LMT leaves Latvian defense industry union

One of the founders and most influential members of the Latvian Security and Defense Industries Federation (LDAIF), the state-owned company Latvijas Mobilais Telefons (LMT), has quit the federation after expressing dissatisfaction with its management, reports the Latvian Television broadcast De Facto on March 18.

De Facto reports that last year, the federation welcomed a company among its members that exports an increasing third of its products to Russia.  There have also been suspicions that the Federation has artificially increased its membership by admitting companies whose activities are not related to the defense industry. LDAIF was once founded with this very purpose - to develop the production of goods for the defense industry in Latvia.

LDAIF signed a cooperation agreement with the Ministry of Defense soon after its establishment, 11 years ago. The Federation has developed as a mediator between business and the Ministry, organizing exhibitions and participation of Latvian businesses in international projects.

Last year, in mid-summer, the LDAIF was also granted €106,737 of state budget funds to promote the inclusion of the Latvian national defense industry and research institutions in the development of NATO and European Union military capabilities.

"In recent years, the number of members of the federation has been artificially increased, including with members who are not, in our opinion, entirely suitable for the industry. Who still continue to cooperate with Russia and who create both confidentiality and reputational risks for us as a member of the defense industry," says Ingmārs Pūķis, Vice President of LMT.

LDAIF members have included a provider of portable toilets, a fitness equipment supplier, a boiler manufacturer, and others. At the end of August last year, Tonus Elast, a manufacturer of flexible textiles and medical products, was admitted as a member of the federation, which also saw the potential to develop dual-use products. At that time, the company itself admitted that it exported a third of its production to Russia. The firm also appears on the list published by the Ministry of Economics of companies exporting to Russia and Belarus in December 2023.

"If we are talking specifically about Tonus Rlast, which currently has some business left in Russia, this issue was also discussed at length in our Council. And there was a commitment from the management to leave this market as soon as possible. If the company fails to honor this commitment, then, of course, our Ethics Committee will also look into this issue and the company will be expelled from membership," said Elīna Egle-Ločmele, board chairwoman of LDAIF.

Tonus Elast did not respond to De Facto's questions.

The Defense Ministry does not intend to reconsider its cooperation with LDAIF. However, another non-governmental sector partner has come to the negotiating table - the Latvian Industry Development Confederation (LIAK), established in mid-January and comprising the largest manufacturing industries in Latvia, excluding food. Among the founding members of LIAK are the Latvian Electrical Engineering and Electronics Industry Association, the Association of Mechanical Engineering and Metalworking Industry, the Latvian Information and Communication Technology Association, the Latvian Chemical and Pharmaceutical Entrepreneurs Association, and the Latvian Wood Industry Federation. The Board of Directors includes Normunds Bergs, Juris Binde, Ivars Eniņš, Kristaps Klauss, and Vitālijs Skrīvelis. One of the three objectives listed in the founding document is the development of the defense industry.

Atis Švinka, Member of the Saeima and Parliamentary Secretary of the Ministry of Defense (Progressives) said: "The key thing is how we have defined the development of the military-industrial ecosystem and the partners who are participating and talking with us and with whom we can talk. And that's why we are not prevented from [talking] in one case with LDAIF, in the other case with the LIAK, and associations, and we can also talk to LTRK [Latvian Chamber of Commerce and Industry] or LDDK [Latvian Employers' Confederation]."

The Minister of Economics Viktors Valainis points out that they work with both NGOs because each has its own strengths.

In the five years from 2018 to 2022, the Defense Ministry has awarded €1,898,464 in grants to 32 different projects, matched by almost as much funding from companies. In the new round, it plans to distribute €600,000, for which 36 project applications have been received. Plus another 15 projects supported by the European Security Fund and funding of €1.5 million.

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