Role of Russia in foreign trade of Latvia

Section: - 2006-11-09/2006-11-09

From time to time Russian mass media present again the idea that the role of Russia in foreign trade of Latvia is dominant and of critical importance to the Latvian economics, and that the reduction in amount of this Russian trade share (via economic sanctions or economic blockade) could serve as a tool to force Latvia behave in ways that suite Russian political agenda.

This appears to be a misconception.

Let us look into the data from Central Statistical Bureau of Latvia to find out what the actual situation is[1].

Groups of countries in the Latvian foreign trade (import, export)
Image:107_valstu-grupas-imports.gif Image:106_valstu-grupas-eksports.gif

First of all we shall note the overwhelming superiority of the European Union countries in the foreign trade balance as compared to the countries of the Commonwealth of Independent States (in the import the share is respectively 75.2% and 16.7%, in the export it is 76.4% and 12.2%).

Turnover data (see table) show that Russian share in Latvian foreign trade is only 8.3%! Of course every trade partner is welcome, but there is no reason to talk about any kind of special role of Russia as a trade partner for Latvia.

Latvian foreign trade turnover, main partners
IdCountryM LVL%
GBGreat Britain380,34,9%
USUnited States 130,31,7%
CZCzech Republic80,51,0%

Ten major Latvian foreign trade partners (import, export)
Image:103_imp-ex-10-imports.gif Image:102_imp-ex-10-eksports.gif

Russia is third major partner in Latvian import (9%), behind Germany (14%) and Lithuania (14%), being one percent ahead of Estonia (8%). In Latvian export Russia (8%) shares fifth place with Sweden (8%), being behind Lithuania (11%), Estonia (11%), Germany (10%) and Great Britain (10%).

Three major groups of gods in Latvian trade with Russia (import, export)
Image:101_grupas-ru-3-imports.gif Image:100_grupas-ru-3-eksports.gif

The structure of import and export according to the categories of trade goods is quite interesting. Three main groups of import of goods from Russia are mineral products (which includes also oil, gas and coal), metals (including rolled steel) and wood. Main groups of goods in Latvian export to Russia are machinery and electrical equipment, food and chemicals; besides, traditional Latvian export of food products to Russia has retreated to the second position, behind the machinery and electrical equipment. Thus Russia is providing to Latvia mainly raw materials in exchange for goods with much higher added value, amongst those Russia is receiving back its own raw materials after being processed. Obviously Russia is serving in its traditional role as a “raw materials appendix” to Europe, and to Latvia in this particular case.

As we see from the statistical data reviewed above, the role of Russia in economics of Latvia is not essential, and declarations of Russian politicians about “teaching a lesson” to Latvia with economic sanctions is nothing else than hot air and wishful thinking.

P.S. There have been speculations about Russia "cutting off gas" to Latvia to kill its economy. Still those who like to talk about it seem to forget two key factors, that: (a) in modern globalized world anything can be bought somewhere else; (b) Russia does not trade the gas for fun and they really do need the money they are getting for it. Though, any unreliable supplier can cause you some trouble. But that is what you normally call a “pain in the neck”, and not an “important partner”.


[1] Central Statistical Bureau of Latvia, Main socio-economic indicators: Foreign trade

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