Ilona Bērziņa
“Latvia always wants to run ahead of the train. It is a characteristic national trait—or perhaps a national flaw, depending on how one chooses to describe it—but there are situations in which it works very much to our disadvantage,” says Leonīds Loginovs, former Chief Executive of the Freeport of Riga Authority and Member of the Council of the Latvian Stevedoring Companies Association (LSA), speaking about the challenges facing the transport and logistics sector, including transit.
The good news, however, is that the new Minister for Transport, Rihards Kozlovskis (New Unity), is finally beginning to hear the concerns of the industry.
“I must honestly say that it is both commendable and fair that the Minister personally chaired the newly established operational working group,” says Leonīds Loginovs following the meeting held on 30 June, where he represented the Latvian Stevedoring Companies Association.
– During the Ministry of Transport’s working group meeting, the Latvian Stevedoring Companies Association highlighted a number of issues affecting the sector, including the impact of tariffs, the port reform that has been stalled for years, possible support measures for port companies to mitigate the impact of rising fuel prices, and several other matters. In your opinion, has the Ministry of Transport finally done more than simply listen to the industry—has it actually heard what the sector has been saying?
– After the meeting, I was left with the impression that the Minister is taking a positive approach. He is addressing all of these issues carefully and pragmatically. The sector faces a wide range of challenges—roadmaps, taxation, relief measures, support mechanisms and other issues.
Today (30 June – Ed.), EUR 24.49 million was allocated to the railway to ensure its financial balance for 2025.
However, when I was still working at the port, the situation was exactly the opposite. Back then, the railway and the entire transport and logistics sector connected with the ports generated revenue for the state. Today, both Ventspils and Liepāja are saying that they have to seek government funding simply to keep their port infrastructure operational.
The fact that there is no cargo does not mean that nothing has to be done. Harbour Master’s services must continue to operate regardless. Even if it were solely a military port, receiving tanks or other military equipment from time to time, a marine pilot would still be required, the Harbour Master would still have to perform his duties, and the entire port infrastructure would still need to be maintained.
People must continue to receive their salaries. If the port can no longer generate sufficient revenue, then either the state has to subsidise it, or people will have to seek employment elsewhere. Overall, however, the picture is bleak.
I also commented on the Prime Minister’s address following the government’s meeting in Latgale, where he confidently and emphatically declared that the government would act immediately and resolve everything so that farmers would receive full support.
I told Mr Kozlovskis: “You see, the Prime Minister himself speaks publicly from the stage about farmers—but what about us? For three years we have been going from one ministry to another—from the Ministry of Transport to the Ministry of Economics, then on to the Ministry of Finance—and nothing has moved forward by even a single centimetre. Now, all we can do is hope that it finally will.”
– Speaking of farmers, they are facing problems caused by shortages of mineral fertilisers and their high prices. Farmers were already saying several months ago that, if this situation continues, the consequences for harvests and food prices will be severe.
– I have spoken with farmers operating in southern Latvia. They tell me: “This is not a major concern for us because we import mineral fertilisers from Lithuania.” And in Lithuania, everything is functioning.
You see, Latvia has another problem—Latvia always wants to run ahead of the train. It is a characteristic national trait—or perhaps a national flaw, depending on how one chooses to describe it—but there are situations in which it works very much to our disadvantage.
For example, Lithuania imports mineral fertilisers from Russia and Uzbekistan because Russia’s KuibyshevAzot plant, which produces nitrogen fertilisers, is not subject to any sanctions, and its products may legally be imported into Latvia as well.
Yet in Latvia we cannot do that because, although it is not prohibited, it is considered to “look bad.” Farmers have a genuine problem, but for us the main priority seems to be looking good in the eyes of Brussels—and perhaps even the Pentagon.
– The United States has lifted its sanctions on Belarusian mineral fertilisers because they are needed on a global scale. However, they are still not permitted to transit through Latvia, as European Union sanctions remain in force.
– The problem is that we always want to please some higher authority. Once it was Moscow; now it is Brussels. Not much has changed—only the geographical direction. Psychologically, we are still living in the role of a servant. No one has even said anything yet, and we are already prepared to comply.
We have nine Members of the European Parliament, but what are they doing to ensure that Latvia’s interests and needs are taken into account, rather than simply making sure that everything pleases Brussels?
The Estonians, for example, say: “Hold on, let’s first work out what is in our own interests. Perhaps we will agree—but perhaps you should also offer us something in return, and then we will do what you want.”
The previous Prime Minister announced that we would stand in solidarity with Lithuania and would not handle potash because, as a result of deteriorating relations between Belarus and Lithuania, the Belarusians no longer wanted to ship potash through Klaipėda. Then, as I have heard, they approached Latvia and said: “Please, you should not handle it either. Do not agree to do it.”
I do not know the details—I can only repeat what I hear from the stevedoring companies. Meanwhile, the Lithuanians have never been overly concerned about solidarity. They even dismantled railway tracks leading towards Latvia to prevent cargo from being redirected here.
– The geopolitical situation is what it is, and in recent years there has been much discussion about turning towards Uzbekistan and Kazakhstan. Following Russia’s invasion of Ukraine, Kazakhstan even significantly increased its coal exports through Latvia, but then everything suddenly went quiet. What actually happened?
– There has been no coal for a long time, and there will not be any in the future. First of all, it is no longer economically viable. Secondly, the political climate is quite unfavourable. Everything we shout about among ourselves here is heard everywhere. All the ambassadors are here, their embassies are operating. The Russian Embassy is here as well. Their job is to record everything that happens here, compile that information and send it to the Kremlin—or wherever else it needs to go. Analysts there look at it and say, “Ah, these people are like this, those people are like that…”
While we were arguing among ourselves and making fools of ourselves, Russia built its massive terminals. As a result, none of that cargo will ever come back. Kazakhstan and Uzbekistan will continue shipping their cargo through those newly built terminals because, in terms of overall costs, it is more advantageous for them.
Moreover, Russia introduced a 25% increase in railway tariffs for transit cargo destined for Finland, Estonia and Latvia. That in itself would not have been the biggest issue—but Lithuania was exempted from that increase.
– Why? What makes Lithuania different?
– The Lithuanians have a strong bargaining chip—the Kaliningrad region. They reached an agreement with the Russians: “Fine, we will allow your cargo to transit through our territory under agreed tariff conditions, but in return you will not impose additional charges on cargo moving through the Port of Klaipėda.”
The Lithuanians are in a favourable position because they have only one major port. We, on the other hand, have three major ports, which are also competing against one another.
At the meeting of the operational working group, one proposal was raised—that the state should determine which cargoes should be handled by which ports. However, under the current governance model of Latvia’s ports, that is simply not possible.
Back in the early 1990s, Latvia should have adopted an entirely different port management model—similar to that of the United States, where all terminals belong to the port authority and, therefore, to the state. The port authority leases the terminals to private operators that wish to handle specific types of cargo for a defined period and under agreed tariff conditions. It is an excellent system.
Instead, in 1994 Latvia introduced a model that is virtually unheard of anywhere else in the world, and that system persisted for years.
When the New Conservative Party was still in government, it reopened the Law on Ports, and to this day the process has never been completed. They launched what was called the port reform, but in reality, they only created a mess.
I listened to Transport Minister Tālis Linkaits’ presentation, and I believe it was the first time I had heard a minister clearly explain, point by point, how he sees the future of the Law on Ports.
In principle, it does not matter what legal form the ports take—whether they are joint-stock companies, limited liability companies, or something else—but they must have a clearly defined legal structure.
The New Conservative Party (JKP) reopened the Law on Ports, but to this day the reform has not been completed. As a result, Ventspils and Liepāja are, in effect, operating without a proper legal framework. They are functioning on the basis of a few transitional provisions—and that is all.
Investors are reluctant to commit their money because the legislation remains unfinished and the legal framework has yet to be finalised.
– Is there a solution?
– During the operational working group meeting, the idea was raised that Latvia simply has too many ports. But why would there be too many if, as recently as 2017, all of our ports together were generating revenue for the state?
Unlike Ventspils, the Port of Riga had never received a single cent from the state. Not one. The Port of Riga operated entirely on the revenue it generated itself.
A port’s principal source of income comes from vessels calling at the port and paying port dues for berthing, loading, unloading and the services they receive while in port. Every port in the world collects such vessel charges and uses them to develop the port, maintain the Harbour Master’s Service, marine pilots and all other essential services.
The Port of Riga never took any money from the state. Today, everyone has forgotten that simply because people do not know it.
There are four state representatives sitting on the boards of Latvia’s ports. They should be addressing the industry’s most pressing issues within the remit of their respective ministries. They should be acting as members of one united team.
– Even when these problems were only beginning to emerge, representatives of the sector approached ministers, explained the situation, asked for support and urged them to reverse poorly considered decisions. Yet nothing changed.
– The whole mechanism is upside down.
Four representatives of the state sit on the boards of the ports—representatives of four different ministries, not just some ordinary people pulled in off the street. They are the State Secretaries of those ministries.
Their job is to tell the minister, who is a political appointee, to go back to his party colleagues and say, “Hold on, we need to do this or that so that the whole sector doesn’t disappear.”
But they do not do that. They come to a board meeting, sit there for a while, review a few issues, collect their remuneration and leave.
Has anyone ever heard of even one board member stepping forward publicly to speak about these problems? Has any of them gone to a newsroom or spoken to the media about what is happening? No. They remain silent because they simply do not want anyone bothering them. They attend one board meeting a month for an hour or so, and that is the end of it. They do nothing, while the system remains just as dysfunctional as it has always been.
– How is the Freeport of Riga Authority doing today?
– I do not interfere in its day-to-day operations. I believe there is a good team there, and they are doing their job well. The circumstances are difficult, but in my opinion, they are coping.
– Representatives of the Latvian Stevedoring Companies Association met with Minister of Economics Viktors Valainis on 10 June. The press release issued after the meeting sounded promising—so to speak, “we will discuss, evaluate and review.” Has there been any progress?
– That is as far as it has gone—they will discuss it and continue to consider it. But so far, there have been no tangible results.
At least Mr Valainis is showing an interest.
The Port Development Plan expired back in 2021, and for the past five years there has been no new plan in place. Well, “plan” may sound like a Communist-era slogan—call it a development strategy, a roadmap, or whatever you like—but where is it?
If, as some people believe, Latvia no longer needs transit at all, then that should be stated openly, and the ports should simply be closed.
Businesses are still required to pay lease fees to the port. On Krievu Island alone, one terminal has to pay around one million euros a year in rent. But what exactly are they paying for?
There is no longer a single tonne—or even a single kilogram—of cargo there. Yet they are still expected to pay. Nothing can be reduced. They are required to pay exactly the same charges as they did in 2017, when the port handled 40 million tonnes of cargo. The boards simply say, “Nothing can be reduced.” Unfortunately, there is no flexible regulatory framework that would allow the rules to be adapted to changing circumstances.
– Ports are also part of the country’s strategic infrastructure, and, when necessary, NATO military cargo passes through them. This infrastructure has to be maintained. You cannot simply lock up a port and say, “Well, we don’t have any money.”
– Exactly. But no one is thinking about that. At the meeting at the Ministry of Transport, I said: “Fine, we have no commercial cargo—but what about tanks, helicopters and everything else?”
Back in 2000, when many of you were still children, we worked together with the Pentagon to organise military cargo shipments to Uzbekistan and beyond. Military equipment was delivered to the Port of Riga, transhipped onto the railway, and transported onward.
There was competition for those shipments, and Pentagon generals came to Latvia to make sure everything was organised properly.
One of those generals was quite remarkable. He insisted on climbing to the top of one of the terminal cranes himself. I don’t like heights, so I stopped halfway up, but he climbed all the way to the top.
He looked around and asked, “How do you control what enters the port?” At that time, we had what were essentially militia-type personnel standing there. He was surprised. “What do you mean? You don’t have a port police force?” That was when we first learned that specialised port police even existed elsewhere in the world.
We travelled to the United States—to New York—where they trained us and showed us how such a system worked. Afterwards, we established our own Port Police, responsible for protecting the country’s strategic port infrastructure and overseeing cargo operations as well as the movement of people within the port area.
Port infrastructure has to be maintained because ships carrying military cargo must be serviced. A vessel cannot simply enter a port and be left to fend for itself.
And there is one more thing: nobody thinks strategically. If you want to play the game properly, you have to control the entire field, not just defend one goal. People are not incompetent, but they lack the necessary strategic understanding. In politics, it is not enough to be intelligent—you also have to be shrewd. Diplomacy is about using intelligence, skill and, at times, deception to outmanoeuvre others.
Instead, we beat our chests and charge headlong at a tank armed with nothing more than a crowbar.
– Nevertheless, the new government is trying to do things differently—for example, by holding a Cabinet meeting in Latgale.
– I thought it was quite a ridiculous idea to hold a government meeting in Latgale simply because a drone had fallen there.
If I were the Prime Minister, I would say: “Tomorrow, all ministers meet at the bus station. The bus tickets have already been bought. We get on the bus and travel to Latgale together.”
Let them see for themselves what travelling there is really like—how the bus stops at practically every bus stop along the way.
But no. Each of them drives there in their own official car, complete with a motorcade, using taxpayers’ money to pay for the fuel.
No one is allowed into the special tent—it must be some great state secret.
Then they come out and announce: “We have agreed that we are going to build a military factory here together with the Ukrainians.”
What were they thinking? That is precisely the kind of information that should remain confidential. If a military factory is built there, then it is obvious that it will become the first target for a missile. Why announce it publicly and frighten people?
The government should stay in its offices and make decisions every day, rather than organising travelling Cabinet meetings simply to demonstrate how much it cares about the public. And what is the result? People leave even faster. They leave. Instead of staying, living and working here. They are simply afraid. If a drone were to fall in Mērsrags tomorrow, would the government rush there as well? Every municipality has its own local leaders. Let them reassure the public. The government’s job is to remain at work and deal with strategic issues—not to organise public relations events.
But we are a small country that keeps harming itself without even recognising that it is doing so.
– Let us return to transit and the ports. Since various types of cargo are no longer routed through the Baltic States but through Russia instead, the aggressor is earning millions of euros every day. From mineral fertiliser transit alone, Russia collects approximately EUR 500–600 million annually from railway transport and port services. Can we really say that, in this respect, we have managed to hurt Russia?
– We have not hurt Russia at all. We have only helped it. Coal that once passed through the Port of Riga is now being shipped through St Petersburg and Ust-Luga, where enormous, state-of-the-art terminals—worthy of a science fiction film—have been built.
Today, the Russians are earning three times more from that business than we ever did.
The same applies to other types of cargo. Here, we tell ourselves, “Look how badly we’ve hurt them.” But in reality, they are rubbing their hands together and making money. Meanwhile, we sit here blaming one another while people are losing their jobs. The figures speak for themselves.
In 2017, around 20,000 people were employed in activities connected with the Freeport of Riga, and every tonne of transit cargo handled generated approximately EUR 15 for the state budget.
When the Port of Riga handled 40 million tonnes of cargo, that amounted to roughly EUR 600 million a year.
Today, all of that has disappeared. So, when people ask me where we have ended up, my answer is a harsh one: We created this situation ourselves. We made this mess ourselves. And now we are surprised that the overall picture is so bleak.