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China and Russia test the limits of EU power

Are Europeans doomed to spend the 21st century being pushed around by outside powers? In Brussels, they like to argue that the collective power of the EU is the only way of saving the old continent from that ignominious fate. Although no single European country can stand toe-to-toe with America or China, the EU collectively ranks as one of the world’s three largest economies.

But the idea that the EU’s economic weight can be easily converted into geopolitical power is undergoing a brutal reality check. The Ukraine crisis has seen the EU sidelined. Meanwhile China has imposed unofficial economic sanctions on Lithuania, an EU member — and Brussels is struggling to find an appropriate response.

If things go badly for the EU over the coming weeks and months, talk of a “geopolitical” Europe will sound increasingly ridiculous. But it is also possible that the current crises — in particular the Lithuanian challenge — will lead to a leap forward in the EU’s ability to defend its interests in the global arena.

The crisis over Ukraine is a matter of war and peace on the European continent, so some EU officials feel humiliated that they did not take part directly in recent negotiations. Yet it should not be a huge surprise that Brussels was sidelined. The EU is not a military power and may never be. And Ukraine is not an EU member.

Lithuania, by contrast, is one of the EU27. It is also involved in a trade dispute — and trade is one of the few areas where the EU is already a global heavyweight. So the Europeans have both an opportunity and an obligation to get their act together.

The Lithuanian government has been singled out for punishment by China for upgrading its relationship with Taiwan, a self-governing democratic island that Beijing insists is a rebel province. Lithuania had earlier pulled out of the 17+1, a talking shop set up by Beijing.

In response, Beijing has applied methods that Gabrielius Landsbergis, the Lithuanian foreign minister, compares to the “Spanish Inquisition”. (In a possible tribute to Monty Python, Lansbergis adds that “nobody had expected” the Spanish Inquisition.)

China is not just blocking all trade with Lithuania. It is also blocking all products containing components made in Lithuania, causing a huge headache for foreign investors in the country.

Beijing has chosen a clever tactic. German investors in Lithuania are believed to be urging the government to back down, while polls suggest that Lithuanian public opinion has turned against the Taiwan gambit.

But China’s policy also contains risks that Beijing may not have fully reckoned with. By targeting the EU’s supply chain, the Chinese are taking aim at the integrity of the European single market, which is central to the EU’s economy and strategic aspirations. As Janka Oertel of the European Council on Foreign Relations puts it: “By Europeanising the problem, China has turned this into a test for the entire EU.”

This is not just a theoretical issue. Some Europeans fear that the next country in China’s sights will be the Czech Republic, whose government and politicians have also been friendly towards Taiwan. Czech factories play a central role in the EU supply chain, so targeting Czech-made components could create havoc inside the single market.

Some European politicians are privately irritated that the Lithuanians acted without consulting the rest of the EU. But the Lithuanians have not broken with the EU’s “one China” policy. And support for democracy and the protection of small nations are meant to be core European values.

EU officials have pledged support and solidarity with Lithuania. A case will probably be taken out against China at the World Trade Organization, but could take years to come to fruition. So instead, the French, who currently hold the EU presidency, are looking at accelerating the adoption of anti-coercion legislation. This would allow the EU to retaliate against coercive trade measures, from China or any other nation, with a range of measures that could include blocks on investment and tariffs.

The beauty of these instruments, as far as Brussels is concerned, is that they are trade measures. Unlike pure foreign policy questions, which require unanimity, decisions on trade can be taken by majority vote. That would mean that China’s friends within the EU — notably Hungary and Greece — would not be able to prevent the adoption of anti-coercion legislation or its deployment.

Reinhard Bütikofer, an influential member of the European Parliament who has been personally sanctioned by China, believes that the Lithuania crisis may therefore lead to a leap forward in Europe’s ability to project power. As he puts it: “The interconnection between trade and foreign policy all of a sudden allows us to use trade policy for a more effective pursuit of foreign policy.”

But the EU’s legislative processes is tortuous, making it unlikely that anti-coercion instruments can be agreed before the summer. By then Lithuania may have been forced to back down.

In their own interests, the Europeans need to stop that happening. If China successfully bullies Lithuania while the EU watches impotently from the sidelines, that lesson will be noted — not just in Beijing, but in Moscow and Washington, too.


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