AGP Executive Report

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.

Agriculture Costs: Latvian farmers warn the Middle East-driven fuel and fertilizer price shock will hit harder next year, with current input prices already 30–50% higher than last year and the toughest purchases expected in autumn. Defense Tech & Drones: Latvia and Ukraine plan to deepen cooperation on drone production and counter-drone expertise, while the EU continues scrambling for a common response to drone risks on the eastern flank. Energy Security: Latvia’s ties to the drone-and-energy threat theme grow as the UK considers no-fly zones over critical power infrastructure, and regional attention turns to protecting grids from hostile drones. Aviation Decarbonisation: NorSAF has selected KBR’s PureSAF technology for what is set to be Northern Europe’s largest SAF/e-SAF plant in Latvia, targeting 100,000 tons annually from 2030. Local Transport: Rīga inaugurated the extended Tram Line 7 and the new Ķengarags mobility hub, adding infrastructure and transfer upgrades. EU Rules on Green Claims: The European Commission opened infringement procedures against 20 member states, including Latvia, over delayed transposition of green claims and sustainability label rules. Wages & Business Mood: Latvia’s average gross monthly wage rose to €1,831 in Q1, but wage growth slowed sharply; retail confidence improved in May while construction sentiment dipped. Rail Baltica Funding Risk: Latvia’s Rail Baltica section redesign delays could jeopardize around €50m in EU funding, with only limited redesign money spent so far.

Drone security & politics: Three Ukrainian drones entered Latvian airspace on 7 May, with two crashing near the Russian border and triggering a wider political fallout—another reminder that Latvia’s growing role in Ukraine support and drone production keeps the country in the crosshairs. Border tech upgrades: Estonia has started deploying stationary anti-drone detection systems along its Russia border (with mobile radar trailers filling gaps), aiming to cover the full eastern line by end-2026. Civil defence readiness: Finland is testing emergency sirens and drone alert protocols nationwide, with citizens urged to learn the warning sounds to avoid panic. Energy & heating costs: Riga mayor says Latvenergo plans to raise heat prices for TEC-1/TEC-2 output, pushing the debate over who controls Rīgas siltums and how tariffs hit households. EU consumer rules: The European Commission opened infringement steps against 20 states, including Latvia, over delayed transposition of green-claims and sustainability-label rules. Rail Baltica funding risk: Latvia may lose about €50m in EU funding for Rail Baltica after redesign delays and stalled deliverables. Wages & labour: Latvia’s average salary was reported at €1,831 in Q1, alongside a higher minimum wage from 1 January. Business climate: Foreign investors remain cautious amid security and political uncertainty, though fewer firms say they plan no further investment. EV retail expansion: Polestar confirms entry into Estonia, Latvia and Lithuania via Volvax Baltic retail infrastructure, starting with Tallinn in June. Aviation & tourism pressure: Latvia’s restaurant industry warns that alarming, unclear messaging about airspace threats is already driving booking cancellations and losses.

Heat & Utilities: Riga Mayor Viesturs Kleinbergs says Latvenergo is planning higher heat prices for TEC-1/TEC-2, which could push up the heating tariff residents pay via Rīgas siltums, while the city also floats becoming a majority shareholder. Border Security & Drones: Estonia has started deploying stationary drone detection systems along its Russia border and plans full coverage by year-end, using mobile radar where fixed gear isn’t ready; the move follows repeated drone incursions across the Baltics. Civil Defence Readiness: Finland will test emergency sirens and public warning protocols on June 1, explicitly folding drone-alert guidance into civil safety procedures. Underwater Infrastructure Defence: Seventeen countries, including Latvia, launched the GUIDE framework to protect critical subsea cables and energy networks, aiming for shared norms and cooperation. Ukraine Drone Lessons: A Ukrainian official says Western drone command centers should be mobile and ideally underground to reduce vulnerability to Russian targeting. Latvia in the EU Labour Mix: Eurostat data shows Latvia has one of the EU’s highest shares of workers in agriculture (about 6% of employment). Aviation/Logistics: Latvia’s Drone Coalition with the UK delivered 215,000 drones to Ukraine, including FPVs and interceptor drones. Energy/Industry: NorSAF and KBR are pushing major SAF/e-SAF production plans in Latvia, with technology selected for Northern Europe’s largest facility.

Baltic Border Security: Estonia has begun deploying stationary anti-drone detection systems along its border with Russia, with the first units operating on three southeastern sections and full coverage planned by end-2026; where fixed gear isn’t ready, mobile surveillance is used. Latvia’s Defence Industry & Operations: Latvia is also in the drone fight—its role in the UK-led Drone Coalition is highlighted by deliveries of 215,000+ drones to Ukraine, including FPV, interceptor and reconnaissance types. Critical Infrastructure Protection: Seventeen countries, including Latvia, launched the GUIDE framework to strengthen defence exchanges for critical underwater infrastructure like subsea telecom and energy cables. Ukraine War Outlook: Ukrainian President Zelenskyy told U.S. media Russia is preparing for major new strikes, urging civilians to use bomb shelters as drones, cruise missiles and ballistic weapons are expected. Latvian Economy & Labour: Eurostat data shows Latvia has one of the EU’s highest shares of employment in agriculture (about 6%). Food Costs Reality Check: Despite lower inflation, grocery prices remain painful as the earlier food shock is “baked in,” with prices still rising more slowly rather than falling. Local Human Interest: A Latvian expedition suffered three deaths and one rescue after a fall near Alaska’s Mount McKinley.

Undersea Security Pact: Seventeen countries, including Latvia, launched Singapore-led GUIDE principles to protect critical underwater cables and energy links, with China and the US notably absent—aiming for shared best practices and early-warning cooperation. Drone War Readiness: Estonia activated its first fixed counter-drone detection systems along the Latvia–Russia border area, with full coverage planned by year-end, underscoring the region’s push to harden airspace and border monitoring. Latvia in Ukraine Drone Supply: The UK–Latvia-led Drone Coalition delivered 215,000+ UAVs to Ukraine, including FPV, interceptor, and long-range reconnaissance drones. Defence Industry & Tech Transfer: Malaysia signalled it will buy arms only from partners willing to transfer technology, a message echoed by ongoing NATO vehicle procurement moves like Lithuania’s Patria 6×6 order. Food & Manufacturing: Vilvi Group opened a new €60m+ cheese factory in Bauska, targeting 18,000 tons annually and €100–120m revenue, with production already shipping to Italy. Airport Commercial Growth: Riga Airport selected international partners for terminal retail and lounge services, including Dufry/Avolta and WHSmith franchise.

Modular Construction & AI Manufacturing: EcoModular signed an MoU with Riyadh-based IDS and Riga’s Modul Consult to jointly market and deliver modular building services, with possible future corporate alignment after Nasdaq listing. Aviation Fuel Decarbonisation: KBR’s PureSAF tech was selected by NorSAF for Northern Europe’s biggest SAF/e-SAF plant in Latvia (100,000 tons/year target, start planned for 2030), tying into EU ReFuelEU mandates. Dairy & Food Production: Vilvi Group opened a €60m+ cheese factory in Bauska, projecting 18,000 tons annually and €100–120m revenue, with production already started and exports underway. Airport Commercial Growth: Riga Airport concluded its tender for terminal commercial management, awarding duty-free/food/convenience/lounges to Dufry (Avolta), TheMillerGroup (WHSmith) and TAV Latvia (Primeclass). Energy Investment: Sunly plans a €100m hybrid solar-wind-battery park in northern Latvia near Valmiera, with inauguration set for June 4. Security & Border Works: Latvia began installing “dragon’s teeth” anti-tank barriers along the Russia border, using three-row concrete blocks and expanding defense infrastructure this year. Counter-Drone & GPS Disruption: Reports highlight Russian GPS spoofing affecting flights in Europe, while drone incursions keep driving NATO counter-drone testing and Latvia’s border readiness.

Border Security Build-Out: Latvia has started installing concrete “dragon’s teeth” anti-tank barriers along the Russia border, with three-row placement and compensation for affected private land as the Baltic Defense Line expands. Counter-Drone & NATO Readiness: NATO is accelerating counter-drone testing and uncrewed systems work, with Latvia’s Sēlija range positioned as a key innovation site for battlefield-style trials. Aviation Disruption & Resilience: Reports say Russian GPS spoofing affected thousands of flights in the past year, including British Airways, Jet2 and easyJet, underlining navigation risks near the Russian border. Defence Industry Procurement: Norway signed the Patria-led CAVS framework for serial procurement of 6×6 armoured vehicles, with Latvia among participating nations. Energy & Industry Investment: Sunly plans a €100mn hybrid solar-wind-plus-storage energy park in northern Latvia, while KBR’s PureSAF tech is selected for a major SAF/e-SAF plant targeting 100,000 tons annually from 2030. Food Manufacturing: Vilvi Group opened a new €60mn cheese factory in Bauska, and a new cheese factory also highlights Latvia’s expanding dairy production capacity.

Latvian Politics & Security: Latvia’s Saeima approved a new centre-right coalition government led by Andris Kulbergs after the previous cabinet fell over stray drone incidents, with security, budget stability, fair elections, and anti-cartel/anti-corruption named as top priorities. Border Hardening: Latvia has started installing reinforced concrete “dragon’s teeth” anti-mobility barriers along the Russian border as part of the Baltic Defence Line, expanding from state and municipal land. EU Rules for Industry: The European Commission opened infringement procedures against 20 member states, including Latvia, for failing to fully transpose the Directive on Empowering Consumers for the Green Transition, targeting green-claims reliability and sustainability labels. Aviation Fuel Investment: NorSAF and KBR signed a permanent license deal for PureSAF technology, aiming at Europe’s first 100% drop-in SAF plant in Latvia (Liepāja SEZ), with entry into service planned for 2031. Defence Tech Testing: NATO’s new Sēlija counter-drone and uncrewed-systems innovation range in Latvian pine forests is now operational for battlefield-style trials, pushing local UAV and defence firms to test and iterate faster. Consumer & Energy Transition: EU industry ministers discussed the Industrial Accelerator Act and Single Market measures to boost competitiveness, low-carbon permitting, and “Made in EU” demand.

Latvia’s Drone-Driven Security Shift: President Edgars Rinkēvičs urged the EU to fund border regions hit by drone incursions, saying the disruptions are already affecting school exams and local business life in eastern Latvia. Government Reset: Latvia’s Saeima approved a new four-party coalition cabinet led by Andris Kulbergs after the previous government fell over stray-drone handling; priorities include security, budget stability, fair elections, and tackling cartels and corruption. Border Infrastructure Build-Out: The National Armed Forces began installing the first reinforced “dragon’s teeth” anti-mobility barriers along the Latvian-Russian border, expanding the Baltic Defence Line onto expropriated lands. Aviation Decarbonisation Deal: NorSAF selected KBR’s PureSAF technology for what’s set to become Northern Europe’s largest SAF/e-SAF plant, targeting 100,000 tons annually with production planned from 2030. Riga Rail Milestone: Riga Central Station moved into “Power On” mode as permanent power systems are tested and activated, paving the way for full passenger operations. Airport Concessions: Riga Airport picked new commercial operators for terminal retail and lounge services starting 1 January 2027, including Avolta for duty-free and food & beverage. Energy Market Watch: Estonia’s electricity has been markedly cheaper than Latvia’s over recent days, linked to successful frequency reserve bids that reserve more interconnector capacity for reserve services. Local Industry Supply Chain: Recaro Aircraft Seating highlighted Latvian supplier Artex Latvia for customer service excellence in its global supplier awards.

Latvian Politics & Budget Priorities: Parties behind PM-designate Andris Kulbergs signed a coalition agreement ahead of a Saeima vote, putting security first, promising budget discipline, economic development and social policy, and targeting defence spending at 5% of GDP. Agriculture Power Struggle: Progressives say ZZS continuing to lead the Agriculture Ministry is “unacceptable,” pointing to the arrest of former minister Armands Krauze in a timber-industry case; ZZS argues Krauze has taken political responsibility. Border Defence Build-Out: NBS has started deploying anti-mobility “dragon’s teeth” along the Latvian-Russian border, with three-row barriers meant to stop military equipment movement. Drone Shockwaves for Industry: Drone incursions and airspace alerts are already hitting Latgale tourism hard, with major reservation cancellations reported. Drone Cooperation & Testing: Latvia and the Netherlands signed a drone cooperation memorandum using Latvia’s Sēlija training range for NATO training and testing, with an emphasis on scaling unmanned systems. EU Defence Innovation Ranges: NATO expects multiple innovation ranges to be operational this year, with Latvia focused on uncrewed systems. Pay Transparency Tech: ERDA launched a real-time salary data platform for the Baltics ahead of the EU pay transparency rules coming into force on June 7. Capital Markets: AS Grenardi Group raised EUR 7m via a subordinated bond offering, with demand about 30% above target.

Counter-Drone Industry Push: NATO says four innovation ranges should be operational this year, with Latvia’s Autonomous Systems Competence Center leading counter-unmanned systems testing and multiple industry events planned through year-end. Border Security & Local Manufacturing: Latvia will deploy mobile drone-interceptor units to the eastern border soon, using locally made drones from Origin Robotics and Eraser, as drone incursions keep disrupting daily life and business planning. Tourism Hit in Latgale: Cancellations are spiking after repeated drone alerts near the border, with the Latgale Tourism Association estimating 60% of foreign reservations cancelled and local bookings down 40% year-on-year. Defense Procurement Cooperation: Norway has joined the CAVS framework to enable serial procurement of Patria 6×6 armored vehicles, extending a Finland- and Latvia-led industrial cooperation model across Northern Europe. Workforce Transparency Tech: ERDA launched a real-time salary data platform ahead of Latvia’s EU pay transparency requirements, using large-scale job ad data to quantify pay gaps across roles. Aviation & Logistics: Riga Airport reported 2025 profit of EUR 4.2m, with cargo volumes rising 7% to over 20,000 tonnes. Finance & Retail Funding: AS Grenardi Group raised EUR 7m via a subordinated bond offering, attracting demand 30% above target.

Baltic Security Escalation: NATO is moving to speed up reinforcement for Latvia and Estonia, with Reuters reporting a new command setup that would let a second corps deploy rapidly in a Russia scenario—Germany and the Netherlands’ German-Netherlands Corps are in the mix. EU Hybrid-Threat Response: In Vilnius, Commission President Ursula von der Leyen said Baltic drone and air-raid disruptions are part of a deliberate Russian strategy, pushing a new EU hybrid-threat protocol plus more counter-drone and early-warning funding. Ukraine–Belarus Warning: Kyiv says it has a list of 500 targets in Belarus ready if Lukashenko joins the war. Defense Industry & Readiness: Baltic firms are also looking to Ukraine for shelter know-how as drone anxiety reshapes civil preparedness. Local Business Watch: Riga Airport closed 2025 with a EUR 4.2m profit and 7.1m passengers, while cargo rose 7% to over 20k tonnes.

NATO Command Upgrade: NATO is set to create a second corps-level command for the Baltics, aiming to move “mass at speed” and bring roughly 40,000–60,000 troops to Latvia and Estonia if war breaks out, with Germany and the Netherlands’ German-Netherlands Corps earmarked for the job. EU Security Push: In Vilnius, Baltic leaders met EU Commission chief Ursula von der Leyen to press for stronger counter-drone and early-warning systems, with “Eastern Flank Watch” framed as a core pillar for the region. Shelter Demand Spills Into Markets: Baltic firms are increasingly talking to Ukrainian defense and civil-protection experts about buying bomb shelters as drone fears reshape property listings and civil readiness. Drone Risk Meets Tech Threats: Lithuania warned Russia can spoof GPS signals deep into Europe, adding a new layer of anxiety for aviation and critical infrastructure. Latvia’s Domestic Agenda: Latvia’s incoming government lineup was announced by PM candidate Andris Kulbergs ahead of Saeima approval, while Riga Airport closed 2025 with a EUR 4.2m profit. Energy Finance: EBRD backed Eesti Energia’s green bond, supporting renewables, storage and EV charging across the Baltics.