Introduction

��For the first time since 1972,��when��SALT I negotiations yielded the Anti-Ballistic Missile (ABM) Treaty and the Interim Agreement on offensive arms, the strategic relationship between Washington and Moscow is entirely unconstrained by a legal framework.��.��As the current normative vacuum is unprecedented in the modern era, the��North Atlantic Treaty��Organization��(NATO)��Alliance faces��a new ‘strategic trilemma’:��the simultaneous and often contradictory imperatives��of maintaining credible extended deterrence;��enhancing conventional defence against hybrid and missile threats;��and reconstructing a confidence-building, risk-reduction framework to prevent accidental escalation. The central policy problem is that the traditional tools of strategic stability��– quantitative and qualitative ceilings, inspections, and transparency��–��have been discarded in favour of vertical��nuclear��proliferation. NATO must navigate an environment where��the absence of constraints increases the risk of miscalculations, potentially leading to an unmanaged arms race that reduces the security��for all��NATO Allies.����

Context: The Long Transition and the Paradox of the New START��

The��international��arms control regime, which persisted through various systemic shifts from 1972 until 2026, has finally fractured. However, a rigorous assessment��of its lifespan��suggests that the final pillar of this regime,��the New START,��was already flawed.����This omission allowed Moscow to channel its modernization efforts toward lethal, MIRV-capable systems,��while remaining formally��compliant to��the treaty limit of 1,550 warheads.��,��Moscow’s Strategic��Rocket��Forces (RVSN) and the missile industry exploited this normative��‘shield’��to initiate a massive��‘re-MIRVing’��process. This modernization was driven by a����within the Russian military-industrial complex. By focusing on systems that exploited New START’s qualitative loopholes, institutional actors, such as the��, secured long-term funding and development pathways for a new generation of delivery vehicles. This momentum��facilitated��the emergence of a direct nexus between treaty-compliant modernization and the later deployment of advanced long-range capabilities on the Ukrainian battlefield.��

The Strategic Trilemma between Extended Deterrence and the ‘Upload’ Disparity��

The end of New START has transformed the re-MIRVing process into a catalyst for a new arms race. In this new unconstrained environment, the US possesses a significant technical advantage. . If the US opts to utilize its technological edge, it would effectively out-deploy Moscow, potentially doubling its arsenal to levels above the failed treaty’s limits.  In response, Moscow may prioritize asymmetrical offset centred on long-range theatre strike capabilities. This likely reaction is deeply rooted in the bureaucratic momentum of Russian military-industrial complex, favouring dual capable systems that operate in regulatory grey zones.   

Defence, Resilience, and the Hypersonic Decision Gap

��Unlike traditional��ICBMs, which allow for a 25-plus minutes warning window, a hypersonic system launched from central Europe can reach critical command nodes in Moscow in less than 10 minutes. This����in decision time undermines de-escalatory signalling and places����on the adversary’s early warning systems, potentially triggering automated ‘launch on warning’ responses. Even a conventional strike on communications, command-and-control (C3) centres would be strategically relevant. Therefore,��the deployment of such systems in substantial numbers would create a ‘launch-on-warning’ incentive for Moscow, further destabilizing the offensive-defensive��balance and increasing the risk of automated nuclear response.����

Managing Uncertainty��in a Multipolar System��

Emerging from a Cold War environment coalesced around a bipolar international power-distribution, traditional arms control has proven ill-suited for the asymmetrical, multipolar international disorder of the last two decades.  In a world without inspections, stability depends on predictability. To achieve this goal, the international community must work to prevent accidental escalation through transparency and launch notifications. The reconstruction of a stabilizing framework is currently stymied by two primary structural hurdles: Russia’s current lack of trustworthiness and China’s strategic intentions.  

The main obstacle to reopening dialogue with Russia is the paradox of negotiating limits on the same systems being employed in the current war in Ukraine. It would be politically fraught for the US to engage in fresh negotiations, while Russia utilizes these assets as tool of active coercion and battlefield destruction. . This move puts Washington in an uneasy negotiating position, forcing it to negotiate over assets that France and the United Kingdom (UK) consider non-negotiable. This is hardly a novel tactic:  Putin’s proposal risks to exacerbate infra-systemic fault lines, foster suspects of decoupling, and ‘fears of abandonment’ between the US and its European Allies. Simultaneously, China’s strategic stalling (and its own ambitions to increase its arsenal) prevents the necessary transition toward a trilateral framework. By hiding behind the rhetoric of minimal deterrence, Beijing refuses to accept any oversight while rapidly expanding its nuclear and conventional inventory.  

While the American and Russian nuclear stockpiles greatly exceed those of all other nuclear-weapon states, the strategic equation has irrevocably shifted from a bipolar to a multipolar calculus through China’s ambitions to drastically increase its own arsenal.  These missiles provide Beijing with a high-precision, non-nuclear capability to hold regional strategic assets in the mire, including forward air bases, carrier strike groups, and command-and-control (C2) nodes.  This scenario of ‘conventional entanglement’ complicates the global force posture of NATO’s primary security provider, the US.   

Technological Acceleration: The AI-Hypersonic Nexus��

The ‘Strategic Trilemma’ is further complicated by the integration of����and launch-control systems. As the����through the deployment of Hypersonic Glide Vehicles (HGVs), the decision-making window for political leaders has shrunk from thirty minutes to mere seconds.��.��However, the ‘black-box’ nature of neural network-based AI introduces unprecedented��. Because these models recognize patterns in ways that are non-replicable and often incomprehensible to human operators, they are prone to hallucinations or false positives – interpreting unusual atmospheric phenomena or cyber-spoofing as an incoming strike. In a strategic environment dominated by fast-flying systems like the��Dark Eagle��or��Oreshnik, the reliance on AI-driven recommendations could lead to a ‘compressed escalation’ where a machine��initiates��a retaliatory strike before human deliberation even occurs. This technological entanglement��necessitates��that any future��arms��control negotiations must deal not only with warheads and delivery systems, but also with the algorithms governing their employment.����

The Shift towards Integrated Deterrence��

In response to this acceleration, NATO has transitioned toward a posture of integrated deterrence. With the expiration of New START in sight, the North Atlantic Council (NAC) moved to solidify the Alliance’s defensive architecture.  This strategic shift was codified on February 12, 2026, when several NATO Allies launched  to develop next-generation sensors designated to counter ballistic and hypersonic threats (like the Hypersonic and Ballistic Tracking Space Sensor (HBTSS)). These initiatives, alongside a new  for drone-based deep precision strike capability, signal a move away from static, treaty-based stability, toward a dynamic denial posture. Furthermore, the  reinforces this approach by emphasizing trans-regional deterrence, acknowledging that while NATO remains a regional alliance, its security is inextricably tied to the ‘two-peer’ challenge.  

Policy Recommendations:����

1. Rediscover a dual approach: Combine military modernization with a standing��negotiating��offer��to both Russia and��China��on Strategic Stability Dialogue,��which would��likely benefit��NATO��Alliance cohesion by reassuring the most risk-adverse NATO��member��states.����

2. Prioritize Qualitative Limits: Advocate for a Multilateral MIRV-freeze to mitigate first-strike incentives and neutralize the advantage of rapid uploading.����In the post-START environment, the primary risk is no longer aggregate warheads counts, but the rapid surge��in��capacity,��afforded by US upload potential and Russia’s modernization of MIRV-capable systems.��A ‘freeze’ approach would be aimed at neutralizing the perceived advantages of rapid arsenal expansion, signalling a commitment to strategic sufficiency rather than the��reckless��pursuit of superiority.����

3. Establish��‘Cold War��Plus’��Communication Channels: Strengthen secure, real-time links between military headquarters to manage crisis in an era of hypersonic weapons.��NATO should strengthen secure, real-time links between military headquarters – specifically��the Supreme Headquarters Allied Powers Europe (SHAPE)��and the Russian Ministry of Defence – to manage crisis in an era defined by HGVs. These channels must be hardened against cyber-interferences and electronic warfare to ensure they��remain��viable��during high-intensity grey zone friction or hybrid confrontations.����

4. Manage AI Integration in Command and Control:��Establish��‘human-in-the-loop’ standards between launch commands and early warning systems to��prevent��AI��systems��from triggering accidental escalation during high-speed hypersonic encounters.��While AI may become indispensable for processing massive data streams from next-generation��sensors like the HBTSS, it must never��possess��the autonomous authority to��initiate��a response. Hence, the��NATO��Alliance should champion an international protocol that mandates��a ‘’ for human commanders, even in high-speed hypersonic confrontations.��

5. Define a Clear Doctrine for Conventional Hypersonic: Clarify that systems like��Dark Eagle��are for��,��while acknowledging that����remains��inherently destabilizing.��NATO should explicitly disavow ‘decapitation’ or strategic nuclear roles for these assets to reduce the risk of Russia misperceiving conventional precision strikes as existential threats to its��C2��architecture.��

6. Strengthen Hybrid Resilience: Protect undersea and digital infrastructure as a core��component��of strategic stability to prevent��hybrid,��non-kinetic bypassing of deterrence.��By neutralizing low-cost, high-impact hybrid threats, the��NATO��Alliance prevents adversaries from bypassing deterrence thresholds��and undermining stability at the lowest level of the escalation ladder. This approach ensures that the emerging new capabilities in air, missile, and drone-defence would not be��compromised��by asymmetric disruption aimed at eroding domestic resilience and political will during a crisis.����

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Key Takeaways 

• In Estonia and Latvia, border residents, ethnic Russians, and Russian-speakers differ from the general population in their perception of security threats. They are more likely to view domestic political instability as their country’s primary security threat, rather than Russia. 

• This segment of Estonians and Latvians also tend to feel disenfranchised and helpless regarding national defence, with the majority more likely to respond that their countries are “on their own” if faced by a military threat. 

• NATO should take a regionally focused outreach, using the Russian language as a medium and utilize transparent intelligence disclosure to assure and rebuild trust among these vulnerable populations. Furthermore, using visible and well-tested approaches such as tangible first-responder training and on-the-ground capacity-building measures could help address local skepticism. 

Background 

While the North Atlantic Treaty Organization (NATO) focuses on defending the Baltics from external Russian aggression, a critical segment of the population – namely border residents, ethnic Russians, and Russian-speakers – are more concerned with internal political instability than external threats for its national security. In addition, many of these respondents express a feeling of helplessness and alienation, believing neither the West nor Russia would come to their aid should their country face a military or security threat. Thus far, NATO operations aimed at reassuring Baltic residents are not succeeding with instilling confidence in current national security frameworks. Recognizing the diversity of security beliefs with a particular regional and linguistic focus could better inform NATO strategies that address security threat responses in the Baltics, helping to reassure these skeptical and disenfranchised populations.   

Russia’s full-scale invasion of Ukraine in 2022 has fundamentally transformed the international security landscape, prompting NATO’s response to reassure its Baltic members that, should it face a threat, NATO will come to their defence.  NATO’s operations in Latvia and Estonia are a part of its broader efforts at deterrence and defence on its eastern flank by increasing its presence in the region, with Canada leading the Multinational Brigade in Latvia through , and the United Kingdom leading in Estonia with . Latvia and Estonia are both active participants in various NATO-accredited Centres of Excellence (COEs) that conduct collaborative research with NATO Allies to better address security threats, many by malign Russian influence through hybrid tactics. For example, the , located in Riga, Latvia, monitors and counters information-manipulation threats in real time. Russia’s information operations in these countries exploit pre-existing societal divisions among ethnic, regional, and linguistic lines, promoting extremist sentiments and skepticism against their governments and Western partners.  accuse Estonian and Latvian governments of being anti-Russian and incapable of defending their countries against any threat.   

Existing studies suggest that Russophone, ethnic Russian, and borderland populations in both Latvia and Estonia are more skeptical towards NATO and existing national security frameworks. They are found to be , and .  is found to be a salient factor, associated with decreased support for present (often liberal democratic) regimes.  In the context of the ongoing war against Ukraine, , and . Furthermore, they are.   

However, public opinion amongst these groups in Estonia and Latvia is proving to be more nuanced; many in these populations express a complex belief system surrounding national security that is . , , meaning that public opinion among Russophones in Latvia and Estonia is heterogenous. Given these insights, policy aimed at developing trust with these populations and fostering participation in national security frameworks should reflect this variety of beliefs, and address skepticism through regionally and linguistically mindful outreach initiatives.

Belief in ‘Domestic Political Instability’ as the Greatest National Security Threat

A survey conducted by the �Ӱ�ԭ�� University Eastern European and Transatlantic Network (EETN) in Latvia and Estonia between March and May 2025 indicates that while Russia and the war in Ukraine are still prevalent security threats, 26% of Latvians and 22% of Estonians perceive “domestic political instability” as the most important threat. These opinions are particularly widespread among the border-region populations, among Russian speakers, and ethnic Russians. For example, in Latgale (Latvia’s border region) 52% chose “domestic political instability” as the greatest threat; only 7% picked Russia, and 12% the war in Ukraine. Similarly, in Northeastern Estonia, an area that borders Russia, 47% consider domestic political instability as a main security threat while only 17% consider Russia as the greatest threat. In Latvia, Russian speakers were far more likely to hold this belief compared to respondents who speak the titular language; language was not a measured factor in the Estonia survey. 

These groups are all more likely than their counterparts to feel personally “unsafe,” with 51% of Latgale residents and 30% of Russian speakers in Latvia choosing “unsafe” when asked about their personal safety. In Northeastern Estonia, 31% also personally feel “unsafe.” Skeptics tend to attribute threats to personal safety on internal concerns rather than external actors. In both countries, those who share this belief have a higher likelihood to view Russia as most helpful for their national security. ​​For example, in Latvia 26% of respondents chose “domestic political instability” as the greatest threat to personal safety, and among these respondents 61% chose Russia as the most helpful external actor to Latvia in the case of a military threat- pointing to an intersection between positive perceptions of Russia and concerns over internal concerns. Similarly, for the same question in Estonia, 22% chose “domestic political instability,” and of this group 77% also picked Russia to come to their aid. 

In addition, those concerned with domestic security are more likely to be skeptical of the EU, NATO, and the West. In both countries, such respondents are least likely to choose “the West” as most helpful should they face a military threat, with only 12% in Latvia, and 18% in Estonia. Furthermore, among those who share this belief is a higher likelihood to vote “no/leave” in hypothetical referendums for the EU and NATO respectively.  

Feelings of Alienation, NATO Skepticism and Internal Instability Belief 

Among respondents who share a belief regarding domestic political instability and specifically in the Russophone, ethnic Russian, and borderland populations is a common feeling of alienation from current security mechanisms and parliamentary processes. Respondents who share this belief also often expressed disenfranchisement, believing that if their country faces a military threat that they will be helped by no one. When asked the same question, Russophones in Latvia proved that they are least likely to choose NATO and most likely to choose “Nobody will help us/we are here for ourselves”.  

Residents of Northeastern Estonia and Latgale are the least likely among Estonia’s macro-regions to choose “closer to NATO” (only 34% in Northeast Estonia and 41% in Latgale) and are most likely among all regions to pick either “closer to Russia” (22% in Northeast Estonia, 21% in Latgale) or “closer to both/neither” (31% in Northeast Estonia, 25% in Latgale). 

It seems that such skepticism towards common security architecture reflects a greater disbelief in the national political system. Although a majority of respondents who also share the belief of alienation would vote “yes/stay” in the hypothetical referendums to remain in NATO or the EU, their support is weaker than the general population. To conclude, Russophones, border-region residents, and respondents who share their “domestic political instability belief more often express feelings of alienation and disenfranchisement from political processes rather than a desire to deepen ties with Russia.

Conclusion and Policy Recommendations 

Feelings of skepticism, alienation, and disenfranchisement in the border regions cannot be attributed to ethnic and linguistic identification alone. Being Russian or Russophone in a border region does not inherently make someone vulnerable to Russian influence. Socioeconomic disparities in these regions paired with titular language mandates in both countries can contribute to feelings of alienation, though further research is needed in order to uncover a clearer picture of these citizens’ experiences. A more in-depth understanding will further restore agency to this population, as their beliefs are likely acquired through more complex routes than simply absorbing Kremlin media.  that Russian media did not have an independent effect on one’s willingness to defend their country and instead infers that many respondents who consume Russian media have a distrust of media in general, further highlighting a need for a more nuanced understanding of skepticism among Russophones. 

1. Further research on best practices through NATO COEs is needed to address alienation and helplessness 

NATO Allies utilize different COE’s to share best practices for countermeasures and confidence-building initiatives and to build societal resilience against malign information influence. A transnational study on best practices for building confidence among ethnic minorities would fill a sizable gap in current research and would provide a basis for which to design public outreach campaigns for populations experiencing alienation and skepticism.  In addition, further research can investigate the security perceptions and feelings of alienation in public opinion. This would provide a more accurate foundation for which to form policy on public outreach, rather than simply attributing the security concerns of Russophones to inherent Russian-tendencies that favor Kremlin-intervention. 

2. Targeted and regionally mindful outreach for key groups could have important impacts 

Further regionally-focused outreach for these specific Russophone, ethnic Russian, and borderland populations using a , with tactics such as intelligence disclosures (gathered through the , or NISRF), can effectively rebuild credibility and better reassure these populations of NATO’s defence commitments and decision-making. Furthermore, intelligence disclosures through accessible media can inform users on external security threats and potentially increase risk awareness and trust in public institutions through transparency measures.  

 Given that a significant amount of  is conducted by Russian-language media, it is tantamount to consider this population’s linguistic preference as a tool of engagement rather than a characteristic to exclude from policy measures to counteract Russian influence.  

3. Share key expertise within NATO frameworks, and make it visible to key groups 

 found that any citizen regardless of ethnicity is more open to helping in their country’s defences if they are reassured by a powerful patron, one that they have confidence in. In 2023, , sharing best practices for preparedness among first responders. Similar efforts in Latvia and Estonia could reach NATO-skeptical populations among citizens working in the public sector for emergency response. Sharing key expertise in similar sectors can potentially build trust among skeptical groups and increase NATO’s visibility among local populations, offering a firsthand account of NATO’s efforts instead of through malign narratives online.  

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Executive Summary  

Transatlantic relations are currently facing growing uncertainty due to significant strategic divergences in the fields of trade, security, technology, and global governance. From the trade tariff disputes to President of the United States (US) Donald Trump’s territorial claims on Greenland, ties between the European Union (EU) and the US are under growing stress. This tension has heavy repercussions on the EU and its member states. Fears about an effective transatlantic decoupling have reenergized calls for the EU to acquire a capacity to act on its own. In this context, Canada can play a decisive role. Stronger EU-Canada cooperation could provide an answer to this new strategic anxiety. It would also allow to reduce dependency on the US and help develop both Canadian and European strategic autonomy.  

Changing Transatlantic Relations: An Opening for Deeper Canada-EU Ties 

While the first Trump administration tested traditional transatlantic relations, Trump’s second term has marked a significant recalibration of US foreign policy that has fundamentally challenged the core values that have underpinned this relationship for the last 80 years. From recurring trade tariff disputes to territorial claims over Greenland, Trump’s actions have often questioned – and even opposed – the US’s role as the principal guarantor of transatlantic stability and security. His administration has delegitimized multilateralism in favour of a “selective engagement” strategy with individual US partners. The recent US , released in November 2025, formalized this major shift in American foreign policy. This new strategy reorders global priorities, reframes NATO Allies’ roles, and seeks stability in Europe to allow Washington to redirect its focus and resources to the Indo-Pacific and the Western Hemisphere. At the same time, it adopts  toward the EU, portraying it as a source of instability and accusing it of undermining political liberty, sovereignty, and social cohesion. 

These dynamics raise fundamental questions about the stability, predictability, and future shape of the transatlantic relationship. For the EU, the implications are immediate: increased strategic risk, reduced certainties, and stronger pressure to develop autonomous capabilities and diversified partnerships. 

Why Canada Matters to the EU (and why the EU Matters to Canada) 

In this rapidly-changing international environment marked by geopolitical fragmentation, erratic US behaviour, and Russia’s ongoing war against Ukraine, the EU must meet three conditions in order to become a more credible and decisive actor at the global level: one, it must sway sufficient economic power; two, it must demonstrate political will to act cohesively both amongst its member states and with its international partners; and three, it must be perceived as a legitimate and credible entity by other . 

To achieve these conditions, the EU needs to strengthen its ties with like-minded democracies, such as . Among them, Canada appears as an especially natural and highly compatible partner for the EU. Throughout the last 50 years, Canada and the EU have built an exemplary partnership based on shared democratic values and worldview. But in today’s challenging global landscape, the EU and Canada stand together more firmly than ever as stable and trusted partners. And while the  and  serve as the foundation of the contemporary EU-Canada relationship, increased cooperation to both reinforce current areas of coopetition – such as security and defence – as well as joint ventures in new sectors – including the digital domain – will play key roles in the near future.

Security and Defence Cooperation Between Canada and the EU: A Win-Win Opportunity 

Canada’s contribution to European security and defence policy is hardly new: Ottawa has been a valued contributor to EU-led security and defence efforts for over a decade. It was the first country to establish a Security and Defence Dialogue with the EU in 2015; it participates in  and has contributed to . 

However, at the 20^th EU–Canada Summit in Brussels last June, António Costa, President of the European Council, Ursula von der Leyen, President of the European Commission, and Mark Carney, Prime Minister of Canada, together pledged to further strengthen their bilateral cooperation. Both sides committed to an ambitious and comprehensive partnership, the new , aimed at deepening cooperation across key areas such as trade, security, energy and other critical sectors. 

As part of their re-energized relationship, the EU High Representative of Foreign Affairs, Kaja Kallas, the Canadian Minister of Foreign Affairs, Anita Anand, and the Canadian Minister of Defense, David J. McGuinty, also signed the , which provides a framework for cooperation on cyber defence, hybrid threats, space security, maritime issues, crisis response and assistance to partners, such as Ukraine. This agreement also includes provisions for joint research in emerging technologies, which can help position both Canada and the EU as global leaders in these fields.  

This new agreement importantly lays the groundwork for increased defence procurement collaboration, primarily related to the EU’s . It also opened the door for   – a new European loan instrument for joint procurement – and for an administrative arrangement between Canada and the European Defence Agency, the body that supports cooperative European  and provides a forum for European ministries of defence to coordinate their policies. As a result of this increased cooperation, both Brussels and Ottawa have made tangible steps to diversify their defence partnership and become less reliant and vulnerable to Washington’s shifting moods on collective security. Similarly, this new agreement enhances the resiliency of the European pillar within NATO, without either undermining the NATO Alliance or trying to substitute it. 

New Areas of Cooperation in the Digital Domain 

As part of their cooperative efforts, the Canadian Minister of Artificial Intelligence and Digital Innovation, Evan Solomon, and the Executive Vice-President of the European Commission for Technological Sovereignty, Security and Democracy, Henna Virkkunen, have also agreed to strengthen cooperation in the . On 8 December 2025, the first meeting of the EU-Canada Digital Partnership Council took place in Montreal, Quebec. The  made at the conclusion of that meeting showed that both sides recognized the importance that digital partnership plays in advancing bilateral efforts to boost competitiveness, innovation, and economic resilience. This meeting also resulted in Canada and the EU  This meeting also resulted in Canada and the , one on cooperation on artificial intelligence, and another on digital credentials, digital identity wallets, and trust services. This new partnership will guide collaboration on AI governance, quantum technologies, cybersecurity, and digital standards. The  of this partnership is to build digital systems that are secure, transparent, and centred on public trust.

Conclusion

The ongoing reconfiguration of US foreign policy and the end of predictable transatlantic relations have led the EU and its member states to reconsider their strategic goals and explore alternative strategies to promote their own interests and societal well-being. In this context, cooperation with Canada would be a win-win opportunity, allowing both sides to reduce dependencies on the US and bolster collective defence capabilities without undermining NATO. Strengthening the EU-Canada relationship could also help show other countries that – in an era of re-emerging great power rivalry – there is still an opportunity for states to create and benefit from collective partnerships. 

Policy Recommendations  

In order to make the EU-Canada cooperation effective and concrete, both sides should consider the following policy recommendations: 

• Take an active approach to , including encouragement of domestic defence industries to actively utilize this instrument to gain increased access to external markets. 

• Encourage all EU member states to ratify CETA, as only 17 member states have ratified the agreement thus far. Finalizing the ratification of CETA would ensure stability and continuity for the agreement and would signal increased confidence in the overall Canada-EU trade relationship going forward.  

• Strengthen efforts aimed at enhancing their bilateral , to advance and diversify trade, promote economic security and resilience, and create investment opportunities. 

• Increase cooperation in the extraction and trading of . Deepening ties in this area could help reduce dependencies on unreliable partners while strengthening internal supply chains.  

• Improve cooperation on  while at the same time continue working together in order to balance innovation with ethical considerations and standards. This includes joint investments on AI-driven sustainability solutions, the adoption of accountability measures for violators of AI regulations, and the enforcement of policies that support both technological advancement and societal well-being. 

• Utilize the strong EU-Canada relationship as a stepping stone to reinforce multilateral partnerships with like-minded democratic partners, such as Japan, South Korea, Australia, and Taiwan. 

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Amid the ongoing war in Ukraine, Latvia is increasingly confronting the issue of companies using third countries to evade international sanctions. Many companies, particularly in the information and communication technology (ICT) sector, use transit jurisdictions, undermining international efforts and national security. Traditional sanctions alone are insufficient, as . This memo explores the potential of corporate self-regulation through corporate social responsibility (CSR) as a proactive alternative.  

CSR allows companies to voluntarily exclude themselves from unethical practices, ensuring that each employee takes responsibility for compliance with established norms. Participation in such ethical business practices could enhance . This issue is particularly pressing as the to finance Russia’s war against Ukraine, making it a matter of national security. While the circumvention of sanctions occurs across various industries, this paper focuses on the self-regulation mechanisms implemented by Latvian ICT companies. An assessment of Latvia’s five largest ICT companies shows considerable variation in their compliance with self-regulatory standards. Only a few meet most criteria, likely because prior reputational issues have prompted greater efforts. Key gaps include: weak public advocacy, limited third-party transparency, and insufficient training on sanctions compliance.   

This memo concludes that self-regulation practices concerning sanctions compliance among Latvian ICT companies are insufficient, especially in light of the war in Ukraine. Recommendations include encouraging CSR-based compliance frameworks, improving transparency, and considering a legal model similar to the United Kingdom (UK) Bribery Act 2010 to promote ethical business conduct and accountability. As sanctions circumvention directly impacts Latvia’s economic security and geopolitical independence from Russia and Belarus, promoting stronger self-regulatory and legal mechanisms are essential. This approach could also be applied to other high-risk sectors such as construction and extractive industries.

The Problem

The issue of sanctions circumvention, particularly through third countries, has become acute since Russia’s full-scale invasion of Ukraine in 2022. indicates that many Latvian companies use states in Caucasus and Central Asia as intermediaries to get around international sanctions. For example, in 2024 the Deputy Director of the Customs Administration – without disclosing the names of specific companies – noted a sharp increase in the number of sanctions violations committed by Lativan companies. The export of goods was prohibited in more than related specifically to Central Asian countries. This report highlighted that the goods being intercepted are mostly various mechanical devices, vehicles, and electrical equipment. Similar increases have been observed in Germany, as reported in a by Robin Brooks. There is about the need for against companies that facilitate such activities. However, it is evident that this approach is not , as it often fails to address the , namely, that the same individuals can establish new legal entities, continue their operations under a different owner, or employ alternative schemes to .  

The Context

In the case of CSR, compliance with economic sanctions is not a well-documented subject. According to relevant literature on the topic, sanctions compliance could be indirectly linked with topics, such as ; corruption risks associated with ; as well as s. CSR is also generally accompanied by an that aids in internalizing and implementing its provisions, as well as adhering to its own established standards and norms. Furthermore, the literature emphasizes the necessity of a proactive and innovative approach in developing supplementary mechanisms that beyond mere regulatory compliance. 

There are related but not directly addressed topics about sanctions compliance within CSR. In 2025, the United Nations Working Group on Business and Human Rights released a implying that businesses should comply with all relevant legal frameworks, which could include sanctions. Maayan Menashe that international standards can become embedded as social norms within corporations, influencing their behaviour even when legal enforcement is weak or absent. Similarly, sanctions compliance can be reinforced by market and societal expectations, making circumvention more reputationally and financially costly. According to Hortense Jongen, the private sector is facing pressure to , particularly in areas like anti-bribery and corporate responsibility, because of scrutiny from . Just as firms voluntarily align their CSR policies with international standards to maintain credibility, according to Bryan R. Early and Timothy M. Peterson, they may also adopt stricter compliance policies regarding sanctions to avoid being . A strong example of corporate response to geopolitical events is the reaction to Russia’s invasion of Ukraine, with over 1,000 companies publicly announcing the beyond the minimum legal requirements imposed by international sanctions. 

 A recent study by Keith A. Preble and Bryan R. Early claims that a critical aspect of compliance with economic sanctions is , with enforcement agencies leveraging “naming and shaming” tactics to deter violations. Firms fearing reputational damage are less likely to engage in risky transactions with sanctioned entities, and the heightened scrutiny on large corporations creates industry-wide compliance pressures. However, the authors also , with American institutions imposing significantly higher fines on foreign entities to ensure global compliance. Similar conclusions come from a study which , particularly those imposed on Russia after its 2022 invasion of Ukraine, through a survey of 610 medium-sized companies in Germany, Poland, and the United States (US). This analysis finds that, while external pressure generally encourages compliance and even overcompliance, it can also push some firms toward sanctions circumvention. Compliance is often accompanied by proactive business strategies aimed at finding legal loopholes to continue operations. The results of this study underscore the – US firms, for instance, face stronger legal enforcement mechanisms, whereas firms located in the European Union (EU) , particularly in Germany and Poland, exhibit a wider spectrum of compliance behaviors. These findings suggest the need for stronger enforcement mechanisms, standardized regulatory guidance, and targeted measures to curb both undercompliance and sanctions circumvention. 

To gain insight into how such regulatory measures are implemented by Latvian ICT companies and what the most popular approaches are, this memo examines the largest ICT enterprise, including a review of corporate statutes, annual reports, as well as open and publicly available data. The evaluation is conducted based on criteria aligned with  international standards. However, the criteria used in this memo are modified to reflect the existing narrative on sanctions circumvention, specifically addressing political involvement, corruption risks associated with third-party involvement, and public anti-corruption stance. The assessment is conducted based on a scoring system, where “Yes” is assigned 1 point, “Partially” is assigned 0.5 points, and “No” is assigned 0 points, depending on the extent to which the information found in the company’s documentation aligns with the methodological criteria.  

The methodology to review the most popular approaches is based on ISO 37001 (), ISO 26001 standards (), (training programs), (third-party involvement and whistle-blowing) and (sanctions compliance and restricted parties). State-owned companies or companies that have previously been state-owned are excluded from the study. Primarily, publicly available information about companies is included, and letters requesting answers to specific questions were sent out to relevant companies as a secondary source.  

Table No.1 Criteria to review most popular self-regulatory approaches 

Table No.2 Evaluation of the largest Latvian ICT companies 

Overall, self-regulatory approaches and their implementation among the five largest Latvian ICT companies can be characterized as insufficient according to the utilized methodologies. There are significant disparities in the extent to which companies comply with the requirements, with some demonstrating full or near-full compliance, while others fail to comply with any of them.  

The lowest performance was observed in areas such as advocacy for sanctions compliance, transparency regarding meetings with public authorities, and disclosure of industry association memberships. In addition, most companies disclose only their own offices and a limited number of partners, failing to provide comprehensive disclosure of partners across different jurisdictions. Furthermore, there is insufficient recognition of anti-corruption and anti-bribery compliance programmes, and whistleblowing mechanisms for employees are largely absent. Additionally, based on the analysis of social media and website content, as well as information obtained through formal correspondence, existing training programmes appear to inadequately cover all key topics. Typically, employees across all levels receive uniform training content on anti-corruption and compliance, with no specific reference to sanctions compliance. 

Conclusion and Recommendations

Given the inconsistent approaches among businesses in implementing sanctions compliance policies, it may be beneficial to consider a legal framework similar to the . This legislation has motivated both domestic and foreign companies operating in the UK to establish , as failure to do so may result in legal liability. A comparable framework could be developed for sanctions compliance in Latvia – clearly defining what constitutes a sanctions violation and establishing enforcement mechanisms. Such a framework should also include provisions for holding companies accountable for failing to prevent sanctions circumvention or violations. 

At the same time, such measures may be considered controversial, as critics might claim that these regulations internationally, potentially undermining short-term competitiveness. Criticism of this regulatory framework often comes from and various private sector actors – particularly those where law enforcement institutions are less advanced. In such contexts, companies based in developed economies can exploit institutional weaknesses to serve their own interests. This issue underscores the broader phenomenon whereby business actors from developed countries ‘export corruption’ and take advantage of their cooperation partners in developing countries. To mitigate such practices, only a few jurisdictions have introduced specific regulations, for instance, foreign bribery committed by U.S. nationals or persons located in the country is addressed under the . 

Analysis of ICT companies in Latvia reveals differing approaches to sanctions compliance. It is important to acknowledge that , , long term, often involving tax avoidance, tax evasion, tax fraud, and money laundering. Given Latvia’s current , there is a strong case that implementing such a regulatory framework could positively influence corporate decision-making, especially in selecting international partners. The evaluation shows that only Tietoevry Latvia has largely met most criteria, likely as a result of efforts to involving Belarus. In other cases, the extent of compliance remains incomplete.  

In sum, based on the analysis conducted, the following recommendations are proposed for Latvian policymakers and other relevant stakeholders: 

1. Develop a comprehensive legal framework for sanctions compliance. It is recommended that policymakers establish a legal framework for sanctions compliance and prevention of foreign bribery, modelled on the UK’s Bribery Act 2010; 

2. Promote enhanced corporate due diligence in partner selection. Companies should be encouraged to strengthen their due diligence practices, particularly when selecting international business partners, especially in high-risk geopolitical contexts; 

3. Expand compliance evaluation to other high-risk sectors. It is advisable to apply the compliance evaluation methodology currently used in the ICT sector to other high-risk industries, including construction and extractive sectors. 

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