AGP Executive Report

Drone Shock to Baltic Tourism: Reuters reports that stray Ukrainian drones are emptying guesthouses in Latvia’s “Land of Blue Lakes,” with cancellations tied to drone alerts and renewed NATO air policing. Nordic-Baltic Defense Push: At a Tallinn summit, Nordic and Baltic leaders backed Ukraine’s “swift accession” to NATO and the EU, while also calling for faster EU accession steps and stronger defense industry investment. Latvia-Ukraine Drone Deal: Zelensky and Latvia’s PM Andris Kulbergs signed a Drone Deal focused on joint drone development and production, plus counter-drone know-how and integrated air defense cooperation. Airspace Cost Pressure: Estonia’s leaders said shooting down drones with fighter jets works but is expensive, pushing for cheaper solutions using Ukrainian expertise. Maritime Security Upgrade: NATO’s BALTOPS 2026 near Liepāja highlighted U.S. Navy unmanned underwater drones for monitoring and protecting contested Baltic waters. Payments Tech Spotlight: DECTA was named to The Payments Power 50 2026 for end-to-end payments processing. Consumer Tech Localization: Microshare added 31 languages to its EverSmart™ Pest and Clean AI tools, aiming to speed adoption across multilingual operations. EU Sanctions Watch: The EU Commission proposed an entry ban for Russian military servicepeople and further restrictions tied to Russia’s “shadow fleet.”

Defense & Drones: Ukraine and Latvia signed a new Drone Deal in Tallinn, with Latvia backing joint development and production of drones, air defense and missile-defense tech, plus financing and technology exchange. Regional Security: Nordic and Baltic governments backed Ukraine’s swift EU accession and pushed deeper defense investment, while Zelenskyy said Ukraine can share drone know-how with Baltic partners to counter stray drones. EU Sanctions: The European Commission proposed a new Russia sanctions package, including an EU entry ban for Russian military servicepeople since the 2022 invasion and further limits tied to Russia’s “shadow fleet.” Energy & Shipping Tech: A hydrogen-powered “gas station” for ships cleared key trials, aiming to cut the long permitting grind for shore power. Latvia Economy: Latvia’s inflation hit a 5-month high in May at 3.5% y/y, driven mainly by housing, utilities, and transport. Transport & Industry: airBaltic reported its strongest-ever May with 466,500 passengers; Latvian Railways plans safety upgrades at 45 crossings over two years. Payments & Fintech: DECTA was named to The Payments Power 50 2026, highlighting end-to-end payments scale.

Baltic Air Security: NATO jets shot down a drone that entered Latvian airspace in Latgale after Russian electronic warfare, triggering an air-threat alert and reinforcing Latvia’s eastern air-defense posture. Defense Industry & Procurement: EU and NATO are pushing to scale anti-drone capabilities and speed cooperation with Ukraine’s defense industry, while NATO’s Rapid Adoption push highlights the need to move faster on counter-drone tech. Energy & War Economy: Ukraine says it hit oil depots in Russia-occupied Crimea, as Russia reports “certain problems” with fuel supplies after energy-site strikes. Agribusiness Investment: Agrova Baltics started building three new laying hen houses in Alūksne in a EUR 30m plan to raise egg output by 56% to ~280m eggs/year. Consumer & Compliance: An EU check found 60% of remote-controlled toys failed interference rules, leading to bans and corrective actions across 13 countries, including Latvia. Logistics & Trade: Latvia targets illicit cigarette factories by working with equipment suppliers, aiming to disrupt supply routes. Labor Market: Latvia had nearly 20,000 job vacancies in Q1, with the biggest shares in public administration and mining/quarrying.

Baltic Air Security: NATO jets shot down a drone that entered Latvian airspace in Latgale, with Latvia citing Russian electronic warfare as the cause; authorities had issued a shelter alert across several municipalities before the threat ended. Counter-Drone Industry: NATO and EU officials are pushing faster anti-drone capability rollouts and closer cooperation with Ukraine’s defense industry, while Latvia’s drone radar and counter-UAV ecosystem keeps expanding. Defense Procurement & Vehicles: Latvia unveiled its “Hunter” mechanized infantry vehicle, built on the Ascod platform, with the defence ministry framing it as a boost for local industry and future regional production. Agri-Food Investment: Agrova Baltics began EUR 30m construction of three new laying hen houses in Alūksne, targeting a 56% jump in annual egg output to about 280m eggs. Aviation Connectivity: Wizz Air signed a Starlink satellite internet deal to equip its fleet from 2027, following airBaltic’s earlier rollout. Customs & Trade Controls: Latvia is stepping up efforts to curb illicit cigarette supply routes, linking enforcement to EU import control systems. EU Consumer Safety: An EU check of remote-controlled toys found 60% failed interference rules, triggering bans and corrective actions across multiple countries including Latvia. Shipping/Transport: Tallink’s Romantika returns to the Tallinn–Stockholm route from 2 July, adding weekend services and summer entertainment cruises.

Air Defence & Security: Latvia issued an air threat alert after at least one Russian drone entered its airspace, with NATO jets scrambled to shoot it down. EU Defence Industry Push: Leaders including Starmer, Macron and Merz urged faster ramp-up of defensive weapons production after reports of Russia’s hypersonic Oreshnik missiles. Underwater Infrastructure Protection: Latvia joined a new 17-nation initiative (GUIDE) to protect critical underwater cables and energy links, aiming for shared principles and cooperation. Counter-Drone Manufacturing: A Mark I close-range counter-drone missile is nearing production, with a long-term development and output deal involving a Polish partner. Energy Storage & Grid Economics: Baltic power prices stayed volatile as wind and hydropower output shifted; experts point to battery storage (BESS) and new demand sources like data centres as key to handling low-price solar hours. Local Food Procurement: Rīga amended school catering procurement rules after challenges over how “green” and organic criteria are applied, raising concerns for organic supply to children. Pharma Trade Pressure: Latvia’s medicine exports to Russia remain significant, with industry arguing reorientation takes time and that pharmaceuticals aren’t covered by sanctions. EBRD & Regional Finance: EBRD backed pan-Baltic capital market integration, while Ameriabank and FMO signed a EUR 120m green-focused MSME loan deal in Armenia. Fertilizer Transit Warning: Commentators warn Latvia should scrutinize fertilizer transit that can feed Russia’s war economy via logistics corridors.

Baltic Energy Storage Boom: Sunly and Rolls-Royce Power Systems have signed an agreement to build four battery energy storage systems in Latvia, totaling 490 MWh (with a possible 790 MWh regional expansion), aiming to stabilize grids as solar output can plunge to near-zero and balancing demand rises. EBRD in Riga: The EBRD used its annual meeting in Riga to push conflict-affected economies and sustainable growth, while also signing a framework to deepen a unified pan-Baltic capital market across Estonia, Latvia and Lithuania. EU Economic Resilience Plan: The European Commission unveiled the 2026 European Semester Spring Package, steering member states toward competitiveness, decarbonisation, housing solutions and skills—backed by EU funding tools. Latvia’s Pharma Exports to Russia: New data show Latvia exported about EUR 94.5m in medicines to Russia in 2021 and nearly EUR 76m last year, with industry saying growth is driven by Russian inflation and price shifts rather than expanded product ranges. Armenia Finance via Riga Deal: Ameriabank and FMO signed a EUR 120m loan in Riga to expand MSME lending in Armenia, with at least 25% earmarked for green projects. Energy Prices Watch: Estonia’s power prices swung sharply this week, with storage and weaker wind generation cited as key drivers.

Baltic Energy Storage Push: Sunly and Rolls-Royce Power Systems signed an agreement for four large battery energy storage systems in Latvia, totaling 490 MWh (with a possible 790 MWh regional expansion), aiming to balance fast-growing solar output and grid stability as low-price hours become harder to monetize. EBRD in Riga: The EBRD Annual Meeting in Riga saw the UAE back “Advancing Economic Governance,” while the EU and EBRD expanded InvestEU guarantees by up to €478.4m to unlock higher-risk green, digital and infrastructure projects across member states. Local Grid Reality Check: Baltic energy-sector experts warned that “realization” is the bottleneck: when solar prices plunge, payback suffers—so they point to BESS and even attracting large data centers to create steady demand. Defense Priorities: Latvia urged NATO to keep collective defense and deterrence central, stressing deployable forces, resilient supply chains, advanced tech and ongoing investments in air defense and drones. Armenia Trade Shock via EU Path: EU leaders prepared over €50m in support as Russia expanded restrictions on Armenian agricultural exports, including flowers, with shipments planned to arrive in Latvia. Identity & Payments Tech: IDenfy added Smart-ID to its identity verification platform for Latvia, Lithuania and Estonia, supporting onboarding without physical document checks.

Energy Storage & Grid Balancing: Sunly and Rolls-Royce Power Systems signed a deal for four 490 MWh battery energy storage projects in Latvia, with the first Valmiera hybrid site due in 2027—aimed at solving the Baltic “realization” problem as solar output can drive prices toward zero. EBRD in Riga: The EBRD Annual Meeting in Riga saw the EU expand InvestEU guarantees by up to €478.4m to back higher-risk green, digital and infrastructure projects, while EBRD also pledged continued scaling of support for conflict-affected economies including Ukraine and parts of the Middle East. MSME Green Finance: Ameriabank and FMO agreed a €120m loan package in Armenia, with at least 25% earmarked for green projects and support for women and young entrepreneurs in agriculture and rural areas. Defense & Deterrence: Latvia urged NATO to keep collective defense and deterrence as the core focus, stressing deployable forces, resilient supply chains and investments in air defense and drones. Pre-Election Rules: Latvia’s pre-election campaign period for Saeima elections starts June 6, with KNAB warning parties to label paid political advertising and avoid hidden campaigning. Infrastructure IPO: Bank of Latvia approved LAU Infra Group’s IPO prospectus; subscriptions begin June 10 for shares priced at €1.57, targeting Nasdaq Riga listing. Identity & Fintech Enablement: IDenfy added Smart-ID to its identity verification platform for the Baltic market, letting businesses onboard users using everyday mobile e-IDs. Counterfeit Medicines Crackdown: Europol backed an international operation dismantling a counterfeit medicines and supplements network linked to up to €240m in illicit sales.

EBRD x EU Boost: The EBRD and the European Union expanded InvestEU guarantees by up to €478.4mn (plus €11.4mn for advisory work) to back higher-risk green, digital and infrastructure projects across EU economies where the bank operates. Energy Storage Deal: Sunly and Rolls-Royce Power Systems signed contracts for four Latvia battery energy storage systems totaling 490 MWh, with the first Valmiera site due in early 2027; Sunly cites EU cybersecurity (NIS2) requirements as a key reason for choosing a European supplier. Biomethane Push in Latvia: The EBRD approved a €26m loan to Next Biogas (Host Group) to convert a plant in Lēdurga into a major biomethane facility producing about 80,070 MWh annually, using agricultural and food waste. Local Food Procurement: Latvia’s farmers’ group Zemnieku saeima wants public food tenders to move beyond “lowest price,” arguing current rules let intermediaries win while local growers lose out. Finance Sector: Bank of Latvia approved the IPO prospectus for LAU Infra Group, with subscriptions starting June 10 and shares planned for listing on Nasdaq Riga. Undersea Security Framework: Seventeen countries launched GUIDE to protect critical underwater cables and energy infrastructure, including Latvia, via voluntary information sharing.

Energy Storage Deal: Rolls-Royce Power Systems has signed a 490 MWh battery energy storage contract with Sunly for four Latvia projects, with the first hybrid park in Valmiera due in Q1 2027; Sunly cited EU cybersecurity rules (NIS2) as a key reason for choosing a European supplier. Green Finance: The EBRD approved a €26m loan to Next Biogas (Host Group) to convert a Lēdurga biogas plant into a biomethane facility producing about 80,070 MWh annually for grid injection and EU exports. Capital Markets: Bank of Latvia approved LAU Infra Group’s IPO prospectus; subscriptions start June 10 for up to 6.4m shares at €1.57 each, targeting Nasdaq Riga listing. Undersea Security: Seventeen countries launched GUIDE, a voluntary framework to share best practices and improve early warning for protecting critical underwater telecom and energy cables; Latvia is among the participants. Cyber & Industry Risk: A CERT.lv-linked warning highlights high cyber threat levels and nearly 800,000 vulnerable devices, with AI making attacks faster and more automated—an issue for industrial operators and critical digital infrastructure. Defence Tech Cooperation: Latvia and Ukraine are drafting a long-term agreement covering drone tech, air defence, cybersecurity, and defence-industry integration.

Armenia–EU Trade Push: The EU is moving fast to offset Russia’s new restrictions on Armenian agri-food exports, announcing €50m+ in immediate aid and trade-easing measures after a call between Ursula von der Leyen and Nikol Pashinyan; a first shipment of 10,000 Armenian flowers is set to arrive in Latvia on June 5. Latvian Industry Pulse: Latvia’s industrial production rose 7.0% year-on-year in April, with manufacturing up 6.8% and electricity/gas supply up 12.1%. Energy & Infrastructure: Sunly opened a 54 MW solar park in Valmiera, part of a hybrid plan reaching €100m, while Latvenergo plans to donate decommissioned TEC-2 equipment to support Ukraine’s energy rebuild. Finance: Latvia’s State Treasury raised €1bn via a 7-year sustainable bond. Energy Tech Spotlight: AdvanGrid is expanding its smart monitoring platform to cut electricity waste and improve grid efficiency. Business & Logistics: Cosmos Health says its Sky Premium Life products are now available across all 27 EU states via Skroutz, including Latvia.

Latvian Industry Pulse: Latvia’s industrial production rose 7.0% year-on-year in April, with manufacturing up 6.8% and electricity & gas supply up 12.1%, while mining fell 8.3%. Energy & Renewables: Sunly opened a major 54 MW solar park near Valmiera, part of a hybrid plan reaching EUR 100 million, and is pairing it with battery storage via a Rolls-Royce deal. Grid Tech: AdvanGrid is pushing smarter energy management using sensors, AI analytics and real-time monitoring. Power Aid for Ukraine: Latvenergo plans to donate decommissioned TEC-2 equipment to support Ukraine’s energy rebuild, pending approvals. Finance & Markets: Latvia’s State Treasury raised EUR 1 billion via a 7-year sustainable bond. Transport Upgrades: Latvian Railways says electrified Riga–Jelgava services could reach 140 km/h after modernization. Defence & Drones: Latvia’s new Defence Minister says drones must be intercepted and destroyed, and warns one system won’t be enough. Rail Baltica Workplace Claims: Latvian Radio reports bullying allegations at Rail Baltica’s implementing company are under scrutiny by the State Labour Inspectorate. Trade & Logistics: An opinion piece argues fertiliser transit through Russia keeps feeding the war economy while Latvia loses volumes and revenue.

Defence & Industry: Latvia’s new Defence Minister Raivis Melnis says drones entering Latvian airspace must be intercepted and destroyed, pushing for a full network of surveillance, detection and interception—not just a single counter-drone purchase—and for tight integration between defence industry and the armed forces. Regional Security Tech Transfer: Ukraine will send counter-drone expert teams to Latvia, Lithuania, Estonia and Romania, sharing interceptor know-how and operational lessons from the war. Baltic Defence Procurement: Latvia and Finland agreed to develop a Common Protected Vehicle system, aiming for serial production and joint future procurement over a three-year programme. Ammunition Sector: Ammunity appointed Kaspars Pollaks as CEO from 1 June, with priorities including quality, higher production capacity and deeper end-user cooperation. Logistics & Trade: 4RCargo became Finnair Cargo’s general sales agent for Estonia, Latvia and Lithuania, boosting Baltic access to Finnair’s global cargo network via Helsinki. Food & Agriculture: Latvian fruit and vegetable growers complain supermarkets favour imports, citing procurement rules that local farms struggle to meet on volume, quality and certification. EU Economic Backdrop: The European Commission’s 2026 Spring Semester roadmap targets competitiveness, skills, resilience and housing, while keeping fiscal sustainability front and centre. Fintech (Baltic focus): Baltic Fintech Days in Riga highlighted embedded finance, payments infrastructure, and scaling compliance across the region.

Baltic Defence & Industry: Latvia and Finland agreed to jointly develop a Common Protected Vehicle (CPV) system, with a three-year plan and potential future serial production, while Latvia also moved on Ammunity’s leadership change as Kaspars Pollaks took over as CEO from 1 June, signaling a push toward higher capacity and deeper end-user cooperation. Rail Baltica Funding Pressure: RB Rail warned Latvia’s Rail Baltica main line decisions can’t wait, with unit costs in Latvia reported as more than twice Estonia’s and a funding gap tied to the 2030 target; options include a PPP for the northern section or redesigning the southern segment to cut costs. Energy & Infrastructure: Vindr opened Latvia’s first hybrid solar-plus-battery energy park in Līvāni (3.4m euros), aiming to reduce import dependence and stabilize the grid. Logistics & Trade Links: 4RCargo was appointed Finnair Cargo’s general sales agent across Estonia, Latvia and Lithuania, boosting Baltic access to Finnair’s global freight network. Macro Outlook: The EBRD cut growth forecasts for Latvia and the Baltics, citing higher energy costs from the Middle East conflict and risks around major projects like Rail Baltica. Security Reality Check: NATO counter-drone testing in Latvia highlighted how hard it is to reliably stop drones—success must be consistent, while attackers only need one pass.

Energy & Industry Investment: Latvia’s first hybrid wind-and-solar style project is now live: Vindr opened a €3.4m hybrid energy park in Līvāni with 6,000+ solar panels (4.25 MWp) plus a 3.7 MW/7.5 MWh battery system to cut import costs and stabilize the grid. Defense & Trade Policy: Prime Minister Andris Kulbergs says he will instruct the foreign ministry to prepare a decision to terminate export/import trade with Russia, while allowing EU-coordinated exceptions—especially for pharma where certification makes quick switching hard. Cross-border Energy Support: Ukraine’s Deputy PM Yuliia Svyrydenko discussed accelerating equipment transfers from Latvian CHPPs to help restore Ukrainian energy facilities ahead of the next heating season. Logistics & Consumer Goods: Polestar expands retail in Estonia, Latvia and Lithuania via Volvax Baltic, adding planned Riga and other spaces and access to 2,800+ charging points. Food & Agriculture Regulation: Baldone authorities move to shut down a quail farm operation after residents reported severe odor impacts. Local Infrastructure & Safety: Latvia’s nationwide early-warning test found one siren failed (Kurzeme), while cell broadcast delivery issues again raised questions about phone settings and app effectiveness. Business Growth: Prime Prometics topped €101m revenue in 2025, while NML Group targets up to €3m turnover in 2026 as cross-border deliveries rise across the Baltics.

Energy & Security Cooperation: Latvia and Ukraine are accelerating support for each other’s resilience, with Ukraine’s deputy PM Yuliia Svyrydenko discussing faster equipment transfers from Latvian CHPPs to restore Ukrainian energy facilities, alongside preparations for the next heating season. Defense Tech & Drones: Latvia and Ukraine also plan a bilateral agreement on drone technologies, while Latvia’s drone-related concerns continue to shape public life in Latgale after warning alerts. Rail Baltica Cost Pressure: RB Rail says Latvia’s Rail Baltica mainline contract is “exceptionally expensive,” with unit costs for embankment works far higher than in Estonia and Lithuania, pushing the government toward redesign or renegotiation choices. Baltic Business Growth: Prime Prometics topped €101m revenue in 2025, and NML Group targets up to €3m in 2026 as cross-border FMCG deliveries rise across the Baltics. Food Trade Spotlight: Greek and Latvian producers drew Canadian interest at SIAL Canada 2026 under the EU-backed “Premium European Products” campaign. Industry Innovation: SPH Engineering launched a global marketplace to match drone surveying needs with local service providers, aiming to speed up specialized data projects. EU Investment Outlook: A Riga forum warns the Baltics still face fragmented policies and weak research-industry links that slow innovation into faster growth.