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Punching Above Their Weight? The Baltic States and the Peoples Republic of China

01 Nov 2022
By Dr Ausra Park
2016 16+1 Summit Family photo. Source: Latvian Foreign Ministry

In 2012, without too much fanfare, the Chinese Ministry of Foreign Affairs inaugurated the 16+1 initiative. Its purpose was to promote a “win-win” cooperation in business, trade, and investment between 16 Central and Eastern European countries (CEECs) and China.

Feeling ignored, overlooked, and not getting an expected economic “pay-off” from their decade-long membership in the European Union (EU), the CEECs and their illiberal-leaning governments saw an enticing opportunity in the 16+1 initiative to achieve much sought-after Chinese investments. With no political strings attached, national governments welcomed the easy money from the People’s Republic of China (PRC) with open arms while giving little consideration on how they may become susceptible to the Chinese Communist Party’s economic and, ultimately, political influences.

Baltic relations with China started relatively recently. Estonia appointed its first residential ambassador to China in 2002, Latvia in 2000, and Lithuania in 1997. China made inroads into the Baltics somewhat earlier, with its first ambassador taking residence in Estonia and in Lithuania in 1993, and in Latvia in 1995. The PRC’s entry into the Baltics was neither smooth nor uniform. In the early 1990s Latvia established official diplomatic relations with both the PRC and Taiwan, desiring to receive development aid from Taipei, which apparently failed to materialise. Assuming lack of knowledge in the fledgling democracy, Beijing taught Riga a quick lesson by freezing diplomatic ties in 1992. After a new Latvian government came to power and closed the Taiwanese consulate-general in Riga, Latvia finally “normalised” its relations with China in 1994. Riga also downgraded Taiwanese representation status, renaming it the “Taipei mission in Latvia”—a name under which it operates to the present day.

Until 2021, Latvia was the only Baltic state that maintained direct trade contacts with Taiwan. According to Lithuania’s former minister of foreign affairs, Antanas Valionis, Taiwanese delegations visited Lithuania after each parliamentary election seeking to open their representation office in Vilnius. Lithuanian politicians refrained from acting upon this request for decades until the current coalition government “shook things up.” After quitting the 17+1 format in May 2021, Vilnius announced that it planned to open a trade office in Taiwan by the end of the year and had allowed Taipei to open The Taiwanese Representative Office in Lithuania in August 2021. As the news broke, the already sour relations between China and Lithuania quickly deteriorated.

Announcing that Lithuania had taken a hostile action in breach of the so-called One China principle, which the Lithuanian government denies, the PRC recalled its ambassador to Lithuania in August and forced Vilnius to follow suit. In November 2021, China unilaterally downgraded Lithuania’s diplomatic representation status from embassy to a bureau of chargé d’affaires. In December, Lithuania was forced to expeditiously recall its chargé d’affaires and the entire bureau’s staff as Beijing terminated the validity of their diplomatic identification cards.

In parallel to intensive diplomatic pressure, Beijing began to use economic coercion towards Vilnius by halting freight trains to Lithuania, stopping issuing food export permits, cutting credit limits for Lithuanian companies, and raising prices. Next, Beijing delisted Lithuania as a country of origin in its customs system, which prevented Lithuanian exports from clearing Chinese customs. As Lithuanian exports into China ceased, Beijing began pressuring other EU countries, particularly Germany, to terminate business ties with Lithuanian companies if they wanted to sell their products in China. To make sure that Beijing’s warnings were taken seriously, China banned the import of goods that contained parts made in Lithuania.

The PRC’s actions to disrupt integrated supply chains within the EU pushed Lithuania to ask the EU to intervene on its behalf. In January 2022, the Undeterred, Beijing shows no signs of removing imposed trade restrictions against Vilnius. Since litigation processes at the WTO take years, the dispute will not be resolved anytime soon.

Meanwhile, an unexpected internal turf war between Lithuanian President Gitanas Nauseda and Foreign Minister Gabrielus Landsbergis broke out in January 2022. During a local radio interview, Nauseda suddenly rebuked the Lithuanian Ministry of Foreign Affairs (LMFA), calling the government’s decision to allow Taiwan representation in Vilnius using Taiwan in the name “a mistake.” Furthermore, Nauseda suggested that he was neither consulted nor given a chance to voice his views on the mission’s naming and was forced to face a fait accompli. Landsbergis countered these accusations, stating that the ministry coordinated with the president every step of the way and that the president supported the establishment of a representation office, including the use of Taiwan in the mission’s name.

As the presidential office and the LMFA scuffled, Nauseda requested that Landsbergis present an action plan to deescalate tensions with China. According to Reuters, the LMFA proposed replacing “Taiwanese” with “People of Taiwan,” but Landsbergis categorically rejected this, insisting that Lithuania did not consider any changes in the Taiwanese representative office name. Meanwhile, Nauseda’s interview was quoted widely in the mainland Chinese media with a claim that Lithuania had finally admitted its mistake.

When Russia unexpectedly invaded Ukraine in February, the Lithuanian-Chinese row was put on the backburner, at least temporarily. However, China’s failure to condemn Russia’s invasion of Ukraine and Beijing’s “no-limits” friendship with Vladimir Putin, made the other Baltic states—Estonia and Latvia— announce that they were quitting the 16+1 format. Both countries claimed that they would continue to maintain constructive and pragmatic relations with China, but would do so either bilaterally or, preferably, through the EU-China cooperation framework. Apparently, this withdrawal had been planned for months, but the final step was taken when Estonian Foreign Minister Urmas Reinsalu returned to power. Beijing did not penalise Estonia and Latvia but blamed the United States for the Baltic countries’ decision to abandon the 16+1 format.

A rethink in Baltic relations with China was probably overdue. From growing concerns with widening trade imbalances and continuous Baltic criticisms of human rights violations by Beijing to waning enthusiasm for the 17+1 cooperation mechanism due to China’s failed pledges to deliver billions of dollars in investments to deep concerns about China’s strategic alignment with Russia, the new governments have finally decided to re-calibrate their relations with China.

While Tallinn and Riga remain less quarrelsome with China, Vilnius continues to defy Beijing. Lithuania was the only EU state to publicly endorse US House Speaker Nancy Pelosi’s visit to Taiwan. Last month, the Lithuanian Defense Ministry issued a recommendation that Lithuanians should not buy the new Chinese-made Xiaomi phones and should throw away any previously purchased ones because these phones have built-in censorship capabilities that can be turned on remotely and collect information on user activities, in violation of EU data protection rules. And earlier this month, during the Foreign Investors’ Annual Summit, Foreign Minister Landsbergis stated that Lithuania is one of a few states that can say it is “China-free.”

Previous Baltic governments were willing to overlook their countries’ core values in exchange for economic gains. That perception has changed recently as value-based policies gained prominence. Although some CEECs appear satisfied with keeping the now 14+1 format half-alive, the Baltic states hope other CEEC states will follow their lead. For the time being, Baltic reluctance for any deeper cooperation with China is likely to continue, especially while Russia wages war on Ukraine and China remains a willing bystander, or until new political power shifts occur in the Baltics.

Bilateral relation seems to be at an impasse stage. Litigation processes at the WTO take years, sometimes decades. Therefore, there is no expectation that this dispute will see a quick resolution.

Ausra Park is an associate professor of international relations at Siena College. She received her PhD in International Studies from the University of South Carolina (Columbia) and has taught students at Simmons College in Boston, MA and at Davidson College in North Carolina during the period of 2006-2011. 

This article is published under a Creative Commons License and can be republished with attribution.