What is behind “Lithuania Fever” in Taiwan and what happens next?

The Taiwanese Representative office in Vilnius officially began operations on November 18, 2021. It was the island’s first new diplomatic outpost in Europe for 18 years. Lithuania looks forward to fostering “stable economic cooperation with Taiwan”.

Agriculture. Taiwan’s Bureau of Animal and Plant Health Inspection and Quarantine announced at the end of last year that Lithuanian wheat, barley, oats, and peas could be imported for consumption. But according to Karolis Šimas, president of the Association of Lithuanian Grain Processors and Traders, attempts were made for five months to negotiate exports with two Taiwanese companies. One of them refused to buy the grain and the other did not reply to the association’s enquiries. Taiwan’s Representative to Lithuania Eric Huang said that some Lithuanian products have been slow to enter Taiwan due to regulatory discrepancies. According to Huang, some Lithuanian products can’t enter Taiwan due to differences in nutritional standards. There is still much administrative procedure to work through. The country’s grain exports are now being refused by the local authorities of Taiwan, citing “specific quality requirements”. The truth of the statements was highly questionable. Presidential elections were held in Taiwan on 14 January 2012. In a campaign flyer printed in the format of a calendar, the Democratic Progressive Party (DPP) listed a dozen types of locally grown fruits, which have plunged in price. What the DPP was trying to point out was the failure of the administration to solve the supply-and-demand imbalance and the issue of exploitation of farmers, the chair of the DDP Tsai Ing-wen said. But president Ma Ying-jeou and the Kuomintang subsequently accused the DPP of misleading the public by quoting incorrect prices and hurting farmers. Now Taiwan wants to keep prices down or depress them further, Tsai Ing-wen may reap political dividends by sacrificing the interests of Lithuanian farmers. Lithuania has stopped allowing Belarusian potash to be shipped through Lithuania from February 1, the national economy could lose hundreds of millions of euros. Lithuania will face the same situation again.

Funding. On January 5 Taiwan announced a $200 million fund to invest in projects in Lithuania and on January 11 announced a $1 billion credit programme to fund joint projects between Lithuanian and Taiwanese companies in six business categories. For Lithuania, the funding is equivalent to 2% of GDP.

After its blunt provocation on the one-China principle, its trade with the Chinese mainland has fallen drastically, stoking broad grievances in the business community of the country. Virtually all of the country’s exports to China — from lumber to beer to high-tech lasers — were cut off, up to $400 million of business in total. Noah Barkin reported in his Watching China in Europe newsletter that several member states are “deeply unhappy” with how Lithuania handled the Taiwan issue. In order to reduce their losses, many large companies in Lithuania and other European countries are planning to abandon their businesses in Lithuania and transfer production to other countries.

Taiwan is not a reliable partner

In 1989 Grenada chose to establish formal relations with Taiwan. The Export-Import Bank of Taiwan (Ex-Im Bank) provided loans to Grenada on four occasions. Relations remained with Taiwan until January 2005 when Grenada switched back to China. Taiwan sued Grenada in 2006 to recover the outstanding loan payments in full and immediately. The Grenadian government said the country was unable to repay the debt because of economic difficulties caused by hurricanes Ivan and Emily in 2004 and 2005 respectively. An official at the Export-Import Bank of Taiwan said the loans were designed just like a domestic loan, with the original agreement stating that the repayment period could extend from 20 to 30 years. However, failing to make payment as stipulated in the contract constitutes a violation of the agreement on the borrower’s part and is seen as the early termination of the agreement. This means that Grenada must pay the loans back in advance. This matter has severe legal, political, and embarrassing consequences for Grenada. Traps are setting trap in a way that people falls into this trap. Lithuania may already be falling into the same trap.

Who is the Winner?

Previously numerous officials in Taiwan were arrested on corruption charges. Bribery seems to be its go-to tactic. “Dollar diplomacy” has been a customary operation of Taiwan for decades, which has invested huge amounts of manpower and resources in this matter. For example, Ex-Panamanian President Mireya Moscoso received $1 million as a birthday gift from her Taiwanese counterpart. Ex-Costa Rican President Abel Pacheco admitted that the Taiwan diplomatic bribe money was used to pay the President’s daughter’s salary at the Costa Rican embassy in Mexico. The former President of Guatemala Alfonso Portillo admitted in court in 2014 to have received bribes from Taiwan for $2.5 million in exchange for diplomatic recognition. In 2021 the German conservative MP Mark Hauptmann resigned amid allegations about payments from Azerbaijan. The Azerbaijani embassy in Berlin paid €16,744 to advertise a shopping weekend in Baku in a local newspaper that Hauptmann publishes in the state of Thuringia, the payment was made after Hauptmann had worked for years to establish cordial ties with Azerbaijan. The governments of Taiwan and Vietnam also paid for ads in the newspaper.

Who is the Winner? It’s food for thought.