AGP Executive Report

Global Defence Finance: Canada-backed Defence, Security and Resilience Bank (DSRB) is gaining momentum, with Latvia among supporters, but key G7 players like Germany and the UK are still holding back—raising doubts about whether the bank can secure the AAA rating it wants. Aviation & Border Tech: EU’s EES biometric checks are set to resume on 6 September after the summer pause, with airports warning of fresh queue pressure as UK traffic and new enrolments collide. Latvia in the Mix (Disaster Watch): Nepal–Tibet floods and glacier-collapse aftermath has reached at least 750 deaths and over 3,000 missing; China says 261 foreign nationals are unaccounted for, including 33 Latvians. Local Business & Tourism: Northern Latvia launches a “taste trail” tourism network, linking small producers like Trikāta with visitors via themed routes and product tastings. Transport & Logistics: Baltic rail freight stakeholders met in Riga to discuss shifting routes after Russian/Belarus transit declines and how to grow north–south freight links. Aviation Milestone: airBaltic marked its 31st anniversary and the 70 millionth passenger carried since 1995.

Geopolitics & Security: CIA chief John Ratcliffe’s secret Moscow trip is still stirring debate in Europe. Reports say he floated a possible Trump–Putin–Zelensky trilateral meeting and urged Russia to avoid escalation, while European officials say they found no clear signs Russia is preparing a conventional attack on NATO or Baltic states. Latvia in the spotlight: Flight-tracking claims link the mission to a US C-17 route that stopped in Riga, underlining Latvia’s role in NATO logistics and intelligence coordination. Baltic hybrid threat response: Germany pushed for tighter Baltic Sea security cooperation, with plans for a new task force and stronger drone defenses as hybrid attacks and sabotage risks rise. EU defence funding: Bulgaria and Latvia received their first payments under the EU’s SAFE defence instrument—€489.3m for Bulgaria and €524.7m for Latvia—aimed at speeding up joint ammunition, missile and air-defence procurement. Business & investment climate: Latvia’s investment agencies urged clearer, more predictable decision-making after the K2 Ventum wind farm case was not approved, warning that process uncertainty can deter major investors.

Central Bank Shake-up: Bank of Latvia Deputy Governor Māris Kālis will leave at end-September, as Governor Mārtiņš Kazāks plans to nominate economist Andris Strazds as his successor from 1 October, pending Saeima approval. EU Defence Funding: Bulgaria and Latvia received their first payments under the EU’s SAFE defence instrument—€489.3m for Bulgaria and €524.7m for Latvia—aimed at speeding up joint procurement of ammunition, missiles, air defence and ground combat systems. Investment Climate Watch: Latvia’s business lobby groups (LIAA, LCCI, LDDK, FICIL) are urging clearer, more predictable rules after the Cabinet rejected the €560m K2 Ventum wind farm proposal, warning investors need transparent timelines and coordinated institutions. Security & Industry Risk: Latvia is again in the spotlight of Baltic hybrid-threat coordination, while a Slovak case links attempted arson at the Ukrainian drone maker Skyeton to suspects including a detained Latvian. Geopolitics With Local Links: Reports say CIA chief John Ratcliffe flew to Moscow via Riga to warn against attacks on NATO allies, with Latvia repeatedly named in Western concern over Baltic escalation. Disaster Impact: Nepal–China flash floods continue to leave hundreds of foreigners missing, including people from Latvia listed among affected nationalities.

Defence Funding Boost: Bulgaria and Latvia received their first payments under the EU’s SAFE defence instrument—€489.3m for Sofia and €524.7m for Riga—unlocking faster joint procurement of ammunition, missiles, air defence and ground combat systems. Baltic Security Push: Germany and Nordic-Baltic partners agreed to step up coordination against hybrid threats, including drones, cyber attacks and sabotage, with plans for a Baltic security taskforce and stronger drone defences. Central Bank Leadership Change: Bank of Latvia deputy governor Māris Kālis will leave at end-September, while governor Mārtiņš Kazāks plans to nominate Andris Strazds to fill the vacancy from 1 October, pending Saeima approval. airBaltic Milestone: Latvia’s flag carrier marked 31 years and 70m passengers since launch, highlighting its role in Baltic connectivity. Business Climate for Investors: LIAA and partners urged clearer, more predictable rules for major investment projects after the K2 Ventum wind farm decision was rejected, stressing that process quality matters as much as outcomes. Aviation/Trade Disruption Watch: Black Sea tensions are pushing grain buyers to tap Baltic states, a potential tailwind for regional logistics. Fact-Check: A claim that “Latvians are fleeing to Belarus in droves” was debunked as mostly false, with Latvian residents in Belarus rising only modestly.

Himalayan Disaster: Flash floods on the Nepal–China border have killed at least 469 people and left more than 1,500 missing, including hundreds of foreigners, as rescue efforts are slowed by bad weather and difficult access. Security & Defence: CIA Director John Ratcliffe’s secret Moscow trip is being framed as a warning to Russia against escalating toward NATO allies, while Latvia’s Constitution Protection Bureau says Russia poses no direct military threat today but its hostile, Ukraine-like perception of Latvia raises longer-term risks. Latvia’s Military Readiness: Latvia has begun testing counter-drone layers on its locally assembled Hunter infantry fighting vehicle, ahead of fleet handovers, as the country ramps up protection against drone threats. Energy & Power Resilience: After a major storm, around 2,500 customers in Latvia remain without electricity, with repairs shifting to smaller, harder faults. Banking & Inflation: Bank of Latvia Governor Mārtiņš Kazāks says the lending target isn’t reached yet, while ECB officials signal they won’t hesitate to act if eurozone inflation stays above target. Business & Logistics: Girteka is shifting more freight operations into Latvia and Romania by setting up locally registered fleets and teams to ease the driver shortage. Corporate & Investment: LIDO māja in Riga is moving ahead with over €30m planned investment, while airBaltic marks 31 years and 70m passengers. Legal/Trade: A Latvian court case has been referred over a large Belarus cigarette smuggling ring, with state losses estimated at €1.5m.

Baltic Security Watch: CIA chief John Ratcliffe’s surprise Moscow trip is being framed as a warning to Russia not to escalate against NATO allies, with Estonia, Latvia and Lithuania repeatedly named as key concerns, while Trump downplayed the risk and called the visit “semi-routine.” Latvia’s Threat Outlook: President Edgars Rinkēvičs says Latvia’s military threat assessment hasn’t changed and direct invasion risk remains low, though sabotage, cyber and hybrid actions are still possible. Defense & Industry: Riga has launched the first Hunter infantry fighting vehicle at Patria Latvia’s Valmiera plant, starting final assembly of 84 platforms under an ~€800m program, including counter-drone systems mounted for trials. Border Security: Latvia’s border guard chief Guntis Pujāts believes Belarusian services likely knew about migrant tunnels on the Latvia-Belarus border, expecting more to appear. Trade & Economy: Baltic grain exporters booked about 1m tons of wheat for August loading, up 50% year-on-year, as Black Sea disruptions push buyers toward Latvia, Lithuania and Estonia. EU Policy: The European Commission adopted Greece’s €4.77bn Social Climate Plan, the largest so far, using ETS revenues to support vulnerable households and businesses.

Baltic Security Watch: CIA Director John Ratcliffe’s surprise Moscow trip has triggered fresh concern about Russia “testing NATO’s resolve,” with Politico and WSJ reporting he warned against escalatory action targeting Estonia, Latvia and Lithuania and urged Moscow to cut military/economic support for Iran; Latvia’s Response: Latvian PM Edgars Kulbergs and the presidency’s advisers stressed the invasion risk remains low and that a planned “state of emergency” in the eastern border area is meant to keep critical services running, not signal an immediate threat; EU Funding Push: Sweden, the Netherlands, Spain and Poland are urging the European Commission to restart work on using frozen Russian sovereign assets to finance Ukraine, after Belgium blocked last winter’s plan; Energy & Markets: Capalo AI will optimise and trade European Energy’s hybrid solar-storage projects in Lithuania (Anykščiai) and Latvia (Saldus), covering dispatch and balancing-market participation; Ports Digitisation: Riga, Ventspils and Liepāja have completed a €3.24m EU-funded joint digital platform to unify port operations, permits and payments; Aviation Cargo: Baltic Ground Services expanded My Freighter fuel and ground handling to Ostrava, Tallinn and Riga; Defense Industry in Latvia: Wolfram Europa plans an explosives and warheads production facility in Jēkabpils, targeting ~200 jobs and starting in the second half of 2027.

Defense Industry Investment: Estonian firm Wolfram Europa will invest €200m to build an explosives and warhead manufacturing complex near Jēkabpils, with construction starting in 2027 and about 200 high-skill jobs expected. EU Budget & Security: European Council President António Costa’s Baltic tour pushed for the 2028–2034 EU budget to prioritise defence, Eastern flank security and Ukraine support, with Latvia arguing it needs around €7bn to cover higher military spending and war-linked economic losses. Latvia Trade Curbs: Latvia approved sweeping import bans on certain manufactured goods from Russia and Belarus from 1 September, tightening consumer-focused restrictions. Ports Digitisation: Riga, Ventspils and Liepāja completed a joint digitisation project, launching a unified digital platform to streamline port logistics and customer services. Energy Resilience: After regional storm damage, Lithuania reported rapid power restoration progress, while Latvia’s crisis-management readiness remains under scrutiny. Crypto/Payments Watch: The ECB reiterated that offline digital euro payments stay private between payer and payee, while banks can still see identities for compliance.

US-Russia Intel Shock: CIA Director John Ratcliffe made an unannounced Moscow trip aboard a C-17 that reportedly staged via Riga, after the US asked Ukraine to pause strikes on Moscow during the visit; the Kremlin said it involved contacts between security services, while the purpose stayed undisclosed, keeping Ukraine, NATO and Iran in focus. Latvia’s Security & Crisis Readiness: A former NAF commander says Latvia is “not prepared” for major crises, arguing storm response lacked central coordination and priorities despite good frontline work. Storm Aftermath Watch: Three days after the 22 August storm, about 11,000 customers still lacked power; repairs continue and mobile networks are being assessed for resilience improvements. Trade & Sanctions: Latvia approved a ban from 1 September on imports of selected industrial goods from Russia and Belarus, including printed materials, textiles, footwear and toys, aiming to protect security interests. Energy Markets & Trading: Finnish Capalo AI will handle route-to-market and trading for hybrid solar-plus-storage projects in the Baltics, including a Latvia battery park under construction. Logistics Deal: Baltic Ground Services will expand fuel supply and ground handling for My Freighter across Riga, Tallinn and Ostrava. Defence Supply Chain Risks: Reports highlight attempted sabotage of a European drone production plant tied to Ukraine, underscoring the growing threat to arms manufacturing.

Trade & Sanctions: Latvia’s cabinet has approved a ban starting Sept. 1 on importing a wide range of industrial goods from Russia and Belarus, including printed books/newspapers, clothing and textiles, footwear, headgear, toys, games and sports equipment—also covering items routed through third countries. EU Defence Procurement: France is pushing to tighten how Ukraine can use EU loan money to buy non-EU defence gear, aiming to limit third-country sourcing (with exemptions still possible). Security & Markets: EU Commissioner Valdis Dombrovskis says defence, energy independence and digitalisation are key growth areas, urging faster innovation, less bureaucracy and better access to finance—while Latvia faces gaps in productivity and R&D. Latvia in the Spotlight: A US Air Force C-17 carrying CIA chief John Ratcliffe flew from Riga to Moscow for undisclosed talks, after the US reportedly asked Ukraine to pause strikes on Moscow and northern Russia during the visit. Regional Defence Deals: Poland signed a major Piorun MANPADS framework contract for Lithuania, Latvia, Norway and itself under the EU SAFE scheme, with deliveries planned through 2030.

Storm Fallout: Latvia may need tens of millions of euros from the European Commission to cover storm damage after widespread outages left over 250,000 customers without power; municipalities can seek state compensation for 70% of eligible costs, but the state budget for unforeseen expenses may not be enough. Resilient Payments: The Bank of Latvia says last weekend’s storm disrupted about 1 in 5 ATMs (183 of 869), including 17 of 94 critical units, while offline card payments still worked in shops with backup power—urging residents to keep cash on hand. Defence Procurement: Poland’s Mesko has signed an €1.9bn deal to supply Piorun air-defence systems to Poland, Norway, Lithuania and Latvia under the EU SAFE mechanism, with deliveries running to 2030. EU Budget Talks: European Council President António Costa begins a capital tour starting in Bratislava and Tallinn, including Latvia on 26 August, with the 2028–34 EU budget, defence and support for Ukraine at the centre of negotiations. Cyber & Data Security: Latvia’s CSDD cyber breach remains in focus, with reports citing stolen data on 1.2 million people and ongoing scrutiny of accountability. Business & Trade: Latvia’s “list of shame” for companies trading with Russia and Belarus continues to expand, while Riga and other Baltic markets push ahead on digital payments and cross-border commerce. Culture & Tourism: Rossini Opera Festival 2026 reported audience growth to 16,350 attendees and €808,000 box office, with visitors from 51 countries.

Ukraine War & Security: Ukraine marked Independence Day under intensified Russian strikes, while Latvian PM Andris Kulbergs urged the EU to use about €200bn in frozen Russian assets to cover damage and cut off funding for Moscow’s war machine. EU Defence & Procurement: Poland signed a €1.86bn deal for Piorun MANPADS for itself and Latvia, Lithuania and Norway under the EDIRPA/SAFE framework, with deliveries planned to run to 2030. Baltic Fisheries Policy: The EU Commission proposed 2027 Baltic fishing quotas and by-catch cuts, including big reductions for cod and herring by-catches alongside selective TAC increases. Latvia Business & Skills: LIAA’s Mini MBA (Innovation Management) saw applications for the next cohort close in 28 minutes, showing fast demand from Latvian SMEs for innovation and export know-how. Cyber & Governance: Latvia’s CSDD fallout continues after a major data breach and board resignations, keeping pressure on public-company management and accountability. Energy & Resilience: Latvia’s storm response sparked calls for better crisis coordination, with the government pointing to lessons from Ukraine for winter readiness.

Baltic Air Connectivity Watch: Tallinn’s airport chief says Riga and Vilnius are winning on flight numbers because of market size, but Tallinn still leads on revenue (about €74m last year) thanks to non-aviation income like retail, parking, maintenance hangars and Airport City, while passenger growth is accelerating (384,000 in July, +19% y/y; target 3.7–3.8m this year, 5m by 2030). Courtroom Fallout: Former Bank of Latvia governor Ilmārs Rimšēvičs used his final statement to argue that key bribery details—when, where, how much, how and for what—have not been proven; his statement continues in court on Aug 28. Hybrid War Risk to Industry: Western intelligence claims Russia is escalating sabotage and cyber attacks on European arms makers supplying Ukraine, using local criminal networks to preserve plausible deniability; Latvia has already detained suspects over a Milrem Robotics arson case in Estonia. Crisis-Readiness Test: After Latvia’s weekend storm, PM Andris Kulbergs says services weren’t coordinated enough and urges better business backup power and fuel planning; the state is reviewing contingency funding options. Cybersecurity & Public Trust: Latvia’s CSDD cyber breach wasn’t reported within the 72-hour window, with late notifications to DVI and Cert.lv, adding pressure as the board resignations deepen scrutiny of management. Business Upskilling Demand: LIAA’s Mini MBA “Innovation Management” saw applications for the next cohort hit the cap in 28 minutes, signaling strong appetite for practical innovation-to-market skills among SMEs. Storm Recovery Watch: Sadales tīkls reports power restored to 190,000 customers (70% of those cut off), with repairs continuing and drones planned to speed fault detection.

Ukraine Defense Push: Zelenskyy is pressing the “Coalition of the Willing” to unlock EU funding for air defense, warning that Europe must move fast on legislation tied to €30bn for missile protection. Nordic-Baltic Solidarity: NB8 leaders in Kyiv reiterated long-term political, military and economic support, with a focus on winter readiness and protecting Ukraine’s energy and port infrastructure. Drone Deal in Practice: Latvia and Ukraine have started implementing the Drone Deal, aiming for a “green corridor” to let selected Ukrainian firms transfer technology, alongside joint drone and ground-robotics production. Hybrid Sabotage Risk: Western reporting says Russia is behind a new wave of sabotage at European arms plants, using local criminal groups to stay below NATO Article 5 triggers; Latvia detained suspects over an arson case at Milrem Robotics in Estonia. Storm Stress Test: Latvia’s strongest summer storm in decades left up to 277,000 households without power and disrupted mobile networks, underlining how quickly critical infrastructure can fail during prolonged outages. Norway Aid Signal: Norway pledged to keep Ukraine support at roughly $9bn in 2027 under the Nansen programme, spanning military, humanitarian and financial help.

Kyiv Diplomacy: Six European leaders, including Latvia’s PM Andris Kulbergs, arrived in Kyiv for Ukraine’s Flag Day and Independence Day and held talks with President Volodymyr Zelensky, as allies signal continued political support. Norway Funding: Norway will keep Ukraine aid at about $9bn in 2027 under the Nansen Support Programme, covering military, humanitarian and financial support aligned with Kyiv’s priorities. Hybrid Threats: Western sources say Russia is stepping up sabotage against European defence supply chains; Latvia recently detained three suspects over an arson attack on Estonia’s Milrem Robotics. Latvia Storm Disruption: A major storm continues to hit Latvia with widespread power cuts affecting about 277,000 households and thousands of emergency calls as crews battle downed trees and flooding. CSDD Cyber Fallout: Latvia’s Road Traffic Safety Directorate faces pressure after a cyberattack affecting 1.2m people; officials say residents must request personal data via an electronically signed letter, while the storm and telecom disruptions add to operational strain. Defence Industry Upshift: Latvian firm NEWT21 completed an EU-backed project moving its FOG and RAY unmanned surface vessels from prototype to serial production, now certified for standardized manufacturing. Business & Trade Note: Ireland imported “oat feed” from Latvia, raising questions over how oat products are coded and declared in trade data.

Latvia’s Security Push: Latvia is stepping up its border and air-defense posture as Russian-linked drone activity escalates, with a Canadian-led NATO mission expanding presence near the Russian and Belarusian borders after alerts and a drone shot-down incident. Sanctions & Transparency: Latvia has started publicly naming companies trading with Russia and Belarus, publishing an initial list of about 170 firms (not proof of sanctions breaches, but a pressure tool), while also seeking €7bn from the EU to cover the economic and security costs of cutting ties. CSDD Cyber Fallout: After the CSDD cyberattack and the leak of data tied to 1.2m people, the agency says residents can’t get answers by phone or email; requests must be made via an electronically signed letter, and the relevance of older leaked data is still being assessed. Defense Tech & Industry: NEWT21 says EU-backed work has moved its FOG and RAY unmanned surface vessels from prototype to serial production, now certified for standardized manufacturing. Banking Efficiency: Citadele Banka is using Microsoft Azure AI to cut customer call wait times to under five seconds and slash document processing from minutes to seconds. Aviation Politics: Lithuania’s president says it should not invest in airBaltic until the airline becomes profitable, urging radical cost cuts and clearer guarantees. Agriculture Outlook: Latvian apple growers expect a larger harvest than in 2025, which could ease prices, though labor shortages remain a major bottleneck. Business Brief: Akola Group reports FY2025/26 improvement, with food-production profitability rising sharply and poultry driving gains.