Coface: Greenland Moves Towards Independence Despite Trump's Ambitions

Donald Trump's recent remarks about possibly resorting to economic or military measures to take control of Greenland have sparked widespread attention and concern. The comments have drawn reactions from key leaders, including Greenland's Prime Minister and Denmark's Prime Minister, as well as other NATO and EU officials. The United States' growing interest in Greenland has raised questions about why the island is of such strategic significance to the new U.S. president.

Greenland, an island with a population of just under 60,000, is primarily dependent on the fishing industry, a growing tourism sector, and some mining activities. Public sector jobs account for roughly half of the domestic employment. Despite its small economy, Greenland remains heavily reliant on financial support from Denmark. The Danish government provides substantial block grants, contributing about 50% of Greenland’s state revenue. Additionally, Denmark accounts for half of the island’s exports, and 60% of its imports come from there.

As Greenland approaches its April 2025 elections, the issue of independence will likely be a focal point of the political debate. Prime Minister Mute Egede has emphasized that his administration will establish a commission to determine the specifics of a referendum on independence, including the questions to ask and the duration of the campaign. This initiative follows a 2023 proposal for a new Greenlandic constitution, which will be adopted if the island pursues independence. However, public sentiment toward full independence is mixed. In 2017, nearly 80% of Greenlanders expressed opposition to independence if it would result in a deterioration of their living standards.

From an American perspective, Greenland holds significant geopolitical value in several key areas: defense, trade, and natural resources. The island’s location, just 2,000 km from North America and Russia, places it in a critical position for military operations. The U.S. already maintains a military presence on the island, with the Thule Air Base, established in 1940, being a key strategic asset for warning and surveillance systems.

The island’s importance has grown with the accelerating effects of climate change, which are opening up new commercial shipping routes in the Arctic. This development could cut travel time between East Asia and Europe by a third, increasing Greenland’s influence on global trade. The island will play a key role in determining how its waters are used, affecting global shipping and trade flows.

Additionally, Greenland's vast untapped natural resources make it a valuable territory. While mining activities have been limited, there is substantial potential for extracting rare minerals, metals, and other resources. The island holds 25 of the 34 rare minerals listed by the European Commission. However, harsh weather conditions have made resource extraction costly. Yet, with rising global demand for sustainable resources and the decreasing reliance on certain countries, Greenland's mineral wealth is becoming more attractive. Despite a 2021 law halting new exploration for oil, gas, and uranium, Greenland’s resource potential remains a key point of interest for global powers, particularly in the face of environmental and geopolitical shifts.

As Greenland considers its future path, the potential for a vote on independence within the next decade raises crucial questions. Given the island's small population, it will likely need the support of a larger nation, which could be Denmark, the United States, or even China. The decision on how to manage Greenland's resources and its geopolitical alignment will shape the island's future role on the global stage.

Source: Coface