AGP Executive Report

EU Trade Policy: The EU is set to approve a deal that would remove most tariffs on a broad range of U.S. industrial and agricultural goods, with safeguards for European producers and a “sunset clause” keeping key preferences in place until end-2029. Baltic Defence & Drones: Latvia’s Defence Minister Raivis Melnis met Zelenskyy in Kyiv to push the Drone Deal rollout and SAFE-linked joint production, while Ukraine’s drone “kill zone” is reported to be expanding up to 50 km in dense areas. Counter-Drone Industry: Finland’s Armed Forces tested interceptor drones, including Latvia’s Origin Robotics “Blaze,” as part of counter-drone demonstrations for defence procurement. Transport & Logistics: Ocean Network Express launched a new weekly Port of Riga service linking Riga with Portuguese ports via a wider Iberia–Baltic–North Europe network. Aviation Customer Experience: airBaltic won APEX “Best Wi‑Fi in Europe” for 2026, citing passenger ratings and its free Starlink onboard service. Urban Development: A LaSER think tank says Riga’s building process is fragmented across multiple departments, slowing construction pace compared with cities like Helsinki.

Drone & Defence Cooperation: Latvia’s Defence Minister Raivis Melnis met President Volodymyr Zelenskyy in Kyiv to push the Ukraine–Latvia Drone Deal, share counter-drone experience, and discuss joint production financing under the EU SAFE programme. Counter-Drone Industry: Finland’s Armed Forces tested interceptor drones, including the Latvian Origin Robotics “Blaze,” alongside Destinus systems—another sign Baltic firms are moving from R&D to field trials. Maritime Security: A suspected Ukrainian maritime drone exploded near Romania’s Port of Constanta, triggering evacuations and a Code Red alert, with officials pointing to MAGURA V5-type capabilities. Logistics & Trade: Ocean Network Express launched a new weekly Riga route linking Portugal and Baltic ports, improving transit regularity for Latvian exporters and importers. Aviation & Consumer Rules: EU passenger-rights reform keeps delay compensation and limits extra charges for families, but airlines say the final package still leaves gaps—while Spain’s consumer ministry calls it insufficient. Finance & Payments: Latvijas Banka licensed SIA Fibonatix (LV) as a payment institution, adding to Latvia’s growing fintech and merchant payments ecosystem. Construction Watch: A LaSER think tank says Riga’s building process is fragmented across multiple departments, slowing permits and raising developer concerns.

Latvia-Ukraine Defence Tech: Latvian Defence Minister Raivis Melnis arrived in Kyiv for his first foreign visit, with talks focused on implementing the Ukraine–Latvia Drone Deal, financing joint projects under the EU SAFE programme, and exploring joint ventures—plus plans to share airspace protection know-how. Drone Warfare & Industry: Ukraine’s drone “kill zone” is widening in some sectors up to 50 km, underscoring the demand for counter-drone systems and faster adaptation by defence suppliers. Uncrewed Systems Testing: The UK opened Europe’s largest uncrewed testing facility in Swindon, aiming to speed up development and certification—an indicator of where defence R&D budgets are flowing. Baltic Logistics: Ocean Network Express launched a new weekly Port of Riga route to Portuguese ports via Iberia Baltic Express (IBX), improving transit options for Latvian exporters and importers. Payments & Fintech: Latvijas Banka issued a licence to SIA Fibonatix (LV) to operate as a payment institution, adding to Latvia’s growing regulated payments market. Aviation Passenger Rights: EU capitals backed a provisional passenger-rights reform that keeps delay compensation thresholds and blocks extra charges for adjacent seats for families, while airlines argue the final text still leaves key limits on free cabin hand luggage. Construction & Permits: A LaSER think tank says Riga’s building process is fragmented across multiple departments, slowing development compared with Helsinki. Agriculture Prices: Latvia saw a 10% drop in agricultural output prices in Q1 2026, while EU input prices were broadly stable.

Parliament & Governance: Latvia’s Saeima restored the mandates of former PM Evika Siliņa and former Justice Minister Inese Lībiņa-Egnere, and also reinstated Kaspars Melnis, with Siliņa set to move into European Affairs Committee work. Animal Welfare & Food Industry: Lawmakers rejected in first reading a proposal to phase out cage-raised laying hens, despite arguments that it would send a clear signal to investors and retailers. Energy Costs: A new ranking shows residential electricity prices vary wildly across countries, with Europe featuring among the highest-cost markets—an issue that hits household budgets and industrial competitiveness. Defense & Industry: NATO and EU partners are accelerating anti-drone and defense readiness, while a Canadian general says Ukraine’s key lesson is combining precision with mass deployment—forcing Western defense industry to rethink production speed and scale. EU Consumer Rules: The European Commission has started infringement steps against 20 member states for late transposition of the EmpCo environmental claims directive, aimed at cutting greenwashing. Latvian Business & Infrastructure: Klaipėda LNG terminal capacity is being locked in for long-term use through 2044, with Latvia’s Latvenergo among the booked customers. Security & Influence: Latvian-linked activities are flagged as potentially Kremlin-coordinated influence operations, including efforts to undermine trust in state institutions.

Latvian Insolvency Overhaul: Latvia’s insolvency service is being liquidated as a draft law reshuffles roles between the Ministry of Justice and the Court Administration, aiming to cut admin load and tighten supervision of insolvency administrators. Drone-Defense Push: Ukraine will send frontline drone experts to Latvia next week after a bilateral “drone deal” signed in Tallinn, as stray drone incidents keep disrupting Baltic airspace and tourism. Local Business Hit: Blue Lakes tourism operators in eastern Latvia say drone fears are emptying rooms and squeezing hundreds of small businesses. Food & Farming Watch: The Plant Protection Service found unauthorised GMO “Norfolk Purple” tomato seedlings being sold in Latvia; growers destroyed the material after inspection. Agri-Production Investment: Balticovo opened a €120m egg production complex in Iecava with cage-free laying capacity and a new egg transport system. Defense Industry Cooperation: Ammunity signed an LOI with Poland’s Mesko to strengthen regional ammunition supply chains. Energy & Infrastructure: Klaipėda LNG terminal locked in long-term regasification capacity bookings through 2044, including Latvenergo and Latvian-linked demand. Market & Logistics: Rīga Central Market’s meat pavilion was ordered to close immediately after a State Construction Control Bureau inspection flagged roof reinforcement needs.

Agri Watch: Latvia’s Plant Protection Service found unauthorised GMO “Norfolk Purple” tomato seedlings being sold and distributed, with growers admitting they destroyed the material after inspections. Food & Farming Investment: Balticovo opened a new egg production complex in Iecava after a ~€120m build, adding cage-free laying capacity plus an automated egg transport and sorting setup. Defence Industry: Ammunity (Latvia) signed a cooperation letter of intent with Poland’s Mesko to strengthen ammunition supply-chain resilience across the Baltic-Nordic region. Ports & Logistics: Latvia’s Economy Ministry met stevedoring firms to tackle port competitiveness, governance reform and transit bottlenecks, including calls to extend a reduced diesel excise tax rate. Local Infrastructure: Riga Central Market’s meat pavilion was ordered to close immediately after a State Construction Control Bureau inspection, with roof reinforcement funding now on the table. Tourism Under Security Pressure: Eastern Latvia’s Blue Lakes region is seeing cancelled bookings as visitors fear stray Ukrainian drone alerts, hitting hundreds of small tourism businesses. Energy & Industry Policy: Latvia’s circular-economy push gets a boost as CleanR Grupa published its 2025 sustainability statement, highlighting improved emissions intensity alongside expanded operations.

Drone & Airspace Security: Latvia is signing a “drone deal” with Ukraine as stray Ukrainian drones keep disrupting life and business, with NATO jets shooting down drones and officials stressing fighter use is only a stopgap while local capabilities must grow. Regional Defence Industry: Latvian ammo maker Ammunity is starting cooperation with Poland’s Mesko to strengthen ammunition supply chains and resilience. Ports & Logistics: Latvia’s Economy Minister met stevedoring firms to tackle port competitiveness, governance reform, and diesel excise support as transit pressures rise. Energy Infrastructure: Gasum and Naftogaz booked long-term LNG capacity at Lithuania’s Klaipeda terminal, underlining Baltic maritime energy supply planning. Water & Development Finance: EBRD and Morocco’s ONEE agreed a €250m programme to modernise drinking water production, signed during EBRD Annual Meetings in Riga. Circular Economy & Sustainability: CleanR Grupa published its 2025 sustainability statement, tracking emissions intensity improvements and circular-economy progress. Local Business & Construction Oversight: Riga Central Market’s meat pavilion was ordered closed after State Construction Control Bureau inspection, with roof reinforcement funding now in focus. Capital Markets: LAU Infra Group’s IPO subscription opens June 10 for a state-owned infrastructure company, with shares planned for Nasdaq Riga listing. Agriculture Risk: Farmers warn drone-related incidents could threaten storage, fuel sites and food production, urging caution with new “geopolitical risk” insurance offers.

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.