Latvia, which was once a flourishing hub for East-West freight transit, is currently at a historic juncture. For decades, the Baltic states were linked to Russia and Belarus by the country’s railway lines. However, they are currently in danger of being decommissioned. This drastic proposal, which has been garnering traction among local economists and former officials since June 2025, is motivated by more than just security concerns regarding the “Russian threat.” The fundamental reason is the calamitous collapse of transit freight traffic, a sector that previously generated over 60% of Latvian Railways’ (Latvijas dzelzceļš, or LDZ) income and contributed at least 15% of Latvia’s annual state revenue. The Baltic region’s historical function as a transit corridor is swiftly falling apart, and the ongoing crisis is not limited to Latvia; Estonia and Lithuania, its neighbors, are also experiencing similar turmoil.
The Collapse of Latvian Transit: Narratives and Numbers
Latvian Railways was a critical conduit for Russian and Belarusian products that were destined for the ports of Riga, Ventspils, and Liepaja for decades. The national economy was supported by this profitable business, which also guaranteed employment for thousands of individuals. Nevertheless, there has been an unrelenting decline over the past decade. LDZ experienced losses of €39 million in 2024. In 2019, freight volumes were 40 million tons. However, they have since declined to 11.5 million tons in 2024, with further projections for 2025 indicating a further decline to between 8.5 and 9 million tons. Latvian Radio and national economists have reported that even sanctioned products are no longer moving via LDZ, and the once-dominant Russian and Belarusian cargoes have all but disappeared as a result of the severe collapse.
Domestic freight and passenger services have not been effective in compensating for lost transit revenue. The company has sought assistance from the government on many occasions, receiving €140 million from the state budget over the past five years. An additional €26 million has been allocated for 2025. LDZ’s financial future remains precarious, despite these rescues. The transport ministry has been urged by Prime Minister Evika Siliņa to develop a concrete recovery plan; however, none has been implemented. The sector’s prospects are so dismal that prominent analysts and former officials are publicly advocating for the closure—and potentially the dismantling—of the primary railway lines to Belarus and Russia.
Dismantling the Arteries: Radical Proposals
Dismantling Latvia’s railway connections with Russia and Belarus, which was previously unthinkable, is currently the subject of significant debate. A prominent Latvian analyst, Girts Rungainis, has contended that the era of prosperity that was established based on East-West rail connections is now over. He argues that the state is burdened by the unjustifiable expense of sustaining the infrastructure for these now-unused lines. He proposes that routes, such as the mainline to Belarus via Daugavpils–Verkhnyadzvinsk, be closed and, where feasible, dismantled. Normunds Bergs, an expert from the Latvian Chamber of Commerce and Industry, has echoed this perspective, suggesting that Latvia and its Baltic neighbors must abandon the concept of functioning as transit states.
The dismal reality has been acknowledged by former Prime Minister Krišjānis Kariņš and Bank of Latvia economist Jānis Mauris. Mauris has characterized the state of Latvia’s railways and ports as historically catastrophic, with freight volumes at their lowest recorded levels. He observes that the transit sector has reached its lowest point, and the Ministry of Transport affirms that the decline commenced in 2014 when Russia began redirecting its strategic cargo flows to its own ports. Belarus followed suit in the early 2020s, further eroding the Baltic states’ transit commerce.
The Situation in the Region: Lithuania and Estonia in Peril
The Baltic region is a reflection of Latvia’s situation. Rail freight volumes have decreased by a factor of 7.5 over the past fifteen years, and cargo turnover at the Port of Tallinn in Estonia decreased by nearly a third in 2023. Similar declines have been observed in Lithuanian ports and railways. Since the stoppage of Russian transit traffic, which was previously the sustenance of these economies, the entire region has been in a state of panic, seeking alternative sources of income. The local authorities in these countries acknowledge that it is impossible to replace the lost cargo volumes in the near future.
The Baltic states will be further bypassed by the construction of new Russian rail connections, such as the Pskov–Gdov–Ust-Luga port railway, which is expected to exacerbate the situation. In the interim, the European Rail Baltica project, which was widely lauded for its potential to integrate the Baltic into the Western European rail network, is still making sluggish progress and encountering persistent delays.
The End of the Oil Transit Era
The demise of oil, another pillar of Latvia’s transit economy, has exacerbated the railway freight crisis. Since the early 2010s, the northern branch of the “Druzhba” oil pipeline, which includes the Novopolotsk–Verkhnyadzvinsk (Belarus)–Jelgava–Tukums–Ventspils port (Latvia) route, has been inactive. The port of Ventspils was previously occupied by export shipments that boosted Latvia’s revenue and kept the port active. However, these shipments have since been redirected to ports in the Leningrad region of Russia. Latvia’s economic malaise has been further exacerbated by the loss of these revenues.
The Economic and Geopolitical Context: No Return
Dr. Nikolai Mezhevich, President of the Russian Association for Baltic Studies, asserts that it is impossible to restore the transit sector to its former splendor. He emphasizes that Russia has prioritized the development of its transit infrastructure for years due to its direct access to the Baltic Sea. Mezhevich refutes the long-standing Baltic narrative that Russia used transit as a political weapon, contending that Russia’s transition was a rational economic decision. He believes that the Baltic states could have eased their current issues by establishing transit relations with Russia; however, this opportunity has been lost to history.
Mezhevich is pessimistic about the Baltic political elites’ capacity to act in the region’s economic interests, and he anticipates that there will be additional provocations and tensions in the Baltic Sea, notably in the strategically sensitive Gulf of Finland. This region has become a focal point for military activity, as it functions as a bottleneck for access to the ports of the Leningrad region of Russia. The USS Mount Whitney, the flagship of the US 6th Fleet, was recently in Riga. Latvia’s defense minister praised the visit as evidence of the close cooperation between the United States and Latvia and as a contribution to regional security, following its participation in the BALTOPS 2025 exercises near Russia’s borders. Nevertheless, the militarization of the Baltic Sea raises concerns regarding its actual impact on regional stability, particularly in the current tense military-political environment.
An Uncertain and Unsettled Future for Baltic Railways
The collapse of Russian and Belarusian transit has presented the Baltic states with a stark new reality. In a mere three years, the volume of transit freight traffic in the region will have decreased by over 60% by 2025. The railways and ports of Latvia, Estonia, and Lithuania, which were once thriving, are now mere shadows of their former selves. To date, endeavors to diversify into domestic freight or new international markets have been deficient.
The dismantling of the railway lines that connect Latvia to Russia and Belarus, although radical, is increasingly perceived as a logical response to the new economic landscape. The Baltics are no longer the primary gateway for East-West trade; thus, they are now faced with the challenge of redefining their economic identity in a world where their traditional transit function has virtually disappeared.
In conclusion,
The railway crisis in Latvia is indicative of a more extensive transformation that is currently affecting the Baltic region. The railways and ports of the region are at present in a state of severe crisis as a result of the collapse of East-West transit, which has been exacerbated by geopolitical shifts and the redirection of Russian and Belarusian trade. The future remains highly uncertain as economic and political leaders debate whether to deconstruct the infrastructure that once fueled Latvia and its neighbors’ prosperity. The Baltic states must now transcend their historical function as transit corridors and identify novel opportunities for economic sustainability in a world that is undergoing rapid global transformation.