RIGA - Sanctions are no miracle tool that could single-handedly prevent Russia's aggression in Ukraine, but they must be used to make waging the war harder for Russia, Bank of Latvia Governor Martins Kazaks told LETA.
The head of the Latvian central bank also indicated that the West could take a more resolute and courageous stand against the aggressor and help the Ukrainians more.
Kazaks said that according to the Bank of Latvia's estimates the war in Ukraine accounted for half of Latvia's economic slowdown in 2022.
"At the same time of course, our economic pain is incomparable to what Ukraine is suffering. The Ukrainians are fighting instead of us too. It is therefore essential to help and support them. That's why, for instance, expenditure is needed for the military, because the situation in Russia is not going to change soon. Even if there is a change of power, Russia is unlikely to become a coherent and democratic market economy. Sadly, most probably there will be no fast changes, and this war can become protracted," Kazaks said.
It also means that Latvia must invest in defense, as it is essential to feel secure and such investments would also stimulate the development of the national military industry, which so far has been little used segment in Latvia.
"As for the companies doing business in Russia, I would tell them that they are playing with fire because the economic and political risks are very high. Our future is in Europe, Western economies, not in Russia," Kazaks said.
At the same time, the Bank of Latvia governor noted that Russia's role in Latvia's foreign trade has substantially decreased, although there are suspicions of various sanctions violations and hard-to-explain export growth to Russia's friendly neighbor countries.
"My advice - let's look for markets elsewhere, somewhere safer, where the political and military risks are lower. This will let us ensure much more predictable growth and a more prosperous future," Kazaks said.