AGP Executive Report

airBaltic Rescue Plan: Latvia’s Saeima has given preliminary approval to state participation in airBaltic’s financial stabilisation, including potential purchase of up to €30m in bridge-financing bonds and converting about €50m of state-held bonds and loan claims into equity—aimed at keeping the airline afloat while bondholders already capitalised interest payments. CSDD Cyber Fallout: Latvia’s President asked the prosecutor general to review officials’ actions after a major CSDD cyberattack exposed data on about 1.2m people and 200,000 legal entities; an interim CSDD board was appointed after the management stepped down. Consumer Credit Rules: Parliament adopted amendments letting people “ban” themselves from taking out loans via credit bureaus, tightening responsible lending, overdraft notifications, and debt-collection limits. Baltic Security & Connectivity: Latvia and Lithuania pledged closer cooperation on eastern border security and transport projects like Rail Baltica, with Lithuania expected to send additional border guards. Dairy Deal: Estonia’s Agrone parent Falber Investments agreed to acquire Latvia’s Rīgas piena kombināts group (including Valmieras piens), pending competition approvals. Energy Watch: A look at why Germany’s gas storage is low highlights broader EU energy-risk concerns as winter planning tightens.

Cybersecurity & Accountability: Latvia’s president has asked the prosecutor general to review officials at the Road Traffic Safety Directorate (CSDD) after a major cyberattack exposed data tied to about 1.2 million people and 200,000 legal entities, with CSDD’s board and supervisory council stepping down and an investigation now looking at the attack and its cybersecurity contract with Tet. Aviation Finance: Latvia’s parliament gave preliminary approval to possible state participation in airBaltic’s financial stabilisation, including up to €30m in bridge-financing bonds and converting €50m in existing bonds into equity, as bondholders also move to capitalise interest payments. airBaltic Restructuring: The airline says cutting its fleet by a third would reduce total flight capacity by about 10%, focusing on more profitable routes while seeking interim financing to keep restructuring on track. Trade Transparency: Latvia’s Central Statistical Bureau has started publishing a list of Latvian companies trading with Belarus and Russia, following legal changes tied to support for Ukraine. Defense Industry & Security: Estonia’s Milrem Robotics arson case is linked to suspects detained in Latvia, with authorities treating the fire as deliberate and exploring possible sabotage. Energy Demand: A Latvian lawmaker says the Baltics face a 20%-30% electricity shortfall and may need to consider modular nuclear solutions as data-centre and economic demand rises. Business & Industry Deal: Estonia’s Falber Investments (Agrone) has agreed to buy Latvia’s Rīgas piena kombināts, creating a larger Baltic dairy group pending competition approvals.

Cybersecurity & Accountability: Latvia’s road traffic agency CSDD confirmed hackers stole data tied to about 1.2 million people and 200,000 companies, prompting President Rinkēvičs to ask the prosecutor general to review officials’ responsibility; the PM also pushed resignations and an accelerated probe into the CSDD’s Tet cybersecurity contract. State Governance: Latvia’s CSDD supervisory board and management leadership moved toward resignations as the government argues state-company governance has become a “political retirement home,” with cybersecurity oversight questioned. airBaltic Funding Fight: Latvia’s parliament Budget and Finance Committee backed a draft allowing state participation in airBaltic financial stabilisation (up to €30m interim bonds and €50m bond-to-equity conversion), but the Greens and Farmers’ Union opposed more taxpayer money without draft changes. Defense Supply Chain Risk: Estonia is investigating a suspected arson at Milrem Robotics, with Latvian-linked suspects detained and prosecutors examining possible sabotage. Cross-Border Business: Estonia’s Falber Investments (Agrone) agreed to buy Latvia’s Rīgas piena kombināts (including Valmieras piens), setting up a bigger Baltic dairy group pending competition approvals. Housing & Cities: Rīga plans 732 affordable rental homes by 2030 under a public-private partnership aimed at attracting young families and professionals. Consumer Finance Rules: Latvia lifted the long-standing ban on consumer credit advertising but imposed stricter content requirements and mandatory warnings.

airBaltic Rescue Talks: Latvia’s Saeima Budget and Finance committee backed a draft plan for state participation in airBaltic’s financial stabilisation, including up to €30m in interim financing bonds and a €50m bond-to-equity conversion, with an urgent first reading expected Aug 20. State Company Governance: Prime Minister Andris Kulbergs hit the “political retirement home” model for state-owned firms, arguing executive pay and rotation are misaligned with responsibility, and pointing to CSDD supervisory leadership resignations amid scrutiny. CSDD Cyber Fallout: Latvia’s Road Traffic Safety Directorate (CSDD) is reeling after a major cyberattack that reportedly stole data on 1.2m people and 200,000 companies; Transport Minister Rihards Kozlovskis launched an accelerated investigation, while CSDD leadership and the Tet contract are under fire. Rail Baltica Reality Check: A New Unity candidate warned Rail Baltica won’t be completed by 2030 and pushed for a cheaper, lower-speed version (e.g., 180 km/h). Housing for Professionals: VNĪ and the Ministry of Finance plan a PPP to build 732 affordable rental homes in Riga by 2030, with the first phase covering 1,290 homes across six local authorities. Border Security: Latvia boosted border security amid threats tied to Russia and Belarus, including more drone-related measures. Energy Market Signal: Eurostat data shows solar overtook hydropower in the EU electricity mix for the first time in 2025. Retail & Sanctions: Latvia moved to help Mere food suppliers recover perishable goods after the retailer’s closure linked to EU sanctions. Business Expansion: Flexotrap and Millog expanded a Nordic and Baltic distribution partnership for modular bullet trap systems. Scam Alert: Police reported a “psychics” scam that cost two women more than €150,000.

Cybersecurity Shock: Latvia’s Road Traffic Safety Directorate (CSDD) says a major cyberattack stole personal data of 1.2 million people and information tied to about 200,000 companies, including names, payment details, vehicle plates and addresses; PM Andris Kulbergs ordered an investigation and criticised delayed notification, warning the data could fuel fraud. Aviation Stress Test: airBaltic is heading into a critical creditor week as it seeks concessions and fresh financing to avoid insolvency; the airline has outlined restructuring including a fleet cut and cost reductions, with unions warning of potential job losses. EU Funding Push: Latvia is asking the EU for €7bn in the next budget period to cover defence spending and fallout from cutting ties with Russia, but Brussels is reportedly leaning toward loans and strict deficit-linked conditions. Business & Trade: Orkla Latvija plans €5.4m to modernise its Spilva sauce and ready-meal production in Babīte, aiming to boost capacity and efficiency by mid-2027. Energy Supply: Elenger says it will bring three more US LNG cargoes to the Finland-Baltic region in late 2026, with Latvia’s Incukalns storage highlighted as a demand buffer. Policy & Regulation: Latvia has loosened rules for cutting larger trees outside forests (permit threshold raised to 30cm stump diameter), while municipalities can still impose stricter limits.

airBaltic Rescue Talks: Latvian PM Andris Kulbergs says it’s the “last chance” to save airBaltic as creditors back bond changes, including capitalising interest payments due Aug 14 and Nov 14 into bond principal, while the airline seeks bridge financing and fresh equity to avoid insolvency. EU Funding Push: Latvia is asking the EU for €7bn to cover defence spending and the economic hit from cutting ties with Russia, arguing it’s borrowing to fund security for Europe. Border Security & Hybrid Risk: President Edgars Rinkevics warns Russia’s hybrid war is already under way, citing investigations into sabotage and provocation and stepped-up border surveillance. Corporate Expansion: Orkla Latvija plans a €5.4m modernisation of the Spilva sauce and ready-meal plant in Babīte, targeting completion by mid-2027. Food & Farming: Vidzeme grain harvest looks successful despite higher fertiliser and fuel costs, with farmers reporting solid yields and acceptable quality. Business Climate Signals: Latvia’s central bank publishes its Financial Stability Report in English, flagging rising public debt and delayed improvements in the return on public spending as risks for the business and investment environment. Policy Debate: Broadcasters, LSM and film producers urge Saeima to halt amendments that would require dubbing foreign-language TV content into Latvian. Energy Supply Note: Elenger says it will bring three more US LNG cargoes to the Finland-Baltic region, with Incukalns storage in Latvia cited as a key buffer. Local Culture: Vivi and Latvian State Forests name new electric trains after forest themes, including “Baravika” (boletus mushroom).

EU Defence Funding Push: Latvia’s PM Andris Kulbergs is asking the EU for €7bn in extra money for 2028-2034 to cover defence costs and the economic hit from cutting ties with Russia, arguing Riga is borrowing to “pay for the defence of the whole of Europe.” airBaltic Restructuring Watch: airBaltic bondholders have approved capitalising interest payments on its €380m 14.5% bonds due in 2029, adding Aug 14 and Nov 14 interest to principal instead of paying cash, while the airline faces ongoing pressure around interim financing and potential staff layoffs. Labour Tensions at airBaltic: The Latvian Aviation Trade Union says it wants social guarantees and proper consultation over possible collective redundancies tied to the carrier’s fleet reduction plan. Central Bank Signals Risk: Latvijas Banka’s English Financial Stability Report warns that delayed improvements in the return on public spending and rising public debt increase risks for the business and investment climate. Scam Alert: Swedbank customers in Latvia are again targeted by phishing emails urging “bank detail updates,” with the bank warning not to click links and to contact support if data was entered. Cyber Incident Update: Latvian State Forests (LVM) says a cyber attack stemmed from a vulnerability not fixed for years, blaming a misunderstanding in communications with Cert.lv. Riga Real Estate Deal: Capitalica Asset Management has selected RUUME arhitekti for a “city within a city” mixed-use development on Lielirbes Street in Riga. Telecom Competition: Bite Latvija warns that unfair competition—especially where state-linked firms influence access and procurement—could distort Latvia’s telecom market.

Financial Stability: Latvia’s central bank published its English Financial Stability Report, warning that rising public debt and delayed improvements in the return on public spending could raise risks for fiscal and tax predictability, even as the financial system remains stable. EU Funding Push: Finance Minister Māris Kučinskis met Bank of Latvia governor Mārtiņš Kazāks to align on how Latvia will rank priorities for the 2028-2034 EU funds period; Latvia has received proposals worth over €35bn against an indicative envelope of about €9.3bn. airBaltic Rescue Talks: Latvia’s cash-strapped national airline faces a Monday creditor meeting as it seeks to restructure debt, negotiate missed interest payments, and secure about €225m interim financing plus €100m new equity, while planning a major fleet shrink. Cyber & Fraud Alerts: Latvian State Forests blamed miscommunication for a cyber attack tied to an unpatched vulnerability; meanwhile Swedbank customers are again targeted by phishing emails urging “bank details” updates, with a warning to use online banking directly. Business Registrations: Company registrations fell in Q2 2026 across most sectors, while bankruptcies also declined slightly—new registrations in Latvia were down 3.4% quarter-on-quarter. Telecom Competition: Bite Latvija warned that unfair competition in telecoms can emerge when state-linked players influence infrastructure access and procurement, calling for equal rules. Defense & Drones: Latvia is progressing with anti-drone deployments along the border, and NATO activity continues as drones are intercepted in the region.

Counter-Drone Push in Latvia: NATO Baltic Trust 26 at the Sēlija training ground tested counter-drone systems, including interceptor drones, with about 650 participants and EU tech firms working alongside the military to detect, track and neutralize UAVs. Latvian Tech Funding: MikroTik donated €799,031.63 to the University of Latvia Foundation, backing research grants and scholarships for science and future teachers. Riga in the Spotlight: Riga marked its 825th anniversary with crafts, cultural shows and a major Daugava waterfront laser-and-video spectacle. Ukraine-Russia Air War Spillover: Ukraine launched one of its largest drone attacks on Russia, with Russia claiming 822 drones intercepted overnight and a major Wildberries warehouse fire near Moscow; in Ukraine, strikes hit infrastructure including ArcelorMittal in Kryvyi Rih, while stray drones were reported in Latvian airspace. Regional Security Signals: A Spanish NATO fighter jet shot down a suspected Russian drone over Romania, underscoring frequent cross-border incursions near NATO’s eastern flank.

Counter-Drone Drills in Latvia: NATO Baltic Trust 26 at the Sēlija training ground tested counter-drone systems, including interceptor drones, with about 650 participants and EU tech firms helping integrate radar, sensors and electronic warfare—plus a NATO model that lets industry take over engagement once targets are detected. Airspace Incident: Allied Eurofighters and Turkish F-16s scrambled after a foreign drone entered Latvian airspace near the Russian border; Latvia said it was likely pushed off course by Russian electromagnetic warfare, with alerts lifted after the drone was shot down. Energy Policy Lessons: A Eurofound review of Europe’s response to the 2026 energy price spike (after Hormuz disruption) finds governments used short-term relief plus longer-term steps to diversify supply and cut dependency, with many 2022 measures still active. airBaltic Financing: Latvia’s government is set to buy more airBaltic bonds (another €30m) and extend a state loan repayment to end-2026, with possible bridge bond participation pending Saeima approval. Pharma Supply Investment: AS Recipe Plus is investing €20m in a new Riga pharmaceutical distribution centre, aiming to finish in spring 2027 to boost medicine availability and crisis resilience. Defense Industry Demo: OM Defence Systems showcased its X7 counter-drone interceptor at NATO trials, moving engagement authority toward ground operators; it has no contracts yet but targets higher readiness in early 2027.

airBaltic Rescue Plan: Latvia’s government is set to buy more airBaltic bonds and extend state loan repayment, with possible bridge financing alongside private investors—moves that could shape the airline’s survival as bondholder talks loom. Counter-Drone Push: NATO Baltic Trust 26 saw Latvia test counter-drone systems, including interceptor drones, with private industry taking a bigger role in detection-to-interception operations. Drone Incursion in Focus: Allied jets shot down a foreign drone after it entered Latvian airspace near the Russian border; Latvia and NATO cited Russian electromagnetic warfare and launched an investigation. Security of Critical Infrastructure: Reuters reports the Baltics and Poland are tightening protection of dams, power plants and gas infrastructure amid fears of Russian false-flag sabotage using drones. Pharma Supply Investment: AS Recipe Plus is investing EUR 20m in a new Riga pharmaceutical distribution centre, aiming to boost medicine availability and resilience by spring 2027. Ukraine War Spillover: Ukraine’s strikes hit Russia’s Baltic oil port of Ust-Luga, with fires disrupting operations—another reminder of how regional logistics and energy markets stay exposed.

Counter-Drone Drills in Latvia: NATO Baltic Trust 26 saw Latvia test counter-drone systems, including interceptor drones, at the Sēlija training ground, with about 650 personnel and EU tech firms trialling how sensors and electronic warfare can detect, track and neutralise UAVs. Airspace Security: Allied fighters shot down a foreign drone over Balvi after it entered Latvian airspace, with Latvia linking the incursion to Russian electromagnetic warfare; alerts were issued across several eastern/southern municipalities and a debris search began near Rugāji. airBaltic Rescue Talks: Latvia’s government is set to buy more airBaltic bonds and extend a state loan repayment to end-2026, while the airline’s revised plan shifts toward a smaller A220 fleet and financial stability, pending bondholder and Saeima approvals. Private Investment in Medicines: AS Recipe Plus is investing EUR 20m in a new Riga pharmaceutical distribution centre (topping-out reached), aiming to boost automation and resilience of medicine supply by spring 2027. NATO Eastern Flank Worries: Reuters reports Poland and the Baltics are tightening protection of dams, power plants and gas infrastructure amid fears of Russian false-flag attacks using Ukrainian drones. AS Watson Retail Tech in Latvia: NCR Voyix and AS Watson expanded their commerce platform deal, bringing Voyix POS, self-checkout and loyalty services to Drogas in Latvia.

Counter-Drone Drills: Latvia tested interceptor drones and integrated counter-UAV tech at the NATO Baltic Trust 26 exercise at Sēlija, with about 650 personnel and EU tech firms trialling radar, sensors, cameras and electronic warfare, plus a NATO concept that can hand engagement tasks to industry contractors. Airspace Security: NATO Baltic Air Policing jets shot down a foreign drone over Balvi after it entered Latvian airspace, with Latvia and NATO linking the incident to Russian electromagnetic warfare; alerts were issued across several municipalities and Finland briefly restricted parts of airspace. airBaltic Funding Talks: Latvia’s government is set to buy an additional €30m in airBaltic bonds and extend a state loan repayment to end-2026, with possible bridge-financing bond participation up to €30m, pending Saeima approval. Pharma Supply Investment: AS Recipe Plus is building a Riga medicine and medical supplies distribution centre, investing €20m (including €6m for automation/robotisation) to boost resilience and delivery capacity, targeted for spring 2027. Retail Tech Deal: AS Watson expands its partnership with NCR Voyix, rolling out the Voyix Commerce Platform (POS, self-checkout, loyalty and managed services) to brands including Drogas in Latvia across Europe and Asia. Ukraine War Spillover to Business: Ukraine’s drone pressure on Russian ports continues, with reports of a major fire at Ust-Luga after a drone attack—raising risks for Baltic energy logistics and sanctions-evasion flows.

Baltic Security: NATO Baltic Air Policing jets shot down a foreign drone that entered Latvian airspace over Balvi municipality, with Latvia’s Defence Ministry linking the incursion to Russian electronic warfare; the threat was lifted after debris checks. Energy & Trade Disruption: Ukraine’s drone campaign hit Russia’s Baltic oil hub Ust-Luga, triggering a major fire and disrupting operations; Russia says it intercepted hundreds of drones overnight. Pharma Supply Investment: AS “Recipe Plus” is building a medicine logistics centre in Riga with €20m investment and spring 2027 completion, aiming to automate picking/packing and boost capacity up to three times. airBaltic Restructuring: Latvia’s PM says airBaltic’s future depends on creditors as the airline seeks €225m emergency financing and plans to cut its A220 fleet to 36 under a new business plan. Competition Watchdog: Latvia’s state forestry company was fined €7.86m by the competition authority, adding pressure to corporate compliance. Policy & Cost of Living: A ManaBalss petition seeks to scrap MPs’ transport and rent allowances, arguing it’s unjustified amid budget deficits. Latvia–India Business Links: Saeima defence committee chair Raimonds Bergmanis met India’s ambassador, highlighting IT, startups and the EU–India free trade deal as key growth areas.

airBaltic Restructuring: Latvia’s national carrier says its future hinges on creditor support as it seeks about €225m in bridge financing and a creditor vote on 17 August, while cutting its A220-300 fleet to around 36 aircraft by end-2026 and reshaping its Riga-centred network. Competition Watchdog: Latvia’s Competition Council fined state forestry firm Latvijas valsts meži (LVM) €7.86m for creating unjustified advantages for six long-term logging partners, ordering equal timber sales conditions going forward. Cyber & Mobility Services: Latvia’s Road Traffic Safety Directorate (CSDD) suffered a cyber attack that partially accessed historical payment receipt data with personal details; passwords were not affected and CERT.LV is investigating. Border & Migration: Latvia reported its first documented case of migrants using a tunnel beneath the Belarus border, prompting tighter surveillance and cross-agency cooperation. Cost of Living: Eurostat shows Latvia is no longer among the cheapest EU countries for essentials like food, clothing and alcohol, even as overall prices remain below the EU average thanks to cheaper services. Business Expansion: Beneflo, an employee benefits platform, is expanding across the Baltic region and beyond to serve distributed teams managing benefits across jurisdictions. Trade & Diplomacy: Saeima defence committee chair Raimonds Bergmanis met India’s ambassador and pointed to EU-India free trade talks, startups, IT and science as key cooperation areas.

airBaltic Restructuring: Latvia’s national carrier unveiled a new business plan to boost long-term competitiveness, centered on a tighter Riga network and a reduced all-Airbus A220-300 fleet, while bondholders face a make-or-break vote on 17 August after the bond price slid sharply. Competition Watchdog: Latvia’s Competition Council fined state forestry firm Latvijas valsts meži €7.86m for creating unjustified advantages for long-term logging partners, ordering equal timber sales conditions going forward. Border Security: Latvia reported its first documented case of migrants using a tunnel beneath the Belarus border, prompting intensified surveillance and cooperation across agencies. Cost of Living: Eurostat shows Latvia is no longer among the cheapest EU countries for key household items, with food, clothing and alcohol/tobacco already above EU averages even as services and housing remain cheaper. Rail Baltica: The government says the first phase main line won’t be shortened, but it will review requirements and costs by mid-September to make the project more affordable. Crypto Crime Crackdown: Latvian police detained suspects tied to crypto-facilitated money laundering after telephone fraud call centers, with losses exceeding €200,000. Defence Industry: Latvia-linked CAVS work continues as Patria and KNDS Deutschland Maintenance formalise local assembly and integration of German 6×6 armoured vehicles, with deliveries ramping up in early 2027.