Latvia wants €7B from EU to cope with fallout from Russia’s war

RIGA — Latvian Prime Minister Andris Kulbergs wants Brussels to hand over €7 billion to help cover the military and economic costs of confronting Russia, as pressure grows over the price of the country’s hard line on Moscow. The money should come from the EU’s next seven-year budget, under a new Competitiveness Fund, to offset higher defense spending and the collapse in trade with Russia since Moscow’s full-scale invasion of Ukraine, Kulbergs told POLITICO’s Brussels Playbook in an interview. The cash, which Riga wants to come on top of other funds earmarked for the country, would amount to almost half of Latvia’s projected €15.1 billion defense bill over the seven-year budget period. The demand comes at a sensitive moment. Latvia has been one of Europe’s staunchest supporters of Ukraine, sharply increasing defense spending since Moscow’s full-scale invasion, even as sanctions and the collapse of bilateral trade have cut deeply into economic links that once ran eastward. But ahead of an Oct. 3 national election, parties arguing that Riga should demand more in return for sanctions and military support are gaining ground. The European Commission has proposed substantially increasing EU-level defense funding in the 2028-2034 budget, including a €125.2 billion security, defense industry and space pot in the European Competitiveness Fund. That money is designed to finance projects across the bloc rather than provide Latvia with a pre-agreed €7 billion allocation, and the entire budget remains subject to negotiations between EU governments and the European Parliament. Kulbergs argues that Latvia deserves special consideration because it is borrowing to provide security for countries much farther from the front line. “We are getting our budget deficit to the maximum […] and from that debt we’re paying […] the defense of the whole [of] Europe,” the prime minister said at the government chancellery. Much of Latvia’s military spending ultimately flows back to richer Western European economies, Kulbergs added, pointing to arms purchases from Germany, France, Spain, Sweden and the Netherlands. “We fuel their economies,” he added. Election pressure A sharper version of the same argument is emerging on the campaign trail. Ainārs Šlesers, a veteran populist businessman whose party sits with the far-right Patriots for Europe group in Brussels, says Latvia should demand compensation when it backs EU sanctions on Russia. Šlesers condemns Moscow’s invasion and says support for Ukraine should continue, but argues that Latvia cannot absorb the costs indefinitely. “We are losing money … we are talking about how to support Ukraine, but we are a victim,” he told POLITICO at his Riga campaign headquarters. When EU sanctions come up for renewal, Šlesers said Latvia should “get in return support.” Asked whether that could mean withholding Riga’s backing for sanctions, he stopped short of threatening a veto but did not rule it out. “I don’t want to talk about [a] veto [now],” he said. “I guess that we […] will find a peaceful solution.” Šlesers, who has business ties with Russian oligarchs, said the country needs to eventually restore economic ties with Moscow, and advocated for a quick end to the war. “There are things which we cannot replace because if it’s your neighboring country and you’re connected historically […] we need to find the right model.” He argued that whether to hand over territory to Russia should be “a decision by Ukraine” but argued that other countries have lost territory to Russia after conflicts, including Latvia, “to reach [a] peace agreement.” Kulbergs’ center-right party currently leads the polls, but coalition arithmetic could determine how far Latvia’s Russia policy shifts after October. The far-right, pro-Russia Sovereign Power party, polling second, wants to restore ties with Moscow but is considered off-limits by mainstream parties. Šlesers, polling third, i