In the workplaces of the mighty strategies which more so or less so will undoubtedly impact Lithuania are being finalised. Some are already foreseeable and in some places, we must take control of the risks coming our way or even turn them into unique opportunities.
With an analysis of last year’s geopolitical and economic trends I’d like to share some insights on countries in which developments will have a huge impact on Lithuania.
USA: Mr. Trump has only just begun
This year was important not only for America but for the entire world when we tried to understand just exactly what Donald Trump‘s foreign policy is about.
Contrary to predictions made by the foreign policy drivers in Lithuania, there was no nightmare and Donald Trump did not evoke any Russian foreign policy doctrine. In fact, the US administration even reinforced its NATO obligations and urged other member countries to invest in general defence.
Nevertheless, the new national security doctrine’s refusal to mention the struggle for universal human rights and freedom, developing isolationist trends in foreign trade, withdrawal from the Paris Climate Change obligations, the unilateral decision regarding Jerusalem and threats to withdraw from the Iran nuclear deal cause uncertainty regarding US world leadership.
In 2018 the US’s traditional allies – Europe, Canada, Australia, Japan, South Korea and other countries – will have a sense of unpredictability not least because of North Korea’s growing nuclear program which is causing a lot of international tension.
North Korea: casualties on both sides
Donald Trump has called Russian and China “revisionist countries” and “competing powers” however he also added that he would work with them to tackle the most important issues affecting international security.
What’s first and foremost in mind is North Korea, a “Gordian knot” intertwining the security of the countries of the Pacific Ocean. That means that in the case of a military conflict all the key countries will be faced with huge casualties.
At the end of 2018 we’ll in all likelihood move toward a diplomatic process when sanctions against North Korea, the deterrent of US allies with a strengthened military and monitoring by the UN or several countries of North Korea‘s nuclear program will exist all together.
Poland: a historical attribute for Lithuania
Going forward Poland should be full of surprises with its economic and political push back.
“Without Poland we’re OK with Poland we’re powerful” goes the old axiom. History will once again test us. Poland‘s dubious constitutional changes are blurring democratic tradition. The caregivers of the European Commission and most EU countries may well try to punish Poland. Our sister will seek allies without compromising her principles so once again we’ll see Poland’s leaders in Vilnius for our own interests.
The question is how will Poland’s leaders and political elite react to this? Will we take advantage of our most important partner’s about turn to Lithuania and finally show our leadership and political maturity – if we permit the writing of surnames without scaring ourselves and others? If we can consolidate regional leadership? If we dare demand a vote in favour of Poland in the EU Council as well as more Polish and US soldiers in Lithuania and of energy and transport connections. These will be historic steps and a litmus paper of our leadership.
Brexit: coveting the City’s treasure
2018 will surprise Lithuanians with EU and UK pragmatic lessons in policy – these being its principles, position and magnitude of statehood based on the UK’s long-standing experience as an empire and the mass media’s anti-European campaign in recent years.
At the end of negotiations for the UK to leave the Union, in seeking to retain for Britain the all-important commercial ties with Europe, EU and that means Lithuanian citizens as well, will be given equal rights. It’s all so simple. The EU market is almost 10 times bigger than the local UK market. And that’s the crux of the negotiations.
It’s here that Donald Trump’s isolationist policies, decisions on Iran, Jerusalem, climate change etc. are more gainfully linked to the UK and EU. Germany, France, Spain, The Netherlands as well as other EU members will in turn seek longer to take as much advantage as possible from the uncertainty around the future of the UK’s economic relations with a much more powerful and important Britain as a partner.
For Lithuania this is a challenge and an opportunity to more aggressively propose favourable conditions for UK-based capital and to find out up to now the best kept secret.
EU: political discontent will give rise to reforms
Although the economy in the EU is growing and unemployment is dropping, political discontent with EU policy and institutions with rare exceptions (for example in Lithuania) will prevail.
The prolonged German coalition negotiations are restricting Angela Merkel‘s leadership in European and world policy which the 27-member state union needs. On the other hand, that gives time for French president Emmanuel Macron to prove that his country is changing; more flexible labour laws are being adopted and an agricultural reform package is being drafted. In 2018 Mr Macron will start constitutional reforms. After creating preconditions for a more competitive and less bureaucratic France, Mr Macron will get the required political ratings and with Angela Merkel will be able to conduct reforms in the EU itself.
In the middle of 2018 therefore we will see a new framework for “flexible and multi-speed” EU development.
The EU and Lithuania: a challenge to the political elite
The development of a “flexible and multi-speed” EU will be a challenge for Lithuania’s political elite. The EU plan envisages deeper integration for the countries preparing for it. For example, a common budget and taxes or a common defence policy could be in the offing without waiting for the will or wishes of other countries.
We therefore have a choice: be a part of the core EU with France and Germany which would entail being without our most important partners – Poland and Scandinavia, or remain on the periphery without adopting possible obligations for a common Eurozone budget or common taxes which in the short-term would put pressure on Lithuania’s tax perks and reduce our competitiveness.
Having made these decisions, the president will play a supportive role and the way she acts will draw much scrutiny and criticism next year – especially after Lithuania’s much unexpected conduct when, regardless of the foreign policy of others, Donald Trump’s decision on Jerusalem was condemned. What will be scrutinised even more are further career prospects in Brussels and in this way aiming for the EU’s heavyweight positions.
India and China: leverage shifts to Asia
After the last Party Congress, Chinese president Xi Jinping secured unprecedented political influence, the biggest since the time of Mao Zedong. That is a huge admission but not one hundred-percent loyalty. Nevertheless, China is facing deep internal problems.
Its demographic and economic growth is slowing down. Social division is rising. External challenges are demanding a more active China in terms of diplomatic policy from North Korea to Afghanistan as well as Myanmar and other hot regions. China is faced more and more with the dilemma of how to respond to a US delegated and transferable responsibility and to invest in international policy and peace-keeping missions.
At the same time India is making itself known – not only as a great world democratic state but also as a rapidly growing G-20 economy. Demographically India is growing the fastest and is positioning itself even more aggressively as an alternative to the Chinese “Silk Road”. It’s strengthening ties with the US and the EU and agitating the regional political and intellectual elite for an “Asian Davos” dialogue.
“All the same on the eastern front”
Russia will re-elect Vladimir Putin without a vision, without a mission and without a future. Just to survive. A shaky and mobilised nation will be forced to confront and further oppose the US and EU enemies. Yet at the end of 2018 Russia will need to start taking stock of and critically evaluating the Kremlin’s propaganda. People will be faced with news on Russia’s continuing involvement in Ukraine and Syria. The EU and US will continue to apply sanctions on Russia. At the same time, the prospect of a more active development in bilateral relations, which are not impacted by the sanctions, will continue.
In Russia, intellectuals, civil society and even a large part of the oligarchy will start gently (and more ardently in 2019) demanding economic and structural reforms from Mr Putin. He is unwilling but will be forced to talk about it. Due to deep demographic changes and squandering of financial reserves the government will start to implement a highly unpopular pension reform. That will cause discontent not only amongst not only pension-age people.
All of this will limit the prospects of military jaunts. Vladimir Putin will try to portray himself not only as a warmaker but also as a peacemaker. He will publicly and actively engage in the process of reconciliation in Syria and will continue to blame Ukraine for its alleged reluctance to implement the Minsk Agreements.