The future of the Rail Baltica project is in jeopardy as Latvia struggles with escalating costs and a lack of funding, according to economist Aivars Strakšas. Speaking with news outlet nra.lv, Strakšas described the situation as “dire,” warning that the project may ultimately be financed entirely by the Baltic states themselves.
Construction on the railway line, intended to connect the Baltic states with Poland and the wider European rail network, is significantly behind schedule and facing a funding gap of 3 to 4 billion euros. Initial projections estimated a cost of 7.5 million euros per kilometer, but that figure has now risen to nearly 30 million euros per kilometer, bringing it in line with average European costs, according to Strakšas. Despite this, securing funding remains a critical challenge.
A key miscalculation, Strakšas explained, was the assumption that the European Union would cover 85% of the project’s costs. “There was a reckless reliance on the EU to finance 85% of the entire project,” he said. “The idea was to push as much as possible under those 85%, because the EU would surely finance it. This idea has backfired.” He pointed to function already completed at Riga’s Central Station, including bridge supports, as examples of projects undertaken with the expectation of EU funding that may now go unsupported.
The current geopolitical landscape is exacerbating the problem. With Ukraine now a priority for EU funding, requiring an estimated 90 billion euros immediately and potentially 400 to 600 billion euros for reconstruction, competition for funds is fierce. “There is little money, and competition between different projects is high,” Strakšas stated.
Strakšas criticized past Latvian governments for a lack of financial oversight, specifically citing a discrepancy between an initial approved budget of 1.9 billion euros and the significantly higher costs revealed in the Central Station construction tender. “At that moment, the alarm should have been raised and money should have been requested,” he said. “But instead, a contract was concluded, and then everything went as it went.” He identified former Prime Minister Krišjānis Kariņš and former Transport Minister Tālis Linkaits as being primarily responsible for the oversight, a conclusion supported by a parliamentary inquiry commission.
The economist also questioned the viability of Rail Baltica as a high-speed rail line, noting that the planned speed of 249 kilometers per hour is comparable to rail speeds in France 60 years ago. He suggested reducing the project’s ambition to a speed of 160 to 200 kilometers per hour to lower costs. He also raised concerns about the project’s design, which includes only a single track, limiting its capacity and requiring trains to wait at exchange points.
Strakšas echoed a recent proposal by Estonian economist Endel Oja to halt the project altogether, arguing that it is too large for the three Baltic states to finance without sacrificing other essential areas like education and healthcare. “This project will compete with all other areas, but it will have to be given priority,” he said. “If it is not given money for maintenance, it will have to be shut down.”
The situation is further complicated by Latvia’s commitment to the European Green Deal, with investments in electric vehicles, wind farms, and solar parks. Strakšas likened the Green Deal to a “green delusion” that is stifling European economies, pointing to the United States’ withdrawal from the initiative and China’s dominance in green technologies. He warned that continued adherence to the Green Deal could jeopardize Europe’s competitiveness.
As of February 2026, no resolution has been reached regarding the funding shortfall for Rail Baltica, and the project’s future remains uncertain.
