AGP Executive Report

Baltic Security & Defence: Ukraine’s President Volodymyr Zelenskyy told CBS that Russia is preparing a “big massive attack,” warning of drones, cruise missiles and ballistic strikes, and urging Ukrainians to use bomb shelters. Drone Lessons for NATO: A Ukrainian defence official said Western drone units and command centers should be mobile and ideally buried deeper underground to reduce high-value targeting. Regional Threat Watch: Lithuania warned Russia’s war-driven economy could push the Kremlin to the Baltics next, citing airspace incursions and cyberattacks. Underwater Infrastructure Security: Malaysia, Singapore and 15 other countries launched the GUIDE framework to protect critical underwater cables and energy/telecom networks—Latvia and Lithuania included. Latvia in the Spotlight: Latvia is part of the Drone Coalition led by the UK and Latvia, which has delivered 215,000+ drones to Ukraine. Local Economy Signal: Latvia’s GDP growth slowed in Q1 while retail sales rose in April, pointing to a mixed near-term demand picture. Human Tragedy: Three Latvian climbers died and one was rescued after a fall near Denali Pass in Alaska.

Latvia in NATO’s drone push: The UK-led Drone Coalition, co-led by Latvia, has delivered more than 215,000 drones to Ukraine, including 45,000 FPVs, over 150,000 interceptor drones and 20,000 reconnaissance UAVs with up to 200 km range—funded by participating countries to scale unmanned production. Border security upgrade: Estonia has activated its first fixed counter-drone detection and monitoring systems on the eastern frontier, with full coverage planned by year-end; Latvia is also listed among countries backing the broader underwater and drone-security cooperation frameworks. Undersea infrastructure defence: Seventeen countries launched the GUIDE framework at Singapore’s Shangri-La Dialogue to protect critical underwater cables for telecoms and energy, with Latvia among the endorsers and China/US notably absent. Latvia macro snapshot: Latvia’s GDP growth slowed in Q1 to 2.5% year-on-year as public spending declined, while investment gains helped; retail sales rose in April on stronger non-food demand and fuel. EU startup momentum: The European Commission’s first Startup and Scaleup Scoreboard links pro-founder policy to better outcomes, with Estonia highlighted as a digital and early-funding leader and Latvia flagged for remaining policy gaps. Crypto regulation: Latvia’s central bank issued its fourth crypto licence, signaling continued tightening and expansion of the local digital-asset framework.

Latvia’s Economy: Latvia’s GDP grew 2.5% year-on-year in Q1 2026 as public spending cooled, while investment helped offset the slowdown; retail sales also rose in April, supported by stronger non-food demand and fuel. Startups & Policy: The EU’s first European Startup and Scaleup Scoreboard links better pro-founder rules to real performance, with Estonia highlighted for early-stage funding and Latvia noted among countries with room to improve. Aviation & Infrastructure: Riga Airport has picked international partners for a major 12-year commercial overhaul, while airBaltic repaid the first instalment of a 30m-euro state loan and continues working to stabilise liquidity. Energy & Industry: Sunly plans a €100m hybrid solar-wind energy park in northern Latvia, and NorSAF with KBR is set to build a large SAF/e-SAF facility using PureSAF tech. Business Expansion: Vilvi Group opened a new €60m cheese factory in Bauska, targeting 18,000 tons annually and exports to 40+ countries. Security & Trade Risks: Latvia’s drone and counter-drone push continues as NATO accelerates counter-UAS testing, while EU export controls keep evolving beyond traditional dual-use lists. Crime Crackdown: A Eurojust-backed Latvian-Ukrainian operation shut down a Kharkiv scam call centre that defrauded EU residents of over €100,000.

Latvia’s Economy: Latvia’s GDP grew 2.5% in Q1 2026 (0.6% quarter-on-quarter), with the biggest lift from electricity, gas, steam and air conditioning supply, plus stronger household transport spending and exports. New Government: The Saeima approved a new cabinet led by PM Andris Kulbergs, with key posts split across the coalition, including finance and justice under the United List and foreign and defence under New Unity. Aviation & Airports: airBaltic repaid the first instalment of its 30m-euro state loan (6.4m euros), while Riga Airport awarded a 12-year commercial tender: Dufry/Avolta for duty-free and food & beverage, TheMillerGroup/WHSmith for convenience retail, and Primeclass lounges via TAV Latvia. Energy & Industry: Estonian developer Sunly plans a €100m hybrid solar-wind park in northern Latvia with battery storage, and Vilvi Group opened a new €60m cheese factory in Bauska, targeting 18,000 tons annually. SAF Push: KBR’s PureSAF tech was selected by NorSAF for a Northern Europe SAF/e-SAF plant in Latvia aiming at 100,000 tons per year from 2030. Business Security: Ukrainian and Latvian police dismantled a Kharkiv call-centre scam that used fake “lost investment recovery” offers to steal over €100,000 from Latvians via online banking access and crypto laundering. Tech & Work: Eurostat data show women are a majority in science and tech employment in Latvia (62.4%), but care duties still drive a large part-time work gap. Defense & Drones: NATO and EU leaders reacted after a Russian drone hit an apartment block in Romania, as Baltic states brace for more drone and hybrid threats.

Latvia 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 66 deputies voting in favour; the agenda puts national security, secure elections, budget stability, and anti-cartel/anti-corruption at the top, while pledging continued support for Ukraine. EU Compliance & Consumer Rules: The European Commission opened infringement procedures against 20 EU states, including Latvia, for failing to fully transpose the Directive on Empowering Consumers for the Green Transition, targeting green-claims reliability and sustainability-label rules. Defence Industry & Drones: NATO’s new Sēlija training range near Riga is being used to test counter-drone and uncrewed systems in “battlefield-like” conditions, pushing Latvian defence firms to validate designs beyond labs. Aviation Deal: Latvia-linked lessor SmartLynx and Nigeria’s Air Peace settled a dispute over leased aircraft, with a third Airbus A320 released after months of legal tension. Energy Transition (SAF): NorSAF and KBR signed a permanent PureSAF technology license deal for a planned 100% drop-in SAF plant in Latvia’s Liepāja SEZ, with entry into service targeted for 2031.

Latvia’s New Government: The Saeima approved a new four-party coalition cabinet led by Andris Kulbergs after the previous government fell over a drone dispute, with security, budget stability, fair elections and anti-cartel/anti-corruption measures at the top of the agenda ahead of the Oct. 3 election. Border Security & Local Impact: President Edgars Rinkēvičs urged the EU to boost funding for border regions hit by drone incursions, saying air alerts are disrupting school exams and local business activity in eastern Latvia. Defence Infrastructure Build-Out: Latvia has started installing reinforced “dragon’s teeth” anti-mobility barriers along expropriated land near the Russian border as part of the Baltic Defence Line. Energy Market Watch: Estonia’s electricity has been markedly cheaper than Latvia’s in recent days, driven by successful bids on the Baltic frequency reserve market that reserve more interconnector capacity for frequency services. Aviation Decarbonisation Deal: NorSAF signed a permanent licensing agreement with KBR for PureSAF technology, targeting Europe’s largest 100% drop-in SAF/e-SAF plant in Northern Europe. Riga Airport Commercial Tender: Riga Airport selected Avolta (Dufry) for a 12-year duty-free and food & beverage concession starting Jan. 1, 2027.

Latvia’s New Government: Andris Kulbergs’ incoming coalition (AS, NA, JV, ZZS) has signed its coalition deal and activity declaration, with Saeima approval expected Thursday; the programme puts security first, promises budget discipline, pushes economic development and social policy, and targets defence spending at 5% of GDP. Drone-Driven EU Push: Latvia’s president Edgars Rinkēvičs tells Euractiv the EU should add funding for frontline regions hit by drone incursions, saying air alerts are disrupting exams and hospitality and are damaging local economies—while MFF 2028–2034 talks begin. Latvia–Netherlands Drone Deal: Latvia and the Netherlands signed a defence memorandum to expand joint drone training and testing, including Dutch access to the Sēlija range in Latvia and closer links to Ukraine’s drone production know-how. Tourism Under Pressure: In eastern Latgale, drone alerts are already hitting bookings hard, with the tourism association estimating 60% of foreign reservations cancelled and local reservations down 40% year-on-year. Pay Transparency Tech in Latvia: ERDA launched a real-time salary data platform for the EU Pay Transparency Directive, covering tens of thousands of job ads and highlighting large pay gaps across roles. Grenardi Bond Oversubscribed: AS Grenardi Group raised EUR 7m via a subordinated bond issue, with demand about 30% above target from 600+ investors across the Baltics. Crypto Regulation: Latvijas Banka issued a licence to Neverless SIA for crypto-asset services. Border Security: Latvia is strengthening anti-drone defences along its Russia/Belarus border in response to recent incursions.

Latvia’s Drone Shock to Tourism: Latgale’s tourism sector says drone incidents and frequent alerts are hitting bookings hard, with foreign reservations down and cancellations linked directly to drones. EU Pay Transparency Meets Real-Time Data: Latvian firm ERDA launched a continuous salary data platform ahead of the EU Pay Transparency Directive, aiming to help firms justify pay and narrow gender gaps using up-to-date vacancy data. Finance Watch: Grenardi Group’s subordinated bond offering drew €9.01m demand, topping its target by ~30% and raising €7m. Riga Airport Profit: Riga Airport closed 2025 with a profit of €4.2m and reported 2025 turnover of €80.7m, with cargo volumes rising 7%. Tech & Talent: Eurostat data shows ICT specialists still rising in the EU, but growth has slowed—relevant for Latvia’s skills and hiring race. Security & NATO Counter-Drone Push: NATO’s Riga Drone Summit heard calls for faster procurement and scaling counter-UAS testing, as Baltic airspace incursions keep pressure on defenses. Border Resilience: Latvia is set to strengthen anti-drone defenses along the Russia/Belarus border in response to recent incursions.

Baltic Hybrid-Threat Alarm: EU Commission President Ursula von der Leyen says recent Baltic drone and air-raid disruptions are part of a deliberate Russian strategy to destabilise democracies, calling for a new EU hybrid-threat protocol plus faster counter-drone and early-warning upgrades, with SAFE and cohesion funds earmarked for Estonia, Latvia and Lithuania. Local Security Push: Latvia’s incoming government lineup is now set after the drone crisis fallout, with Andris Kulbergs as PM-designate and Colonel Raivis Melnis nominated for defence, while Baltic leaders also demand more EU money for multilayer air defence and “Eastern Flank Watch” delivery. Tech & Infrastructure: Lithuania warns Russia has expanded GPS spoofing capability from Kaliningrad, while Ookla reports Starlink speeds up 45% across Europe, with Latvia leading download performance. Business & Finance: Riga Airport closed 2025 with a EUR 4.2m profit, and Signet Bank completed a EUR 10m capital increase to back local business lending.

Baltic Drone Shockwaves: EU Commission President Ursula von der Leyen met Baltic leaders in Vilnius and pushed for faster, stronger counter-drone and early-warning systems after recent drone incursions triggered air-raid alerts and sheltering across the region. She backed a joint regional assessment to spot gaps and speed up support, with the “Eastern Flank Watch” project urged to move from plan to reality. Latvia Government Reset: Latvia’s incoming cabinet is now named: PM candidate Andris Kulbergs’ government lineup is set for Saeima approval on May 28, with key posts distributed across United List, New Unity, National Alliance and Greens/Farmers. Riga Airport Results: Riga Airport closed 2025 with a EUR 4.2m profit, up year-on-year, while passenger numbers held steady and cargo grew. Energy Finance: EBRD backed Eesti Energia’s EUR 300m green bond with a EUR 20m commitment, supporting renewables and storage across Estonia, Latvia, Lithuania and Poland. Local Preparedness: In Latgale, municipalities are still rolling out drone response plans and school-focused crisis procedures after repeated alerts disrupted daily life.

Baltic Security Drills: Royal Navy divers cleared WWII ordnance in the Gulf of Riga during NATO’s Exercise Open Spirit, bringing nearly 400 personnel and highlighting how vital safe shipping routes are for Riga’s ~2,500 vessel calls a year. Drone & Border Pressure: Latvia’s eastern tourism is taking a hit as drone incidents and frequent alerts drive cancellations—Latgale providers say up to 60% of bookings have been cancelled and some school trips are being halted. EU Budget Fight: Brussels is starting talks on the EU’s 2028–2034 budget, with a bloc of 16 countries pushing back against cuts to cohesion, agriculture and fisheries. Fertilizer Sanctions Twist: US officials are urging Lithuania, Poland and Ukraine to allow Belarusian potash fertilizer transit after Washington lifted sanctions on Belaruskali. Latvia Finance: Latvijas Banka issued its fourth crypto-asset services licence, to Neverless SIA. Inflation Watch: Cyprus’ inflation is forecast at 3.6% in 2026, driven by energy prices.

Drone Fallout in the Baltics: Ukraine’s long-range drone campaign is colliding with a new problem for NATO allies: Russia is reportedly jamming drones and redirecting them toward Baltic airspace, raising security and political pressure as incidents spread from Finland to Latvia. Latgale Tourism Under Strain: Latgale’s tourism association says drone incidents and frequent cell broadcast alerts have already driven cancellations up to 60% and cut bookings by around 40%, with some schools and residents reportedly staying away. Latvia’s Government Reset: President Rinkēvičs is moving to form a new coalition after PM Evika Siliņa stepped down amid the drones row; Andris Kulbergs is set to announce the cabinet lineup. Central Bank Crypto Move: Latvijas Banka has issued a licence to Neverless SIA, making it the fourth licensed crypto-asset services provider under MiCA. AgTech Investment: PerPlant raised €1m to add AI “eyes” to tractors, aiming to cut herbicide use by up to 90% while boosting precision spraying. Health Policy Push: Spain’s Senate is urging faster access to innovative oncohematology drugs, with a six-month maximum path into the national system.

Baltic Drone Fallout: European Commission President Ursula von der Leyen is set to visit Lithuania on 26 May to discuss the latest drone incidents and push a united EU response, with EU Defense Commissioner Andrius Kubilius joining talks on funding and defence planning. The move follows repeated air alerts across the Baltics, including a drone shot down over Estonia, and fresh warnings that Russia is using the incidents to drive a wedge between Ukraine and its allies. NATO Pressure Point: In parallel, NATO ministers are preparing for the Ankara summit as allies grapple with higher defence spending and continued Ukraine support—while the UK and others have blocked a NATO push for members to allocate 0.25% of GDP to Ukraine aid. Latvia Business Signals: Latvia’s largest taxpayers were honoured at the annual SRS ceremony, and the LCCI says the new coalition agreement signals security and spending review progress but still lacks a clear plan to boost competitiveness and cut bureaucracy. Energy & Costs: Eurostat data show Cyprus housing pressures rising faster than the EU average, while fuel prices jumped across the EU—Latvia among the biggest risers.

NATO Logistics Alarm: A new Council on Geostrategy primer warns NATO’s supply lines across the Wider North are dangerously exposed to strike and sabotage, citing chokepoints, thin lift margins, weak dedicated protection, and the risk of frontline combat effectiveness collapsing in a major conflict. Baltic Drone Tensions: Latvia’s political crisis flared after a drone incident near the Russian border, with Prime Minister Evika Siliņa resigning amid fallout over how to handle Ukrainian drone activity and Russian claims. Alliance Politics: NATO foreign ministers in Helsingborg set up this summer’s Ankara summit around turning the 5% defence-spending pledge into real capabilities, while allies also grappled with bewilderment over Trump’s sudden troop-deployment reversals to Poland. Ukraine War Pressure: A major Russian Kyiv bombardment triggered broad diplomatic condemnation, with multiple capitals calling it “state terrorism,” and warnings of further large-scale strikes adding to the pressure. Latvia in the Wider Picture: The week also brought fresh signals of NATO readiness in Latvia, as the multinational brigade led by Canada reached full operational readiness.

Baltic Security: NATO’s Multinational Brigade in Latvia has hit full operational readiness, with 14 countries in the force and Canada leading—an important signal as the region stays on edge. US–Poland Shock: NATO allies are still scrambling after Donald Trump announced an extra 5,000 US troops to Poland, reversing earlier pullback messaging and leaving planners to rethink what comes next on the eastern flank. Drone & Disinformation Row: NB8 foreign ministers (including Latvia) rejected Russian and Belarus-backed claims about drone airspace violations, calling it intimidation tied to Russia’s war on Ukraine. Ukraine War Risk: Ukraine’s leadership and the US Embassy warned of a potentially large Russian airstrike, tied to the “Oreshnik” missile, as Russia’s nuclear drills in Belarus keep raising the stakes. Energy Costs: Eurostat reports fuel prices jumped sharply in April, with diesel up strongly year-on-year—Latvia among the biggest risers. Culture & Film: Cannes’ Palme d’Or went to Cristian Mungiu for Fjörd, while Latvian cinema drew attention with Ulya.

NATO Troop Confusion: Allies are scrambling after Donald Trump said he’ll send an additional 5,000 US troops to Poland—weeks after ordering a similar pullback from Europe—leaving ministers in Sweden openly bewildered about what changes next on the eastern flank. Baltic Drone Disinformation: NB8 foreign ministers, including Latvia, rejected Russian and Belarus-backed claims about drone airspace violations, saying the incidents are tied to Russia’s war and warning threats against Latvia must stop. Latvia’s Readiness Signal: The NATO Multinational Brigade in Latvia, led by Canada, has reached full operational readiness, with 14 countries in the force and Canada providing the bulk of troops and helicopters. Ukraine’s Drone Scale-Up: A new report spotlights Ukraine’s fast-growing drone production, framing it as a “new kind of war” driven by mass, cheap UAVs. Energy Pressure: Eurostat data shows fuel prices jumped across the EU in April, with Latvia among the biggest risers.