Latvia 2025: without railways and NATO battalions

МОСКВА, 27 апреля 2021, Институт РУССТРАТ.

The question is not as abstract as it may seem at first glance. According to the country’s final statistics for 2020, the Latvian railway transported a total of 24.113 million tons of cargo. From this, 22.047 million tons were classified as international traffic and 2.066 million tons were domestic. For a small state, the figure seems large-scale, if you do not take into account the fact that the cargo turnover in 2019 was 41.492 million tons, and in 2018 – 48.96 million tons.

The problem is not even that, in general terms, the cargo flow for the year fell by almost half, but the dynamics of the internal structure of transportation is much more informative.

From the total volume of international traffic, 19 million tons or 86.1% are formed by net transit, i.e., cargo initially of foreign origin, going through Latvia either to the port for loading on transport vessels (15.3 million tons), or by land in the “from one border to another” mode (3.7 million tons).

And even after a radical reduction in the volume of Russian transit, cargo of “Russian origin” (i.e., going from or to Russia) continues to make up the lion’s share – more than 62% of the transit cargo flow. Mostly “port”. Another 25-28% of cargo is of “Belarusian origin”.

In other words, the implementation of Russian plans to reorient its export-import cargo turnover by 2025 means subtracting another 11.78 million “Russian” tons from the current load indicators of the Latvian railway and, taking into account the agreement with Minsk to redirect its flow to Ust-Luga, the loss of “Belarusian” 5.32 million tons. Thus, the Latvian cargo traffic in the next 2-3 years will lose about 17 million tons or 89.4% of the load.

What will remain there? Approximately 4.5 million tons of cargo per year, from which the domestic needs of Latvia will account for a little more than 2 million tons. And from which the import, i.e., the import of foreign goods for domestic consumption, reaches 2.69 million tons, and this is also falling.

The population of the country is actively declining due to emigration, and the fall in income inevitably turns into a decrease in the quantity and quality of consumption. Therefore, the demand for imported goods in Latvia is steadily shrinking. In 2020, compared to 2019, the compression was 18.9%.

The authorities of the country are trying very hard to develop domestic production, especially export-oriented, and have even achieved quite noteworthy success in this. Domestic rail transport increased by 20.8% and export transport by 15.31%.

But this success is formed from an extremely tiny initial base. The export of goods of Latvian origin in 2020 amounted to only 324,000 tons, or 1.34% of the total railway cargo turnover in the country.

Even if you manage to create a miracle and increase exports three times in five years (which is obviously fantastic, but as an experiment, let’s assume), you will be able to reach barely 1 million tons of cargo at the output, which against the background of the scale of transportation in 2018 (48.96 million tons) looks not even a drop in the ocean, but something close to statistical noise.

The matter is complicated by the fact that initially the railway network of Latvia was built on the basis of the possibility of providing a cargo turnover of 90 million tons per year. Those 4.5 million tons (and most likely a third less) that will remain by 2024-2025 will not be guaranteed to allow the Latvian Railway to achieve at least a level of self-sufficiency.

So the infrastructure will have to be dismantled banally, dismantling rails, closing traffic control centres, selling off rolling stock and closing entire branches of traffic. Thus, putting into great doubt the preservation of the above-mentioned 4.5 million tons of “remnants” of the annual cargo flow.

This suggests a fairly reasonable conclusion that, approximately in 2025, Latvia will take an honourable second place, after Moldova, in the ranking of countries that have lost their Soviet transport heritage and have fallen to the level of the remote periphery of the world.

This, in a way, is ridiculous. As the Latvian railways deteriorate, most likely, NATO will also take its consolidated battalion from Latvia, since ensuring its deployment requires decent cargo transportation, which in peacetime without a railway is too unprofitable.

Институт международных политических и экономических стратегий Русстрат

(@russtrat)