“These sanctions will not be catastrophic for the Latvian economy,” Straujuma said, adding that behind the scenes “Latvia has been working hard to ensure the gas sector is not affected” as Latvia is almost totally reliant on Russia for supplies of natural gas.
The food and transit sectors – both important elements of Latvia's trade relationship with its eastern neighbor – would also be unaffected, Straujuma claimed.
Both the US and Europe are drawing up fresh measures to be taken against Russia over its involvement in unrest in eastern Ukraine and allegations that it bears some level of responsibility for the downing of Malaysia Air plane MH17 over the region.
New sanctions are believed to include an extension of travel bans on senior Kremlin officials and figures linked to President Vladimir Putin plus restrictions on the sale of hi-technology goods to Russia.
According to official data Latvia exported €108m of goods to Russia and the other CIS countries in May 2014, against €592m exported to the EU.
Latvia imported €110m from the CIS, against €805m from the EU in the same month.
Despite Straujuma's assurances, the effect of EU sanctions on Latvia will not be negligible. On July 28 Citadele Asset Management said in a stock market announcement the performance of its Russian Equity Fund was likely to be impacted.
“The Company herewith cautions investors that the sanctions against Russian companies of defence, financial services and energy sectors and potential sanctions of the EU may significantly influence the Company’s possibilities exercising the management of the investment fund Citadele Russian Equity Fund assets,” the announcement said.
“Considering the aforementioned and the current situation, the Company cautions investors that their investments may be exposed to greater risks, including but not limited to liquidity risk, third person risk, market concentration risk, political risk, economical risk, safe custody risk and as well other particular Russian Federation risks.”
“The Company strongly encourages investors to re-estimate the risks associated with investments in the Russian Federation due to the political situation in respect to Ukraine,” the statement concluded.