 After the signing of the Soviet–Latvian Mutual Assistance Treaty on 5 October 1939, Latvia became a virtual protectorate of the Soviet Union without a shot being fired.Tensions within the ruling circles increased to the point where on 5 April 1940 Balodis was relieved of all his posts without a clear official explanation.Shortly after the Soviet occupation of Latvia in 1940 Balodis was arrested on 31 July 1940 together with his wife and deported to Syzran, where they were kept under house arrest.