January / 2026 Baltics Next Month Newsletter

Impact of the increased Defence Budgets

From 2026, all three Baltic states will be spending around 5% of their GDPs on defence. The budgets increased significantly. Thus, it’s fair to expect finances will dominate the security debates and conferences across the region for some time. The soonest one, the annual Snow Meeting, organised by the Transatlantic Cooperation and Security Policy Department at the Lithuania’s Ministry of Foreign Affairs, is in mid-January. This year, along with increased military expenditures, two other financial topics are on the agenda: the US National Defence Authorisation Act, including $175 million for the Baltic Defence Initiative and investments into munitions factories by Rheinmetall.

Estonia To Further Tighten Language Policy

Estonian-language proficiency among the Russian-speaking part of the population has been discussed for many years, and in 2022, Estonia began the gradual phase-out of Russian as a language of instruction. From 2026, the country will raise the language proficiency threshold in multiple areas, such as renewing temporary residence permits (A2-level) or joining the army (B1-level). While concerns can be raised, these measures may not affect indigenous Russian-speaking communities as strongly as Kremlin propagandists claim. Regardless, Estonia’s parliament is walking a tight rope. In January 2026, it will reconvene to debate yet another amendment to the Language Law, including restrictions on film dubbing and higher fines for those who do not comply with the language’s public usage rules.

Livonian Werewolf Animation Going for an Award

A year after the international breakthrough with Flow, Latvian animators are again attracting attention. This time, it’s two brothers, Lauris and Raitis Ābeles, who developed a horror-fantasy style cartoon to rethink Baltic historical myths. Their film, called “Dog of God” (Dieva suns), is based on an infamous 17th-century Swedish Livonia court case against the peasant Thiess of Kaltenbrun, also known as the Livonian Werewolf. The elderly peasant Kaltenbrun was put on trial for declaring himself a werewolf in 1692. Instead of denying the accusation, he proclaimed that werewolves were dogs of God—he was sentenced to whipping and banishment. Latvia submitted the film for the Academy Awards, and although it didn’t qualify for the shortlist, it is listed in the Animated Feature Film Selection for the European Film Awards—a ceremony is to take place on the 17th of January.

EU Support for Economies Disadvantaged by Sanctions

Estonia, Finland, Latvia, and Lithuania have suffered disproportionate damage from EU sanctions on Russia, and the EU is gearing up to support them. The wide effect was reported, for instance, by the Centrum Balticum. The fate of the region’s economies will be resolved at the EU’s Economic and Financial Affairs Council on the 20th of January 2026. Despite official acknowledgement that any immediate support will be modest, from a local perspective, any support matters. And while the counter-measures might not revitalise most affected sectors like tourism; nor reorient the cross-border trade; they do serve as a certain reassurance that in the future the costs of confronting Russia will be shared.

Lithuania Rewrites Rules of Conscription

Lithuania has remodelled its military conscription, and the call-up under the revised model starts on the 7th of January 2026. From now on, 18-year-olds will have a wider range of options for combining service with their studies. Furthermore, their financial incentives will increase: high-performers and volunteers will get significantly higher payouts. The numbers aren’t changing significantly—around 5,000 conscripts will be called up, compared to around 4,000 in the previous years. The consequential change in terms of capabilities is, however, the extension of reserve obligations from 10 to 15 years. The largest among the Baltic states, Lithuania’s armed forces were hurt by the conscription hiatus between 2008 and 2015, as the Eesti Ekspress reports. The extension of reserve service is meant to compensate for this.

An Urgent Case of the Russian Railway Gauge

Latvia’s leadership has raised an idea to cut Baltic rail connections with Russia and Belarus—the Baltic states are weighing their options. All three countries increasingly view their infrastructure from a security perspective. In the case of railways, it concerns ten railway tracks (three in Latvia, five in Lithuania and two in Estonia) that are all built using the so-called Russian gauge. It is a security concern because, as experts outline, Russia can use them to transport its military and other supplies in the case of invasion. Do old rail connections, some of which originate in 19th-century tsarist Russia, make sense in the long run? For now, experts are evaluating the implications. As an important element of the regional counter-mobility arrangement, the issue is seen as urgent and set to be resolved in early 2026.

Estonia’s Next Leap: AI for Every Student

In January 2026, Estonia will begin a nationwide rollout of an AI-powered learning tool for schoolchildren. The AI Leap 2025 programme, designed to incorporate cutting-edge artificial intelligence applications into its education system, was initiated by the current President, Alar Karis. At this phase, it aims to embed an AI tutor across public schools, positioning it as a kind of “second teacher” encouraging deeper thinking. Estonia’s public servants already employ AI tools in a range of public services, such as the virtual citizen’s assistant “Bureaukratt”, or predictive and machine-learning tools at various institutions. However, AI Leap takes the effort to the next level. From the 19th through the 23rd of January, the country is presenting its achievements at the World Economic Forum in Davos.

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The Newsletter Baltics Next Month is produced by human beings at fixers.press. The descriptions of the selected events and the contacts offered represent a subjective view of the developments lay any claims to be the only perspective. If you wish to report a mistake, or for any further inquiries, please contact us at team@fixers.press.