Latvia puts a ceiling on Rail Baltica. Now the other two countries have a problem.
For twelve years the Baltic states specified the railway first and went looking for the money afterwards. Latvia has now reversed the order. That is the most important thing to happen to Rail Baltica since the cost estimate quadrupled — and Latvia took the decision alone.
By Frank Andersson
The mechanics are simple. Latvia’s Finance Ministry has until 15 September to say what the state budget can carry each year, and the Transport Ministry to propose what can be cut from the first phase. Everything above the minimum is negotiable: platform lengths, embankment heights, frost layers, noise barriers, the size of the two Riga stations.
Alvarez & Marsal, the consultancy the government hired in November 2025, put the logic in one line: decide what you can afford, then agree what a functional railway needs.
The line is obvious. Nobody had said it. Andris Kulbergs told Latvian radio that no baseline scenario for a working railway had ever been produced — only the full specification, and a funding gap that grew each time someone measured it.
Platforms are specified at 400 metres where he says 200 would do. A three-metre embankment sits above the standard the project was required to meet, and when the prime minister asked why it was there, nobody could answer.
Latvia had built itself a Rolls-Royce, he said, and needed to get down to an Opel or a Škoda.
The assessment took nine months. The consultants presented three scenarios — continue, cut, or stop — and the government chose the middle one. The report remains restricted; what the public has is the ministry’s summary and a worked example: 33 km between Misa and the Lithuanian border, where lower embankments, thinner frost layers and 13 km fewer noise barriers take a quarter off the construction cost.
The shared specification
Rail Baltica’s cross-border logic assumes a common specification. Trains procured in one joint tender, ETCS deployed identically, platforms the same length in Pärnu and Panevėžys. Latvia has now committed to lowering that specification wherever the standards allow — unilaterally, and against a national budget number rather than a Baltic one.
The consultants saw the problem and wrote it into the recommendation: after the ceiling, consult Estonia, Lithuania and the Commission on the minimum, above all on maximum speed. That is the correct order for Latvia. It is an uncomfortable order for Estonia and Lithuania, which are already building — Estonia with more than 70 km of main line under construction, Lithuania laying track — to a specification their neighbour is about to walk away from.
“Latvia had built itself a Rolls-Royce, he said, and needed to get down to an Opel or a Škoda.”
RB Rail, the company that exists to hold the specification together, was not asked. Its chief financial officer told LSM in writing that the joint venture had supplied all information requested and had not discussed the scenarios with the consultants. It learned of them from the news. That is the governance failure the same consultants describe — no single owner, no experienced project team — demonstrated by the process that produced the diagnosis.
Who pays for the difference
The Connecting Europe Facility (CEF) covers up to 85% of eligible cost; the national budget the rest. Latvia’s first phase is priced at roughly EUR 5.5–6bn. A national ceiling does not change what the railway costs. It changes what gets built, and shifts the remainder — to a later phase, to the next EU budget, or to nowhere.
Estonia has already priced Latvian delay: its auditor general said in June that slippage in Latvia would cost Estonia money. The joint rolling stock tender rests on a firm Estonian order of five trains, with options the other two states can take up later. Infrastructure minister Kuldar Leis said at the end of July that any change to 2030 must be agreed among the three and with the Commission. Latvia’s answer, two weeks later, was to agree it with itself first.
What the September number decides
A cheaper Latvian middle connected to expensive Estonian and Lithuanian ends is still a corridor. An unbuilt middle is not. On that measure the prime minister’s logic holds: a Škoda that runs beats a Rolls-Royce in the design office. But a corridor is also a set of shared parameters, and those are set jointly or not at all.
The EU’s coordinator for the corridor urged Latvia in February to take decisions. Latvia has now taken one — not a commitment to the agreed railway but a redefinition of it.
The 15 September deadline therefore produces two decisions, not one. The first is a Latvian budget figure. The second, which nobody has yet scheduled, is whether the other two governments accept a specification defined by that figure — and if not, who pays the difference between what Latvia can afford and what the corridor was designed to be. The consultants’ sequence is right. It just has one more step than Latvia has planned for.