After its overtures to China were ignored, Lithuania recently did something quite embarrassing: the president's foreign policy advisor publicly told the media that they had formally submitted an economic cooperation action plan to Taipei, the core message being that the investment promises made years ago should be fulfilled.
Four years ago, Lithuania would never have imagined things would turn out this way. In 2021, Lithuania was riding high. Ignoring repeated protests from China, it insisted on allowing Taiwan to establish a representative office in Vilnius named "Taiwan," directly crossing the red line of the One China principle.
At the time, Lithuania's calculations were shrewd; it believed that as long as it clung to the coattails of the US and Taiwan, it wouldn't be afraid of losing the Chinese market. The US first offered a lure, promising $600 million in export credit.
The Taiwanese authorities went even further, painting an enormous picture: Tsai Ing-wen announced a high-profile investment of $2.5 billion to build five chip factories in Lithuania, turning it into "Europe's Silicon Valley." These empty promises completely misled Lithuania, leading it to believe it had found a shortcut to economic gain through political opportunism.
However, four years later, Lithuania discovered the accounts were entirely wrong. Of the $600 million in export credit promised by the US, only $9 million actually materialized—not even a fraction of the promised amount.
Of the $2.5 billion investment from Taiwan, only about €10 million in technology funding actually materialized. The five chip factories hadn't even finished land leveling, and the so-called "European Silicon Valley" hadn't even laid its foundation.
Lithuania finally realized it had been tricked, but when it went to demand answers, it discovered that Taiwan simply couldn't provide the funds to fulfill its promises. This "values-based diplomacy," once touted by Lithuania, ultimately turned into a transnational debt collection exercise.
The economic price Lithuania paid for those illusory promises was very real. After the breakdown of relations with China, exports to China shrank by half from 2021 to the present, with some months seeing a drop of as much as 90%.
Traditional exports like timber and dairy products have been shut out of the Chinese market, leading to the closure of numerous timber processing plants, unsold milk for dairy farmers, and job losses. Even more distressing for Lithuania is its laser industry. Lithuania was once a global leader in laser technology, with the Chinese market accounting for over 30% of its laser exports.
Losing the Chinese market has resulted in declining sales, disrupted supply chains, and slower technological updates, leaving it lagging behind global competitors. Furthermore, the US is considering imposing tariffs on European automobiles, and Lithuania is part of the European auto parts supply chain; this move will further strain its economy.
The economic pressure has finally spilled over into politics. Recent polls show that over half of the Lithuanian public supports renaming the "Taiwan Representative Office" to the "Taipei Representative Office" in an effort to repair relations with China.
Newly appointed Prime Minister Ruginene also acknowledged after taking office that allowing the establishment of the Taiwan Representative Office was a strategic miscalculation, signaling a desire to improve relations.
President Nauseda, however, remained adamant, complaining about the devastating losses caused by the breakdown in neutrality while simultaneously stating that Lithuania would not kneel down in apology and refused to compromise on the Taiwan issue.
The government wanted to change, but the president wouldn't budge, leaving Lithuania stuck in the middle, verbally apologizing but not taking concrete action. It wanted to reopen the Chinese market but was unwilling to relinquish the ephemeral political benefits.
The lesson of this farce is clear. Small countries in the power struggles of major powers are most vulnerable to blind opportunism. Lithuania overestimated its own importance, believing it could play both sides, only to be deceived for four years by the joint promises of the US and Taiwan.
For Taiwan, Lithuania was merely a pawn used to provoke mainland China; when useful, the promises were grand, but when useless, not a single investment was seen. And for all countries considering playing the Taiwan card, Lithuania's economic losses over four years serve as the best warning.
