an office, regardless of name, represents the expansion of Taiwan-Lithuania ties. Likewise, any new de facto embassy would be perceived as offensive to Beijing. Given the recent developments regarding Slovenia potentially pursuing a similar course as Lithuania, eyes are on Beijing to monitor its economic response. As more countries build ties with Taiwan, leaders will be able to better assess the risks and benefits of diplomacy with Taiwan. Beijing’s wolf warriors now cry foul at any perceived attempt to foster closer relations with Taipei.

Slovenian Prime Minister Janez Janša espoused a similar argument: “Frankly speaking, there is a vast majority of the EU member countries holding some kind of representative offices with Taiwan. Lithuania is not an exemption. There are some slight differences in naming, but it is not important. I think that China protested every time when some European countries established such offices, but they never went so far as they did in this case, and it is terrifying; it’s terrifying trying to isolate countries, a small country, who also fought for its independence 30 years ago.” Janša’s remarks underscore that Beijing’s treatment of Lithuania is angering leaders across Europe.

Long-Term Effects

The difficulty that Beijing will soon face is that by elevating every Taiwan-related issue, the nationalist rhetorical threats launched by the Ministry of Foreign Affairs will lose salience. Beijing will need to recalibrate how it responds to different decisions by other countries with respect to Taiwan so that a latter of escalation is more obvious.

Meanwhile, Taipei has decided that developing unofficial ties with Lithuania is worth the effort. Partnering with another democratic country that is a member of the EU bolsters Taiwan’s international status. What’s more, Beijing’s response has damaged its image in Europe. So far, Taiwan has invested a significant amount of money and political capital to help Vilnius stay the course. Granted, Lithuanian trade with China is not significant (exports in 2020 were about $350 million), so the effects are less dire. However, if Lithuania comes out of the confrontation with China relatively unscathed—or even better off (from a combination of symbolic support and increased trade from Taipei, Washington, and Brussels)—then Beijing may seriously reconsider how it challenges the next country that seeks to expand its relationship with Taiwan. If Beijing goes all in and loses leverage and status, then the way that it has conducted its foreign policy vis-à-vis Taiwan may come into question.

Lithuania finds itself quite popular in Taiwan at the moment—and for this reason, it has also received more access to Washington. However, domestic politics within Lithuania may require that Vilnius back down if Beijing is able to impose serious economic damage. The President of Lithuania has expressed regret about what has transpired, while the Foreign Minister and Prime Minister have consistently expressed their ongoing support for Taiwan—going back to the formation of the governing coalition in 2020 when it promised to “defend those fighting for freedom around the world, from Belarus to Taiwan.” According to a poll conducted in December 2021, 60% of Lithuanians did not support the country’s “China policy.” However, the survey included no question about Taiwan specifically, and Foreign Minister Landsbergis was quick to criticize the poll’s wording and questions. There are now reportedly conversations about changing the Chinese name of the office in an attempt to appease Beijing’s concerns.

The U.S. and EU should continue to express support for Lithuania as it stands up to Beijing’s economic and political coercion. Growing international support for a country that is actively strengthening ties with Taiwan may challenge Beijing’s international image and provide Taiwan political and economic openings that did not exist before. As Slovenia and Taiwan contemplate the opening of representative offices in Taipei and Ljubljana, the Lithuania case may only be the beginning. Its experience sets the tone for other countries affected by China’s targeted economic and political maneuvering.

Lithuanians may well look towards China with the memory of the Lithuanian victory against the Soviet Union after the Singing Revolution in the late 1980s. Now, a generation later, Lithuania continues this historical example by once again standing up for democracy and against an authoritarian giant.

The views expressed in this article are those of the author alone and do not necessarily reflect the position of the Foreign Policy Research Institute, a non-partisan organization that seeks to publish well-argued, policy-oriented articles on American foreign policy and national security priorities.