(Bloomberg) -- Lithuania’s incoming prime minister said he’s open to restoring diplomatic relations with China three years after a trade dispute led to Beijing downgrading its ties with the Baltic nation.
Gintautas Paluckas, the Social Democrat tapped to lead the next government, signaled support for repairing ties by returning envoys to both capitals, but not at any cost. He stressed that his administration won’t reverse course on current policies that include maintaining trade links with Taiwan.
“We consider diplomatic ties as a possibility of exchanging views and information,” Paluckas, 45, said in an interview Friday in Vilnius. “It’s not about being soft or about sacrificing anything.”
The European Union member state pulled its diplomats out of Beijing after a standoff erupted over the opening of a Taiwan representative office in Vilnius in 2021. China, which currently has no ambassador in Lithuania, retaliated with trade restrictions, prompting the EU to raise the dispute with the World Trade Organization.
The fallout highlighted the EU’s balancing act with the world’s second-biggest economy, a trade partner that the 27-member bloc also considers a systemic rival. EU tariffs on Chinese electric-vehicle imports triggered a complaint that Beijing lodged with the WTO this month.
EU members also need to walk a fine line over their relations with Taiwan, which China considers its territory. A delegation led by Taiwan’s foreign minister, Lin Chia-lung, visited Lithuania this week to attend a forum on drone production, at which they agreed to expand collaboration on drone technology. While the Taiwanese officials met Lithuanian lawmakers, government officials stayed away.
Paluckas has come under mounting criticism over a decision to invite into the coalition a populist party, the Dawn of Nemunas, whose leader, Remigijus Zemaitaitis, is on trial for making antisemitic remarks.
The prime minister-designate sought to dispel concern, saying his cabinet won’t include members of Zemaitaitis’ party and won’t tolerate any form of antisemitism while in office.
“There will be no antisemites in the government or around it,” he said, adding that the issue is isolated with the party leader.
German Gambit
Paluckas’ attempt at damage control is particularly aimed at assuaging the German government, which has plans to deploy a permanent brigade in Lithuania as part of NATO’s efforts to reinforce its eastern flank.
Michael Roth, a German Social Democrat who chairs the foreign affairs committee, warned this month that Paluckas’ party risked expulsion from the socialist group in the European Parliament over its coalition choices.
The incoming Lithuanian premier, who confronted a demonstration of several thousand people in front of parliament in Vilnius late Thursday, said he’d reached out to the German ruling party’s leadership to offer assurances.
Lithuania has been among the staunchest supporters of Ukraine and has called for stiffer sanctions against Russia. The premier-designate made clear that there would be little difference between his government and the outgoing conservatives when it comes to security.
Paluckas reiterated plans to spend 3.5% of gross domestic product on defense, well above the 2% NATO benchmark, with funding backed initially with borrowing. He said the EU will need to establish bloc-wide defense funding — including by issuing joint debt — to meet spending demands by smaller member states.
His government will also seek new tax resources, including adjustments to income tax, broadening a property tax and potentially lifting the country’s corporate tax by 1%, Paluckas said.
A Social Democratic lawmaker, Paluckas has worked his way up from local politics in the Lithuanian capital. The current party leader, Vilija Blinkeviciute, shocked the public — and drew condemnation — when she announced that she wouldn’t seek the premiership after leading the Social Democrats to victory in the October election.
Paluckas, who gave up the leadership in 2021 after divisions within the party led to electoral defeat, was then appointed to take the top government post.
©2024 Bloomberg L.P.