Donald Trump's latest statements that he would not rule out economic or military measures to take control of Greenland have put the country in the spotlight, and prompted reactions from Greenland's Prime Minister, the Danish Prime Minister and other EU and NATO leaders. An important question arises: what does Trump want and why is this island strategic to him?
Greenland: an economy dependent on fishing and Danish support
Greenland is a small economy with just short of 60,000 people. It is an autonomous territory of the Kingdom of Denmark (along with Denmark and the Faroe Islands). It has “home rule” which means that it controls most domestic matters while Denmark still has control over foreign affairs, such as defence, along with monetary policy and citizenship – all people of Greenland are Danish citizens and enjoy the same rights as citizens in Denmark. The country’s economy is mainly centred around the fishing industry and a growing tourism sector, but also has some mining activity (it currently has two active mines). The public sector makes up around half of domestic employment.
The country is also very dependent on support from the Danish government in form of the “bloktilskud”, a block grant, which is around half of the government revenue. 50% of its exports is to Denmark and 60% of its imports are from Denmark.
Elections in April 2025: independence at the heart of the debate
Greenland will have an election by April 2025, which will certainly be focused on Greenland’s future and possible independence.
This was highlighted by the current prime minister, Múte B. Egede, of the Inuit Ataqatigiit party – a socialist party with a focus on the country’s independence. In his New Year’s Adress, he said that the coming term of office would put down a commission that would define what qualifies a legitimate referendum, what question should be posed and how long the campaign should be. This comes on the back of another commission on a Greenlandic constitution which was presented in April 2023 to the regional parliament that would be enacted once the country is independent.
Practically, once the referendum commission has concluded on how a referendum is to be conducted, it can be declared. If the result of the referendum is a yes to independence, then the Danish parliament would have to agree which it is expected to comply with given that only two minor parties have indicated that they would oppose it.
This notion of independence is popular in Greenland.
In 2016 [1], 64% of residents considered it “fairly important”. However, the question around the timeline is more complicated. In 2017 [2] , almost 80% of citizens and politicians said they would say no to independence if it resulted in a deterioration in their quality of life, which is a possibility if independence results in the end of the Danish block grant.
Additionally, other questions around monetary policy issues and other practical considerations (workforce, higher education facilities etc.) are still not resolved. With the commission needing to conclude its work, a referendum is unlikely on the short term (within 2 years) and even thereafter there is still disagreement on when it should be conducted. Even in 2025, most of the parties do not want to put down a date for a referendum, including the most pro-independence party, Naleraq.
What's in it for Trump?
Greenland is an important territory from a global point of view and there has been a rising interest in recent years with for example Chinese investments in mining and infrastructure being suggested in the past, usually resulting in American dissatisfaction.
Greenland is particularly important from an American point of view from three main avenues: defence, trade, and critical minerals.
comments Jonathan Steenberg, economist at Coface for Northern Europe.
Defence
Greenland is geographically part of the Northern American continent and only 2,000 km from Northern Maine and the same distance from Mainland Russia. The US already has a military presence in Greenland, the Pituffik Space Base (currently mainly used for warning and surveillance), which has been there since the 1940s.
Trade
With the temperature increasing quicker around the North Pole, it is expected that new trading routes will develop which would significantly reduce the travel time between East Asia and Europe by almost a third. Greenland’s geopolitical significance is rising as it would have a say around how its waters are used and thereby on global trade.
Rare minerals and natural resources:
Currently, Greenland only has limited mining activity – two mines focused on rare earths and gold – but there is a lot of exploration activities and issued licences as there is a lot of potential when it comes to natural resources, including many metals and rare minerals. Greenland has 25 of the 34 critical minerals listed by the European Commission. However, given the harsh climate and cold weather much initial research found that it would be too expensive to mine most of the potential resources. Yet, with increasing focus on resilience and avoiding an overreliance on certain countries in addition to the rising temperatures, the prospect of mining in Greenland is looking more benign. Nevertheless, these prospects are limited by domestic politics as Greenland introduced legislation in 2021 that included the end of issuing new licenses for oil and gas exploration as well as legislation that prohibited the exploration and mining of uranium.
A potential vote for independence in the coming decade raises fundamental questions about Greenland’s future. Given its limited population size, it will probably need to be dependent on a larger country. This could either be a free association arrangement with Denmark but could also be with other countries, like the US or China.
[1] Massivt flertal for selvstændighed
[1] Redaktør: Grønlændere vil ikke ofre levestandard for selvstændighed | Indland | DR
