RUSSIAN INFLUENCE IN LATVIA

Latvia shares a 214 km border with Russia and is host to one of the largest ethnic Russian communities in the European Union and NATO. Nearly 25 percent of all Latvians boast Russian lineage and 37 percent of Latvian citizens are native Russian speakers. The Russian community maintains close relations with family members in Russia, with Russia granting visa-free travel. Ethnic Russians in Latvia rely almost exclusively on Russian langue media outlets for their news and entertainment.

Russian Economic Footprint

1. Russia’s economic footprint in Latvia was 16 percent in 2014
2. Latvia has relied entirely on imports from Russia to satisfy its domestic demand for gas. In addition, Gazprom exert significant influence over Latvijas Gaze, country’s largest and most dominant natural gas company, through a long-term supply contract (in force until 2030) with a 34 per cent equity stake.
3. Russian Railways holds over 50% of shares in the Latvian railways company Liepajas naftas tranzits (LNT) through the intermediary of its subsidiaries (including Multimodal BV registered in Amsterdam). Taking over shares of the Latvian carrier marks the beginning of an expansion for Russian Railways on the market of railway transport to Latvian ports - mainly Riga and Ventspils. The company is planning to provide comprehensive services for Russian exporters operating in the transit corridor between Asia and Europe via Latvian ports.
4. In 2016, Latvia exported to Russia goods worth 0.78billion euros (7.6 per cent of the total) an amount equivalent to 0.3 per cent of Latvian GDP.
5. Main imported goods from Russia are metals and metal products as well as energy resources, in particular gas and oil. They make up almost 60% of the total import (42.09% - energy resources; 19.42% - metal products, mainly iron or non-alloy steel products).
6. The cumulative level of direct investments from Russia in Latvia has grown from 850 million dollars in the beginning of 2014 to 1.3 million dollars at the end of 2016. Russia is nominally the second-largest investor in Latvia, following Sweden, representing around ten per cent share of the FDI total. However, if one were to add investments from other countries (e.g. Cyprus) which are made by entities de facto controlled by Russians, the overall amount would likely make Russia the number one investor in Latvia. Russian FDIs target mainly Latvia’s financial, energy, transport and real estate sectors.
7. Russian goods, primarily coal and oil products, represent the majority of both international rail freight in Latvia and cargo transshipped through Latvian ports. In addition, Russia is also using pipelines for the transit of oil products.
8. The entire transport and storage sector represents roughly nine per cent of Latvia’s GDP. Activities directly and indirectly related to rail freight and port services are an integral part of it, with Russia being a pivotal economic actor.
9. Approximately 40 per cent of deposits in Latvian banks belong to non-residents. Most of these deposits are controlled by Russian and Russia-linked entities. Russian oligarchs, politicians, managers and civil servants use Latvia, particularly its banking system, to facilitate their own (both legal and illegal) business operations

To navigate Latvian political and institutional waters, Russia’s principal political ally in Latvia is the center-left Harmony party. Harmony founded in 2010 rose to prominence as an advocate and political voice for Latvian’s ethnic Russian community and the expansion of their rights. Harmony asserts a pro-Russian foreign policy and is a vocal opponent of the EU sanctions regime against Russia.