AGP Executive Report

EU Funding Push for Defence: Latvia is asking the EU for €7bn in the next seven-year budget to cover higher defence spending and the economic fallout of cutting ties with Russia, with Brussels likely to steer toward loans and strict deficit conditions. Food & Agriculture Security: Latvia has banned imports of fresh fruit, vegetables and processed plant products from Russia and Belarus, covering a wide range from potatoes and tomatoes to jams, juices and frozen goods. Manufacturing Upgrade: Orkla Latvija will invest €5.4m to modernise its Spilva sauce and ready-meal production in Babīte, aiming to boost capacity and efficiency by mid-2027. Energy Mix Update: Solar stayed Latvia’s top electricity source for a third straight month in July (235 GWh), though output fell 14% vs June as daylight hours decreased. Foreign Investment Jobs: EY’s latest survey says foreign investment projects launched in Latvia in 2025 created 1,015 new jobs—46% of the Baltics total—highlighting Latvia’s employment pull. Border Infrastructure: President Rinkēvičs says the Latvia–Belarus border has seen major upgrades (sensors, CCTV, fencing), with remaining tech work due by year-end. Local Environment Rule Change: Latvia will allow larger trees to be cut outside forests without permits (stump diameter up to 30cm), with municipalities able to set stricter rules.

Food Manufacturing Investment: Orkla Latvija will invest €5.4m to modernise its Spilva sauce and ready-meal plant in Babīte, aiming to boost capacity and efficiency; works run 18 months with completion planned for mid-2027. Energy & Power Mix: Solar stayed Latvia’s top electricity source for a third straight month in July, generating 235 GWh (55% of output), while hydropower covered about 28%; solar output fell 14% vs June due to fewer daylight hours, but capacity has surged past 1.8 GW. Agriculture: Vidzeme grain harvest is being judged broadly successful despite higher fertiliser and fuel costs, with farmers reporting relatively good yields and solid grain bulk density. Foreign Investment & Jobs: EY’s 2026 survey says foreign investment projects launched in Latvia in 2025 created 1,015 new jobs—46% of all new jobs from such projects across the Baltics. Construction & Urban Development: Capitalica Asset Management selected RUUME arhitekti for a “city within a city” mixed-use quarter on Lielirbes Street in Riga. Border Infrastructure: President Rinkēvičs says Latvia’s Belarus border upgrades are progressing, with sensors and CCTV now covering 55% of the line and the rest expected to be equipped by year-end. Media Policy: Broadcasters and film producers urge Saeima to halt amendments requiring foreign-language TV content to be dubbed in Latvian.

EU Budget Pressure: Latvia’s PM Andris Kulbergs says Riga is asking Brussels for €7bn extra in the next EU budget to cover lost trade with Russia and soaring military spending, arguing Latvia is borrowing to fund “the defense of the whole of Europe.” Drone Security & NATO Readiness: Reports say Russia is building 10 secret drone bases with 59 launch rails near Ukraine/Belarus, raising fears of limited strikes to test NATO resolve; separate coverage notes drone incursions and NATO air-policing activity across the region, including a drone shot down near Romania’s border. Latvia Anti-Drone Rollout: Bite Latvia says it has deployed 33 new base stations this year after investing €7m, while Latvia’s defence ministry says anti-drone systems and radar are still insufficient on the border but plans to deploy Latvian-made equipment across the Russia/Belarus line by end-September. Forestry Policy Fight: Latvia’s government is set to consider amendments that could speed up and expand logging; the Progressives warn forests may be cut earlier and more extensively. Business & Construction: Capitalica Asset Management selected RUUME arhitekti for a “city within a city” mixed-use development on Lielirbes Street in Riga. Telecom Competition: Bite Latvia’s CEO flags unfair competition in telecoms, calling for equal rules when state-linked firms influence infrastructure and procurement. Local Economy Signals: Latvia saw business registrations fall in Q2 2026, while bankruptcies also declined.

Latvia’s Defence Budget Push: Ahead of Oct. 3 elections, Latvia’s PM argues Riga should get a bigger slice of EU defence money, saying the country is borrowing to fund Europe’s security while much spending flows back to Western suppliers. Drone and Border Security: Latvia says it’s still short on anti-drone gear along the Russia/Belarus border, but plans to deploy Latvian-made systems across the line by end-September; drone wreckage was found in Balvi and officials stress incursions will be shot down. Telecom Competition: Bite warns Latvia’s telecom market faces unfair competition, especially when state-linked players influence infrastructure access, procurement and end-user services. Cyber in Forestry: Latvian State Forests blames a communication misunderstanding for a cyber attack tied to an unpatched vulnerability, admitting the fault partly lay with its own handling. Business Climate Signals: In Q2 2026, Latvia saw fewer business registrations across most sectors (industry down most), while bankruptcies also fell. Research Funding: University of Latvia Foundation received a €799k donation from Mikrotīkls to back science grants and teacher scholarships. Regional Defence Industry: Patria and KNDS Deutschland plan final assembly of Patria 6×6 vehicles for Germany, with serial deliveries starting early 2027. Household Costs Snapshot: Latvia’s average monthly household spending hit €619 per member in 2025, with food the biggest share and Latgale the lowest-spending region. Ukraine War Spillover: Heavy drone and missile exchanges killed civilians in Russia and Ukraine, with NATO air-policing also reporting drone incidents near the region.

Counter-Drone Readiness in Latvia: Latvia tested interceptor drones and other counter-UAV systems at the NATO Baltic Trust 26 drills at the Sēlija training ground, with about 650 personnel and EU tech firms joining live field trials and a NATO-style model that lets industry take over drone engagement under military coordination. NATO Air Policing Incident: An Italian Eurofighter Typhoon shot down an unidentified drone after it entered Latvian airspace near Balvi; Latvia’s National Guard is checking wreckage to identify the drone and its origin. Education & Tech Funding: MikroTik donated €799,031.63 to the University of Latvia Foundation, backing research grants (including a €700,000 MikroTik Research Grant Competition) and scholarships for future teachers and exact-science students. Ukraine-Russia Drone War Spillover: Ukraine launched one of its largest drone attacks on Russia, with Russia claiming 822 drones intercepted overnight and a major Wildberries warehouse fire near Moscow; the conflict also triggered drone incidents reported in NATO airspace, underscoring pressure on regional logistics and air defenses. Energy Policy Context: A new EU-wide review of responses to the 2026 energy price spike highlights dozens of measures—short-term relief plus longer-term diversification—to protect households and energy-intensive industry.

Counter-Drone Readiness in Latvia: Latvia tested counter-drone systems, including interceptor drones, at NATO Baltic Trust 26 at the Sēlija training ground, with about 650 participants and EU tech firms helping validate radar, sensors, cameras and electronic warfare, plus a NATO concept letting industry take over drone engagement tasks. Airspace Incident: Allied jets shot down an unidentified drone after it entered Latvian airspace near Rugāji in Balvi district; Latvia’s National Armed Forces searched for wreckage while officials said the intrusion was linked to Russian electromagnetic warfare. Hybrid Threats to Infrastructure: Reuters reports Lithuania, Poland, Latvia and Estonia are tightening protection of dams, power plants and gas infrastructure amid fears of Russian “false-flag” drone attacks, while Russia dismisses such warnings as “scare stories.” Ukraine War Spillover to Europe: Ukraine approved a free transfer of captured Russian T-72 tanks to museums in Lithuania, Latvia, Estonia, Denmark and the Netherlands, with vehicles rendered inoperable and stripped of explosive elements. Retail Tech in Latvia: AS Watson expands its retail technology partnership with NCR Voyix, bringing Voyix POS, self-checkout and loyalty services to Drogas in Latvia.

Counter-Drone Industry in Action: Latvia tested counter-drone systems, including interceptor drones, at the NATO Baltic Trust 26 exercise at Sēlija, with about 650 participants and EU tech firms joining trials of radars, sensors, cameras and electronic warfare—plus a NATO concept that lets military delegate drone engagement to industry teams. Air-Policing Incident: An Italian Eurofighter shot down an unidentified drone after it entered Latvian airspace near Rugāji (Balvi district); Latvia and NATO launched an investigation and searched for wreckage, while air alerts were issued and later lifted. Defense-Industrial Cooperation: Latvia and Ukraine’s recent memoranda expand unmanned systems cooperation, aiming to attract investment into UAV production and transfer technologies. Critical Supply Chain: AS Recipe Plus is investing EUR 20m in a new Riga pharmaceutical and medical supplies distribution centre, targeting completion in spring 2027 to boost resilience and medicine availability. Regional Security Context: Reuters reports Poland and the Baltics are tightening protection of dams, power plants and gas infrastructure amid fears of Russian “false-flag” attacks using drones.

Counter-Drone Readiness: Latvia tested interceptor drone and counter-drone systems at NATO Baltic Trust 26 at Sēlija, with about 650 personnel and EU tech firms trialling radar, sensors, cameras and electronic warfare, plus a NATO-style model where industry can help carry out engagements. Airspace Security: An Italian Eurofighter shot down an unidentified drone after it entered Latvian airspace near Rugāji; NATO scrambled Italian and Turkish jets, Latvia searched for wreckage, and officials said the incident followed Russian electronic warfare. Border Pressure: Latvia found its first migrant tunnel from Belarus after a group was spotted near the border; authorities say Minsk denies the activity despite intelligence alerts. Energy Infrastructure Under Fire: Ukraine-linked drone attacks sparked fires at Russia’s Ust-Luga Baltic port, while NATO/Finland took precautionary steps after a Latvia airspace incursion. Pharma Supply Chain Investment: AS Recipe Plus is building a Riga medicine distribution centre (EUR 20m) with automation, topping-out reached, aiming for spring 2027 completion to boost resilience and delivery capacity. Renewables Buildout: Construction has started on a 117MW Lode wind farm in Valmiera region, targeting operations in 2028. Logistics & Industry Tech: AS Watson expanded its technology partnership with NCR Voyix, deploying POS, self-checkout and loyalty systems including Drogas in Latvia.

Defense & Security: NATO Baltic Air Policing jets shot down a foreign drone over Latvia’s Balvi region after it entered airspace “as a result of Russian electromagnetic warfare,” with airspace alerts issued in several eastern municipalities and Finland temporarily restricting parts of the Baltic Sea. Counter-Drone Industry: Latvia tested interceptor and counter-drone systems at the Sēlija training ground during NATO Baltic Trust 26, including radar, sensors, cameras and electronic warfare, with a model letting military delegate engagement to private defense contractors. Energy Infrastructure Risk: Ukraine-linked drone attacks again hit Russia’s Baltic Sea export hub Ust-Luga, triggering fires and prompting reports of dozens of drones downed; the port’s disruption underscores how Baltic logistics and energy revenues remain a key target. Healthcare Supply Chain Investment: AS Recipe Plus is building a new EUR 20m pharmaceutical distribution centre in Riga, topping out now and targeting completion in spring 2027, with automation and robotisation to boost medicine availability and resilience. Renewables Project: Construction has started on a 117MW wind farm in Valmiera region, aiming for operations in 2028. Border & Migration Pressure: Border guards found Latvia’s first migrant tunnel from Belarus after a group was spotted near the fence, adding to concerns about EU infiltration routes. Retail Tech Deal: AS Watson expands its technology partnership with NCR Voyix, rolling out NCR Voyix POS, self-checkout and loyalty systems including Drogas in Latvia.

Pharma & Logistics: AS “Recipe Plus” is building a medicine distribution centre in Riga, a €20m project with a 13,800 sq m automated facility due in spring 2027, aiming to boost capacity up to threefold and strengthen supply resilience. Baltic Security & Energy Infrastructure: Ukraine-linked drone strikes hit Russia’s Ust-Luga oil export port, triggering major fires and disrupting operations; Latvia’s NATO Baltic Air Policing jets also shot down a drone that entered Latvian airspace near Balvi, with Riga citing Russian electromagnetic warfare. Cross-border Defence Engineering: Lithuania approved an expanded border defence plan—20m counter-mobility strips (up to 150m in operational zones), more engineering fleets (27 to 50 by 2028), and wetland restoration to slow heavy vehicles. Competition & Forestry: Latvia’s Competition Council fined state forestry company LVM about €7.86m for long-term logging contracts that gave six firms unjustified advantages, ordering equal timber sales conditions going forward. Rail Baltica Cost Review: Latvia is moving toward a more “rational” first phase for Rail Baltica, with major cost-cutting options under review and a “Riga loop” approach not abandoned. Latvia–India Business Links: Saeima defence committee chair Raimonds Bergmanis met India’s ambassador, highlighting cooperation in startups, IT, science, and the EU–India free trade deal. Household Pressure: Eurostat shows Latvia’s everyday prices are rising—food, clothing and alcohol/tobacco are above the EU average—though overall consumption prices remain below the EU level.

Baltic Defence Line: Lithuania has approved a new border counter-mobility belt, adding a 20-metre-wide strip from the patrol track and up to 150 metres in operational zones, with engineering obstacle parks expanded to 50 sites and deadlines pushed to end-2028—aimed at slowing any Russian advance and buying time for NATO reinforcements. Rail Baltica Cost Review: Latvia’s government says the first Rail Baltica phase in Latvia won’t be shortened for now, but it will review requirements and costs by mid-September, with the planned scope still covering the Lithuania-to-Estonia main line plus Riga airport and central station works. airBaltic Restructuring: airBaltic has outlined a business plan focused on a Riga-centred network and a smaller all-Airbus A220-300 fleet, while seeking interim financing ahead of a key 17 August vote on its 2029 notes after an engine crisis strained finances. Competition Watchdog: Latvia’s Competition Council fined state forestry firm Latvijas valsts meži about €7.86m for long-term logging deals that gave six companies unjustified advantages outside public auctions. Latvia–India Business Links: Saeima defence committee chair Raimonds Bergmanis met India’s ambassador to discuss expanding cooperation in startups, IT, science and the EU–India free trade deal. Household Pressure: Eurostat shows Latvia’s overall price level remains below the EU average, but essentials like food, clothing and alcohol are already above EU levels. Border Security: Latvia reported its first documented migrant tunnel under the Belarus border after 15 people were intercepted, prompting intensified surveillance and investigations.

Defence & Security: Latvia is seeing a sharper focus on border and infrastructure protection as Lithuania prepares a €50m, 950km “Baltic Defence Line” counter-mobility belt and as officials warn Russia could escalate with sabotage or false-flag operations. Border & Migration: Latvia has reported its first documented case of migrants using a tunnel beneath the Belarus border, prompting tighter surveillance and cross-agency cooperation. Rail Baltica: Latvia’s government is reviewing Rail Baltica’s first phase to cut costs, keeping the main route for now but pushing for “rational” optimisation rather than expanded requirements. Aviation & Airlines: airBaltic unveiled a restructuring plan to shrink its A220 fleet to about 36 aircraft and seek €225m emergency financing, with a key 17 August vote for bondholders. Forestry & Competition: Latvia’s state forestry firm LVM faces a near-€7.86m fine for giving long-term logging partners unjustified advantages outside public auctions. Cost of Living: Eurostat shows Latvia’s everyday essentials—especially food, clothing and alcohol—are already at or above Western Europe levels, even as overall prices remain below the EU average. Telecom: LMT topped a mystery shopper survey for customer service quality in Latvia. Energy & Industry: Latvia is also weighing Embraer A-29 Super Tucano as a drone-hunting option for the Air Force.

AirBaltic Restructure: Latvia’s flag carrier will cut its A220-300 fleet from 54 to 36 aircraft by year-end, keep Riga as its hub, and secure €225m in interim financing as costs and demand uncertainty bite. Port & Shipping: Riga’s Freeport has started partial demolition of the ED dam at Eksportosta to expand access for larger cruise ships, with more berth capacity expected for the next cruise season. Energy & Industry: Latvia is bracing for a gas price shock that hits consumer prices with a delay, with higher energy costs gradually feeding into food and services. Defence & Dual-Use: Latvia is weighing Embraer’s A-29 Super Tucano as a drone-hunting light combat option, while NATO partners step up protection of critical infrastructure amid false-flag fears. Agriculture: Potato yields in Latvia are expected to be better than last year after a rainy summer last year, with lower prices this season. Industrial Partnerships: ATIRE has partnered with Bohnenkamp Eastern Group as a distribution partner across the Baltics and beyond, strengthening industrial tyre supply chains.

Port & Tourism: Riga has started partial demolition of the ED dam at the Export Port to expand access for larger cruise ships, with works by contractor SIA “Tilts” due before the next cruise season. Energy & Industry Finance: Latvia’s gas price shock is expected to hit consumers with a delay, but will still lift the overall price level as higher TTF gas prices feed into utilities, then food and services. Defense & Dual-Use Tech: Liepāja Airport will receive €100,000 co-financing for civil-military cooperation services, while NATO BATT26 testing in Latvia showed a Ukrainian passive acoustic drone detector working on a moving vehicle. Air Transport Restructuring: airBaltic unveiled a financial-stability-first plan, cutting its A220 fleet by about one-third to around 36 aircraft by year-end and seeking €225m interim financing. Agriculture & Food Supply: Latvia tightens food import restrictions on Russia, while potato harvest expectations point to better yields than last year and lower prices for buyers. Security Watch: Poland and the Baltics are stepping up protection of critical infrastructure amid fears of Russian “false-flag” strikes using Ukrainian-made drones. Local Economy Signals: July inflation in Latvia was 2.6%, with housing/energy up and food down.

airBaltic Restructuring: Latvia’s carrier will cut its Airbus A220 fleet by about one-third to ~36 aircraft by year-end, shift capacity more around Riga, and seek €225m interim financing as it pivots from growth to “financial stability first.” Baltic Security: Reuters reports Poland, Lithuania, Latvia and Estonia are tightening protection of dams, power plants and gas sites after warnings of possible Russian false-flag attacks using captured Ukrainian drones. Defence Industry & Production: Patria and KNDS Deutschland signed a framework for assembly and final integration of Patria 6×6 armoured vehicles under Germany’s CAVS programme, with serial deliveries ramping in 2027. Latvian Tech for Defence: Ukrainian Zvook tested passive acoustic drone-detection sensors on a moving vehicle during Latvia exercises—“it worked”—expanding options beyond fixed towers. Border Enforcement: A tunnel used for illegal crossings near the Latvia–Belarus border was found; 15 people were detained. Energy & Infrastructure: Latvia received 40m euros to expand power grid capacity, while security upgrades also target the Daugava dam and Inčukalns gas storage. AI & Skills: Latvia’s team won silver and bronze at its IOAI debut, and “AI Connect” is set for Riga to bring practical AI to industry and the public. Dual-Use Trade: Latvia’s Dual-Use Export Forum in Rēzekne (6–7 Sept) is drawing 150+ participants from 19 countries.

Critical Infrastructure Security: Poland, Lithuania, Latvia and Estonia are tightening protection of dams, power plants and gas assets after warnings that Russia could stage “false-flag” attacks using Ukrainian-made drones, with Latvia boosting security at the Daugava dam and Inčukalns gas storage. Energy Storage Buildout: SIA Enersense will deliver a 100 MW / 200 MWh battery park in Grobiņa for Liepāja ESS, using Tesla Megapack systems, with a ~€7m contract and grid connection works. Defence & Industry Networking: Latvia’s Dual-Use Export Forum in Rēzekne (6–7 Sept) is drawing 150+ participants from 19 countries, aiming to connect defence and dual-use manufacturers with investors and system integrators near the EU/NATO eastern border. Aviation Cost Pressure: airBaltic is trimming routes and frequencies across Europe, including Lithuania, as it responds to high fuel costs and financial pressure. Latvia Inflation: Latvia’s annual inflation hit 2.6% in July, with housing and energy lifting prices while food fell. Healthcare Access Gap: Latgale has lost 24-hour pharmacy service, leaving the nearest options in Riga. AI for Industry: Rīga hosts “AI Connect” to help people build and apply AI through workshops and tracks for developers, workplaces and students.