AGP Executive Report

Baltic Security Posture: Lithuania’s PM says the country is ready to “fight back” if Russia attacks, as NATO allies keep troops there and both Europe and Latvia brace for hybrid threats. EU Sanctions Politics: The EU extended Russia-related sanctions to 2029 but delisted oligarchs Alisher Usmanov and Mikhail Fridman; Latvia abstained after pushing back, while officials warn pressure must keep growing. Latvia Election-Era Risk: Latvia’s president calls the coming weeks “alarming,” citing preparations for cyberattacks, information operations, and election disruptions. Defense Supply Chain Hit: Latvia extradited three suspects to Estonia over an arson attack at Milrem Robotics, with sabotage among versions being checked. Riga Airport Development: Riga Airport launched a tender for the first phase of RIX Airport City, including a hotel and offices by 2030. Energy & Industry Context: Eurostat data show Latvia among EU leaders in renewable electricity share, while regional grid resilience and retrofits are increasingly framed as both cost and security measures. Business & Trade: Latvian entrepreneurs visited Paramount and Disney in the US as part of a LIAA-led push to deepen partnerships.

Sanctions Gridlock: Latvia blocked an EU deal to renew Russia-linked sanctions after a compromise would delist oligarchs Alisher Usmanov and Mikhail Fridman, pushing talks to the final deadline and risking the whole regime’s renewal. Defense & Security: NATO scrambled jets over Poland and Latvia amid a Russian strike on Ukraine; separately, Latvia extradited three suspects in an arson case involving Milrem Robotics to Estonia for investigation. Energy Infrastructure: Lithuania plans a hardened power substation near Kaliningrad to keep Baltic electricity stable under drone and sabotage threats, while Latvia’s Riga heating operator faces a potential 20–30% tariff rise from December. Industry & Logistics: A week of warnings highlights how sanctions and border controls shape cargo flows, with commentary urging Latvia to weigh economic costs of turning away transit. Business & Development: Riga Airport kicked off the next RIX Airport City phase, seeking a developer for a hotel and office complex; fintech leaders also argue Latvia can grow by attracting near-term exportable services. Aviation/Travel: UAE flight disruptions continue as airlines adjust schedules.

Defence Procurement: Latvia has picked Excalibur Army’s Morana 155mm wheeled artillery over BAE Systems’ Archer, citing better pricing, faster delivery, and stronger involvement of local defence industry. EU Sanctions Politics: EU diplomats are trying again to agree on renewing Russia-linked sanctions while lifting measures on oligarchs Alisher Usmanov and Mikhail Fridman—Latvia reportedly held back on signing off. Energy & Heating Costs: Latvia’s households still use most energy for space and water heating (83.9% in 2025), with 56.8% of homes supplied by external heat providers; electricity use per household rose to 178 kWh/month. Macro Outlook: The IMF says Latvia’s growth is slowing (1.8% expected in 2026) as inflation risks persist and fiscal pressures rise, urging a credible medium-term plan and faster reforms. Mobility in Europe: A Riga forum pushed for climate-neutral, resilient mobility by 2030, linking civilian transport upgrades with military mobility needs. Aviation: Ryanair will grow Riga capacity by 6% this winter, adding 40,000 seats and expanding routes.

Baltic Security Watch: European intelligence chiefs warn Russia could intensify actions against NATO in the coming months, including sabotage, drone or missile strikes, and even limited incursions to test Article 5—though Latvia’s State Security Service says there are currently no signs of an imminent attack. Defence Procurement: Latvia selected Excalibur Army’s Morana 155mm/52 wheeled artillery over Sweden’s Archer, citing price, delivery terms, capability, and planned Latvian industrial participation. Space & Telecom: LMT Group and Novaspace signed an agreement at ESA’s ESTEC to develop a Latvia-focused 5G/6G satellite communications innovation hub. Energy Markets: Eurostat reports EU renewables supplied 54.1% of net electricity in Q2 2026 (solar 41.6%, wind 27.7%, hydro 22.6%); Latvia led the EU at 97.7%. Aviation & Business: Ryanair plans a 6% winter capacity increase at Riga Airport, adding 40,000 seats; Signet Bank Group reported 68% loan portfolio growth in H1 2026. Housing & Construction: Ventspils developers are finally responding to demand with new energy-efficient residential renovations and fresh commercial projects.

Security Outlook: European spy chiefs warn Russia’s next NATO test could come in “months, not years,” via drones, missiles, sabotage or even a limited incursion, while Latvia’s State Security Service says there are no signs of an imminent attack. Latvian Defence & Air Readiness: President Edgars Rinkēvičs says Europe is falling behind on drone and aerial warfare and that many NATO states may struggle against a missile strike, as Patriot and interceptor supply bottlenecks persist. Industry Mission (Germany): LIAA trade missions in Berlin pushed Latvia’s renewables, defence/dual-use and life sciences, with planned investment projects topping EUR 600m and talks on German market entry. Energy Numbers: Eurostat reports renewables supplied 54.1% of EU electricity in Q2 2026; Latvia leads at 97.7% (mostly hydro and solar). Aviation Shock: Rising fuel costs are driving airline bankruptcies and restructurings, with AirBaltic among carriers facing pressure. Food & Trade: Wheat markets stay choppy as Black Sea export uncertainty continues, with Russian wheat sales showing up from Baltic ports including Latvia. Environment & Cleanup: World Cleanup Day 2026 returns with “Strive for Five,” and Riga is set to host global media and a public village.

Aviation & Fuel Shock: Global airlines are facing a wave of bankruptcies and restructuring as fuel prices surge about 70% year-on-year to roughly $181 a barrel, hitting smaller carriers first and forcing fare hikes and route cuts. Air Defence Readiness: Latvia’s President Edgars Rinkēvičs warns most NATO states can’t currently repel a Russian missile attack, and that drone warfare advances in Ukraine are moving so fast that today’s countermeasures could be outdated by mid-2027. Patriot Supply Push: The US says it’s working with NATO allies to find available Patriot missiles for Ukraine and is exploring expanded manufacturing and licensing, but export and intellectual-property details remain complex. Latvian Life Sciences to Germany: A LIAA-led trade mission in Berlin focused on Latvian medical technologies, digital health, and pharmaceuticals, aiming for joint product development, clinical research, and deeper access to the German market. Renewables Snapshot: Eurostat reports renewables supplied 54.1% of EU electricity in Q2 2026; Latvia leads at 97.7%, driven mainly by hydropower and solar. Latvian Defence Industry Links: Latvian defence and dual-use firms met German counterparts in Berlin to plug into supply chains and co-develop technologies, including unmanned systems and electronic components. Energy Aid to Ukraine: Kyiv and 21 regions received over 2,300 tonnes of energy equipment from partners across 27 countries to repair and expand critical infrastructure ahead of winter. EU Security Alarm: Macron and other European leaders are stepping up plans for critical infrastructure protection against drones, cyberattacks, and sabotage as Russia’s hybrid threat intensifies.

Air Defence & Drones: Latvia’s President Edgars Rinkēvičs warns Europe and NATO are falling behind Ukraine’s “lightning speed” drone and aerial warfare, saying current air, drone and anti-ballistic defences could be obsolete within months and that many allies can’t reliably repel a Russian missile strike. Security Diplomacy: Retired US Lt Gen Ben Hodges criticises US envoys Steve Witkoff and Jared Kushner for reportedly using Russian-provided transport in Moscow, arguing it created an avoidable counterintelligence risk. Energy & Grid Resilience: Kyiv and 21 regions received 2,300+ tonnes of energy equipment from partners across 27 countries in June–August, with 188 shipments aimed at repairing critical infrastructure ahead of winter. EU Power Mix: Eurostat reports renewables generated 54.1% of EU electricity in Q2 2026, with Latvia at 97.7% (mostly hydro and solar). Aviation Shock: Fuel prices surged about 70% year-on-year to around $181 per barrel, triggering bankruptcies and restructuring pressures across airlines, including AirBaltic. Latvian Industry Abroad: LIAA-backed defence and dual-use firms met German industry leaders in Berlin to plug into German supply chains and joint technology development. Food & Trade Markets: Wheat prices tracked Chicago lower as Black Sea export uncertainty persists, while Russian wheat continues to reach Baltic ports.

Air Defence Readiness: Latvian President Edgars Rinkēvičs warned Europe and NATO are falling behind Ukraine’s “lightning speed” drone and aerial warfare, saying current countermeasures could be outdated within months and that many countries may struggle to stop a Russian missile salvo. Energy Infrastructure Aid: Ukraine received 2,333 tonnes of energy equipment from 27 countries via Ministry of Energy hubs, with 188 shipments supporting transformers, generators and grid repairs ahead of winter. Renewables Snapshot: Eurostat data shows renewables generated 54.1% of EU electricity in Q2 2026 (solar 41.6% of renewables, wind 27.7%, hydro 22.6%); Latvia leads at 97.7% (mostly hydro and solar). Defence Industry Links: Latvian defence and dual-use firms met German industry leaders in Berlin to plug into German supply chains and co-develop technologies. Procurement Shift: Latvia chose Czech Morana 155mm wheeled howitzers over Sweden’s Archer, citing cost, delivery timelines and local industry involvement. Public Integrity: KNAB will investigate ZZS for allegedly distributing alcohol-linked “black balsam” souvenirs to seniors during the pre-election period.

Latvia’s Defence Procurement: Latvia has picked the Czech Morana 155mm wheeled self-propelled howitzers over Sweden’s Archer, citing lower cost, faster delivery and stronger local industry involvement; the government says the move boosts long-range indirect fire for NATO’s northeastern flank. EU Energy & Grid Projects: The EU approved €125.81m under CEF Energy for three cross-border renewables projects, including €44.4m for Latvia-Lithuania wind works and major district-heating upgrades in Germany-Poland. Renewables Snapshot: Eurostat reports renewables supplied 54.1% of EU electricity in Q2 2026, with Latvia leading at 97.7% (mostly hydro and solar). Latvian Payments Regulation: Latvijas Banka licensed Velvian SIA as a payment institution, allowing card payment acceptance services for merchants and platforms. Hybrid Warfare Warning: Latvia’s president warned Europe is behind on drone and aerial warfare readiness, stressing air-defense gaps could be critical if the conflict expands. Baltic Mobility Forum: An EESC forum in Riga pushed for mobility systems that are climate-neutral, resilient and also fit for military mobility needs. FinTech Trade Mission: Latvian fintech firms pitched German investors in Berlin, aiming to expand in Europe’s largest financial market. Pellet Market: Latvian pellet prices are starting to fall as demand softens in exports and at home, with producers expecting a slower, steady decline.

Defence Procurement Shift: Latvia’s Cabinet has chosen the Czech Morana 155mm wheeled self-propelled howitzer over Sweden’s Archer, citing lower cost, faster delivery, and stronger involvement of Latvian industry in the deal. EU Energy & Infrastructure: The European Commission approved €125.81m under CEF Energy for three cross-border renewable projects, including €44.4m for a Latvia–Lithuania onshore wind implementation phase and €70m/€11.41m for German-Polish district heating upgrades. Latvian Payments Regulation: Latvijas Banka issued a licence to Velvian SIA to operate as a payment institution, allowing card-payment acceptance services for merchants and platforms. Rail Freight Pressure: Latvia’s Saeima backed expedited increases to railway transit fees for Russian grain (up to 300% as a recommended benchmark), with revenues earmarked for Ukraine’s defence. Renewables Market Watch: Pellet prices in Latvia are starting to fall as demand softens in export and domestic markets, though declines are expected to be gradual. Media & Culture Policy: Streaming platforms will face new obligations to invest 3.5% of Latvia on-demand revenue into European audiovisual works, including Latvian-language content or funding via the National Film Centre. Fintech Trade Mission: Latvian fintech firms pitched solutions to German institutional investors in Berlin, aiming to expand in Europe’s largest economy. Security & Governance: KNAB will investigate ZZS-linked distribution of alcohol-related souvenirs to seniors, while Latvia also expanded its personae non gratae list to include Russian hockey star Alexander Ovechkin.

EU Energy Funding: The European Commission approved €125.81M under the Connecting Europe Facility for three cross-border renewable projects: two Germany–Poland district heating schemes and a Latvia–Lithuania border onshore wind park (up to ~680 GWh/year). Latvia Grain Transit Fees: Latvia’s Saeima backed faster, temporary (until end-2026) fee hikes for Russian grain transit via Latvian rail infrastructure, with revenue earmarked for Ukraine’s defense; a full ban on Russian/Belarus grain transit is also being considered. Russian Food Import Ban: Latvia moved toward a wider ban on importing food products from Russia and Belarus, extending beyond agricultural goods and feed to items like sweets, sauces, ready-made soups, seeds and processed vegetable products. Defense Procurement: Latvia chose the Czech Morana 155mm wheeled howitzer over Sweden’s Archer, citing cost, delivery speed, and the share of work for Latvian industry. Streaming & Film Industry: Saeima supported rules requiring major on-demand streaming platforms to invest 3.5% of Latvia-based revenue in European audiovisual works (including Latvian-language productions). Aviation Shock: Wizz Air cut planned capacity for H2 as Iran-war fuel costs bite, while airBaltic’s Chapter 11 restructuring continues to ripple through the region. Election Air Security: Germany will deploy Eurofighter jets to protect Latvian airspace during the Oct. 3 election amid drone-incursion concerns.

Streaming & Culture Funding: Latvia’s Saeima backs a law that will require major on-demand streaming platforms to invest 3.5% of Latvia-relevant revenue each year into European audiovisual works, including Latvian-language productions or Latvian films, or via National Film Centre contributions. Banking & Printing Industry: Luminor grants EUR 6.3m to Livonia Print for new production equipment, aiming to boost efficiency and strengthen export competitiveness; the firm prints over 60% of Latvia’s books and exports about 97% of output. Aviation Restructuring: airBaltic has been granted U.S. Chapter 11 relief, while Wizz Air cuts its second-half capacity forecast by 5% as the Iran war drives fuel-cost pressure across airlines. Security & Defence: Germany will deploy four Eurofighter jets to protect Latvian airspace during the Oct. 3 election amid drone-incursion concerns; Latvia’s Security Service also opened a case over threats targeting arms suppliers to Ukraine. Trade & Logistics: Latvia sees a sharp rise in grain transit—nearly 159,000 tonnes of Russian grain handled in August—while parliament considers tighter controls and possible bans on Russian/Belarusian agricultural transit and storage. Public Transport Disruption: a bus strike protest cancelled 3,000+ journeys across regions, hitting commuters and school routes.

Aviation Restructuring: airBaltic has been granted U.S. Chapter 11 relief by a New York bankruptcy court, allowing it to keep flying while restructuring and drawing an initial €140m from a €350m debtor-in-possession facility. Defense Cooperation: Canada has formally applied to join the UK-led Joint Expeditionary Force (JEF), a rapid-response group that already includes Latvia, signaling deeper transatlantic defense ties and potential industrial collaboration via the Global Combat Air Programme. Grain Transit Controls: Ukraine’s MFA welcomed Latvia’s preparations to tighten controls on Russian grain transit, including higher tariffs and possible broader bans, to stop stolen Ukrainian grain being routed through Latvian ports. EU Tech Investment: The European Commission backed the first AI Important Project of Common European Interest (IPCEI) designed by 19 member states, including Latvia, aiming to build decentralised AI services and strengthen Europe’s AI value chain. Energy Costs Watch: Latvia’s heating tariffs could rise 5–15% this season, with the ministry also proposing expanded housing benefit support for more households. Drone Regulation: A Finnish platform, Drone Assistant, launched to help commercial drone operators navigate which rules apply by country and location; its Drone Regulation Index 2026 ranks Latvia among the top performers.

AI Industrial Push: The European Commission backed an IPCEI AI plan co-designed by 19 EU states, including Latvia, to build widely accessible AI services across the full stack and strengthen Europe’s AI value chain. Aviation Restructuring: airBaltic secured US court approval to keep flying under Chapter 11 and draw €140m from a €350m financing facility as jet-fuel shocks tied to the Iran war bite. Baltic Security: NATO jets shot down a drone over Lithuania after it entered from Belarus, adding to a run of Baltic and Nordic incursions that are raising pressure on air defenses and cross-border readiness. Energy Costs in Latvia: Latvia’s heating tariffs could rise 5–15% this season, with the ministry also proposing expanded housing benefit support and higher coefficients for eligible households. Maritime Risk: The UN Security Council held an emergency session on Bab el-Mandeb as Yemen’s envoy warned the strait could become a “blackmail card,” urging stronger protection for shipping and energy routes. Defence-Industry Links: Latvia and Italy honoured pilots who shot down a drone over Latvian airspace, highlighting growing cooperation between the two countries’ defence and security industries. Food Tech (Nordics): VTT and Finnish food firms wrapped up a €3m RETHINK programme to make plant-based ingredient processing more commercially viable, targeting oats and legumes. Storage Deal: Bruynzeel Storage Systems partnered with Finnish distributor Laaksonen as exclusive distributor for Finland, Estonia and Latvia, aiming to deepen its Baltic market position.

Aviation & Security: NATO jets shot down a drone over Lithuania after it entered from Belarus, marking a rare first for the Baltic state and renewing fears that the Ukraine war is spilling into NATO airspace; Lithuania says origin and whether it carried explosives are still under investigation, while NATO leaders stress readiness and resolve. Maritime Risk: The UN Security Council will hold an emergency session on the Bab al-Mandab Strait as Yemen fighting intensifies, with Iran-backed Houthi advances raising the risk to one of the world’s key shipping corridors. Latvian Business & Finance: airBaltic won permission for nearly $162m in Chapter 11 financing as restructuring continues, with creditors and bondholders disputing collateral impacts. Transport Infrastructure: RIX Riga Airport has started the next phase of its terminal expansion, adding capacity and new passenger, security, and baggage facilities. EU Industry & Investment: the EU is backing a dual-use upgrade of Klaipeda’s cruise terminal to support NATO ship access, blending military readiness with green port improvements. Tax Policy: Latvia’s economics ministry says cutting fuel VAT could lower pump prices by roughly mid-teens cents per liter if fully passed through. Defence Finance: Latvia is among countries backing Canada-led talks on a Defence, Security and Resilience Bank aimed at cheaper long-term funding for military projects.

Aviation Restructuring: airBaltic has filed for Chapter 11 protection in the US, launching a court-supervised debt restructuring while saying flights and customer services continue and noting about €350m in debtor-in-possession financing. Energy & Transport Costs: Latvia’s Economics Ministry estimates cutting fuel VAT from 21% to 12% could lower diesel by ~15.6 cents and gasoline by ~14.6 cents per liter, if the full cut reaches retail prices. Forestry & Manufacturing Finance: Luminor provided €1.06m to RĒZEKNES MEŽS to boost timber purchasing, production and exports, combining a credit line for working capital with a long-term loan. Crisis Communications: Latvia’s Transport Ministry is working with mobile operators on a plan to keep mobile communications usable for at least 72 hours in a crisis, including emergency calls to 112 and priority network elements. Payments & Compliance: Wallester added CTO Andrei Gornostajev and CRO Rein Ojavere to its management board and assigned AML/sanctions oversight to Fred Sooläte. Defense Tech & Robotics: XTEND plans a new Mexico manufacturing and support hub (XFAB Mexico) to expand its robotics footprint amid Mexico’s 2026 defense and security budget. Baltic Security: NATO fighter jets shot down a drone over Lithuania after it likely entered from Belarus, with officials calling it a rare first for Lithuania and proof of allied readiness. Agriculture Prices: Eurostat reports EU agricultural output prices fell again in Q2 2026, with milk down sharply and Latvia among the biggest output-price declines.