Foreign Policy Research Institute A Nation Must Think Before it Acts Lithuania’s Bet on Taiwan and What It Means for Europe
Lithuania’s Bet on Taiwan and What It Means for Europe

Lithuania’s Bet on Taiwan and What It Means for Europe

Despite a concerted effort from the People’s Republic of China to teach Lithuania a strong economic lesson for opening an unofficial diplomatic representative office in Taipei (and allowing Taiwan to do the same in Vilnius), it appears that Beijing has failed to change the course of Lithuania’s Indo-Pacific strategic priorities. Lithuania’s early July 2023 “For a Secure, Resilient and Prosperous Future” Indo-Pacific strategy doubles down on the country’s engagement with Taiwan and dissatisfaction with China. How did Lithuania become the leading European voice when it comes to support for Taiwan?

After news broke in 2021 that Taipei and Vilnius would open these offices in each other’s capitals — and with Taiwan’s using the word Taiwanese — Chinese leadership launched an unprecedented economic coercion campaign against Lithuania. China removed the Baltic country from its customs system as a country of origin, which prevented Lithuanian goods from entering the country, and strong-armed other European capitals into pressuring Vilnius to change course by banning any goods with Lithuanian components from entering the Chinese market. These economic measures against Lithuania resulted in the Tsai Ing-wen administration announcing new investment and project funds and the Biden administration opening an export credit line. There is now a World Trade Organization complaint against China for its actions.

Beyond the economic sphere, Beijing recalled its ambassador in the country, expelled the Lithuanian ambassador, and downgraded relations — though to date, neither country has threatened to sever their formal diplomatic relations.

Since the initial 2021 controversies, Lithuanian officials continued to engage with Taiwan by visiting the country and receiving Taiwanese delegations. Deputy Minister for Transport and Communications Agnė Vaiciukevičiūtė visited Taipei in August 2022, which resulted in Beijing sanctioning her. Nothing that Lithuania did was out of the ordinary when it comes to unofficial relations with Taiwan — governments across Europe have sent delegations to Taiwan to discuss economic ties. Taiwan’s Foreign Minister Joseph Wu even visited Europe in June 2023, but his trip did not include Lithuania.

Then, a week before the July 2023 Vilnius NATO Summit, Lithuania’s Foreign Ministry released its Indo-Pacific Strategy. The country of under 3 million people, located on the Baltic Sea, has set a new precedent for smaller (and larger) European nations by devising its own regional strategy document. Lithuania’s strategy focuses on Taiwan and China. China is mentioned 18 times, with Taiwan at 16. Japan is mentioned 13 times, while India is only mentioned eight times. This focus contrasts with the Biden’s administration’s 2022 Indo-Pacific strategy, which mentions Taiwan eight times. The amplification of Taiwan in the strategy demonstrates that Vilnius is prioritizing this relationship in new ways — at the expense of China as Beijing has made it clear that deeper informal ties to Taiwan will result in an even worse relationship with China.

Vilnius makes it explicitly clear that Beijing is a major power that seeks to use its might to pressure smaller countries into backing down: “Unsuccessful attempts by China to exert economic and diplomatic pressure on Lithuania proves that a country can withstand economic blackmail if it has built up societal resilience and has reliable partners. Lithuanian experience in its relations with China allows us to share lessons learned in resisting pressure with the countries in the Indo-Pacific and beyond.” The strategy connects Lithuania’s own past as a part of the Soviet Union and how that has served as a motivation to seek out new, like-minded partners with whom to engage. The unstated comparison between the Soviet Union and China does not go unnoticed.

Some of the document has relatively boilerplate language regarding the importance of peace and security in the Taiwan Strait. The strategy states, “Lithuania . . . emphasises that status quo in the Taiwan Strait cannot be altered by military or coercive means. Peace and stability in the Taiwan Strait is one of the most pressing geopolitical issues in international politics and a necessary pre-condition for security and prosperity in the Indo-Pacific.” Nearly every bilateral or multilateral summit hosted by President Joseph Biden contains some version of these sentences.

However, joint summit statements generally stop at one sentence and move on. Vilnius actually set a redline for China: “Using force or coercion to change the status quo in the Taiwan Strait are red lines — the violation of which would prompt a legitimate response from countries that believe in the preservation of the rules based international order.” Setting such a redline is a surprise, since that is not even something Washington has formally done. The U.S. policy of strategic ambiguity, whereby Washington will not formally commit to, or provide conditions for, the defense of Taiwan, essentially prevents Washington from making such a declaration. Having a Baltic nation be the first country to set a firm redline when it comes to Taiwan is a policy development worth keeping an eye on in the future — will Lithuania be setting a new trend even though its military would not play any sort of significant role in a war over Taiwan? In this respect, it is a low-stakes redline.

In addition to the redline, Lithuania calls for even greater engagement with Taiwan: “The development of economic relations with Taiwan is one of Lithuania’s strategic priorities and a part of its economic diversification policy.” Elevating economic relations to a “strategic priority” is a major improvement in the bilateral relationship. Trade between Lithuania and Taiwan increased by 50 percent in 2022 year-over-year.

The strategy specifically identifies the areas and sectors in which Vilnius wishes to expand these economic ties: advanced technology, resilience building, research, investment, general trade, and tourism. It’s clear what this is code for in one respect: Lithuania wants to be the European center for Taiwanese semiconductor investment. Given the close, informal ties between the two countries, it is definitely a possibility for that to occur, considering the amount of money that the Tsai administration has pledged to provide for joint projects within Lithuania. The strategy identifies the Lithuanian laser industry, as well as biotechnology and artificial intelligence, among other things, as natural sectors for greater economic cooperation with Indo-Pacific partners. And these are all sectors on which Taiwan can specifically cooperate with Lithuania.

Vilnius has very clearly thrown its lot in with Taiwan and is hoping that such public support will result in greater Taiwanese investment in the country. The release of the strategy has not gone unnoticed in Beijing. A Global Times editorial argues that Lithuania is a puppet of the United States and NATO in their anti-China agenda. The editorial even makes a veiled nuclear threat, reminding Vilnius, “It is bizarre that a Baltic country with a population of less than 3 million, located in the direct radiation zone of the Russia-Ukraine conflict, has come up with an Indo-Pacific Strategy.”

Beyond state media and government rhetoric, it will be important to watch how Beijing responds to the release of this strategy. The economic relationship is shattered, so it will be difficult for Chinese leadership to use that lever to punish Lithuania. It will likely once again pressure other companies and governments by threatening second-order retaliation. Lithuania has made it clear that it has no plans to switch its formal diplomatic recognition to Taiwan and still adheres to its One China Policy.

Based on the strategy, Vilnius is seeking stronger economic ties to Taipei, much in the same way that other European countries are. It is extremely doubtful — really, a non-existent chance for the foreseeable future — that Beijing would go so far as to unilaterally sever its formal diplomatic ties to Vilnius. Such a move would open up a Pandora’s box that neither Vilnius nor Beijing seeks to unlock because once Beijing does it to one country for these reasons, it will need to continue to sever such ties to any country that follows suit. That would likely mean the Czech Republic is next on the list — not to mention the United States, given its much more progressive and stronger relationship with Taiwan.

Lithuania’s attempt to improve its economic relationship with Taiwan will never be able to compare to just one arms sale package from Washington. Beijing will need to properly calibrate its reprisal lest it continue to overreact and further alert European capitals to the dangers of furthering their own economic ties to the Chinese markets. Lithuania’s Indo-Pacific Defense Representative Margiris Abukevičius emphasized this exact point to Politico in its China Watcher newsletter, “The recipe is simple — the less dependent you are, the less vulnerable and constrained you are. Europe has learned that lesson with Russia the hard way. Therefore we should start decoupling from China, especially in the areas which are important to national security. The sooner we will start, the better prepared for any contingency we will be.”

For the broader European community, it will be important to remain united in support for Lithuania in the face of any additional Chinese pressure. It is now clear that Beijing failed to bully Vilnius into getting its way — the release of this strategy is the final nail in the coffin for any chance of success at that. Beijing’s failure is also dangerous for China because it demonstrates a new path for countries seeking to either improve their ties to Taiwan or to challenge China. In this sense, Beijing will be tempted to try to once again make an example of Vilnius. As long as Lithuania continues to have international support — and it certainly will, considering any fallout from this strategy release will occur during the NATO summit that Vilnius is hosting — it will be difficult for China to push Lithuania to the brink.

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.

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