This is bigger than most people realize: Lithuania's Prime Minister now officially admits it was a huge "strategic mistake" (like "jumping in front of a train") to be the first and only EU country to open a "Taiwanese" representative office in 2021.

She says Lithuania has started the "very complicated process" of "turning the clock back" in order to normalize relations with China, as the "ties were completely cut" as a result of Lithuania's actions.

What does this signify?

It was, of course, always painfully obvious that Lithuania couldn't take on China by itself: they're a tiny country of less than 3 million people, about 1/10th the size of some Chinese cities... As deluded as they were, I can't believe that they thought they could.

Lithuania's bet, doubtlessly, was it'd be a "first mover" of a broader Western decoupling from China and reap strategic benefits from this. It's like at work: if you're a small intern, you stand out in the eyes of the boss by being extra eager on initiatives dear to him.

Plus, at the time, Lithuania was actually already relatively decoupled from China: it was the country in Europe least dependent on China which accounted in 2020 for only 0.7% of its exports and 3.7% of its imports (gssc.lt/wp-content/uplo…).

Basically the thinking must have been: "for a very low cost we can become the boss's new favorite." And, on top of that, there was a genuine expectation of economic payoff from Taiwan who committed to invest hundreds of million in the country (bbc.com/news/business-5…).

They, however, miscalculated in 3 ways:

- The cost, it turns out, was not small. China didn't limit itself to completely stop direct imports from Lithuania. In a pretty shrewd move, they also blocked exports from other EU companies when they contained components of Lithuanian origin, something Lithuania's Foreign Minister said was completely unexpected (lrt.lt/en/news-in-engli…) and actually very damaging (80 to 90 percent of Lithuanian exports are to other EU countries).

- The move turned out to be extremely unpopular with the Lithuanian people, with only 13% of the population supporting it (lrt.lt/en/news-in-engli…). Why? Because it was painfully obvious that Lithuania was the "aggressor" here, as it were: they went out of their way to provoke China on its red line, an issue that had nothing to do with Lithuanian interests. The Lithuanian public, unlike their government, had the common sense to ask "why are we meddling in this"?

- Last but not least, they completely misread the room. The broader Western decoupling from China didn't materialize and Lithuania found itself the only country in the West with completely severed economic ties with China. Far from being the intern who impressed the boss and rode a company-wide trend, everyone was like - much like the Lithuanian public - "why would you do that to yourself?" All the more these days given the transatlantic tensions: Lithuania severed ties with China to prove its loyalty to a US-led order that is itself now disappearing. Hard to imagine a worse-timed bet.

Long story short: they're now doing a 180 degree turn, the current government's primary foreign policy priority is to restore relations with Beijing.

Which means that, in some way, they are ending up being a "first mover", except not in the way they intended: they thought they'd prove being the most fervent disciple of anti-China zealotry would pay off. Instead they're the one coming back and telling everyone: "nope, not worth it."