Opinion article
Every year, Latvia hears the same message: the state is short of money. There is not enough funding for healthcare, defence, education or infrastructure. At the same time, ports are losing cargo, the railway is laying off employees, and the transit sector—once one of the pillars of Latvia’s economy—continues to shrink.
Meanwhile, Russia’s ports are becoming more profitable. Transit cargo volumes handled by Russian ports increased by 10% last year, while Russia now earns an estimated €486 million annually from transporting Belarusian fertilisers that once passed through Baltic ports.
Railways and ports are part of Latvia’s critical infrastructure, essential not only for the economy but also for military mobility and national security. Yet there is insufficient funding even to maintain this infrastructure, and there is still no clear answer as to where the necessary money will come from.
Maintaining Latvia’s three largest ports currently costs around 15 million euros per year (2024 data), while officials estimate that at least another 6 million euros will soon be required.
The railway network can no longer finance its infrastructure through track access charges as it once did,
forcing the government to cover the growing shortfall. Without additional funding, both the financial stability of Latvian Railways (LDz) and the maintenance of the country’s railway infrastructure could be at risk, according to Latvia’s Railway Development Plan for 2025–2029.
Finding funding for all these needs has become more urgent than ever.
For years, transit generated substantial revenues for the Latvian economy. Today, much of that income has disappeared. European Union sanctions have sharply reduced cargo flows through the Baltic states, while much of the trade has simply been redirected elsewhere.
Last year, Russian seaports handled 71.5 million tonnes of transit cargo, including 11.6 million tonnes of Belarusian fertilisers. These shipments deserve particular attention because
they were previously handled primarily through Lithuania’s Port of Klaipėda, with smaller volumes moving through the ports of Riga and Ventspils.
So who ultimately benefited from shutting down Belarusian fertiliser exports through Baltic ports? The answer is uncomfortable. It was not Latvia. It was not Lithuania. It was not the European Union. It was Russia. And that is where a discussion rarely taking place in Latvia begins.
On the one hand, the government is searching for millions of euros simply to maintain port infrastructure. Officials warn that without additional funding, Latvia’s ports may be forced into a “survival mode,” as cargo volumes no longer generate enough revenue even to cover basic maintenance costs. Industry representatives caution that
preserving long-term competitiveness without state support will become increasingly difficult.
On the other hand, the Baltic states have quietly accepted that the very same cargoes which once generated income for their ports are now producing substantial revenues for Russia’s ports and railway system. According to available estimates, Russia earns approximately 486 million euros every year from services related to transporting Belarusian fertilisers alone.
During the first half of this year, Latvia’s ports handled 15.4 million tonnes of cargo, an 11% decrease compared with the same period a year earlier.
The railway sector faces an even steeper downturn. During the first six months of 2026, Latvia’s rail network transported just 3.58 million tonnes of freight, 18.7% less than a year earlier.
Over the past decade,
total railway freight volumes have fallen by 85%, while transit through Latvia’s ports has collapsed by 90%.
Perhaps the most striking aspect of this story is not the scale of the financial losses, but the attitude towards them.
We behave as though these revenues have simply disappeared. But they have not. They have not evaporated. They have not ceased to exist because sanctions were introduced. They have simply changed destination.
The money that once supported jobs in Baltic ports, financed railway infrastructure, contributed to state budgets and sustained thousands of livelihoods is now flowing into Russia’s transport sector.
At the very moment Latvia is searching for millions of euros to keep its own ports operational,
Russia is earning hundreds of millions from handling the same cargo.
That raises an uncomfortable but important question.
Were European sanctions intended to deprive the aggressor state of revenue—or have they inadvertently created a new source of income for it?
If these cargoes continue reaching global markets through Russian ports instead of Baltic ones, the Baltic states are the economic losers. The beneficiary is the very country whose economy Europe is seeking to weaken.
It is difficult to find a clearer example of how the economic consequences of geopolitical decisions can ultimately produce results that run directly counter to their original objective.
Read also: The transit business Latvia lost — and Russia gained