Since Donald Trump turned his attention to Greenland, as well as to Canada and the Panama Canal, there has been renewed talk of the huge island in the Arctic Circle, which has been an autonomous territory of Denmark since 1979. The US president sees Greenland as a strategic axis from a commercial and military perspective, a key crossroads of Arctic routes and a potential source of raw materials, including rare earth elements, oil and gas. In short, a territory that cannot be left to the influence of competing powers, especially China.
Attention to the island has grown since the possible melting of the ice in the Arctic Ocean has paved the way for new routes, disrupting the old balances in the region. Russia has reopened dozens of old Soviet-era military bases, while China has sought to boost trade around the Arctic. For this reason, even before taking office, Trump said that the United States "needs the island for our national security," even though it already has a military base and other security infrastructure there. The president has said he is willing to buy the territory, but has not ruled out the use of military force.
According to the "Economist" magazine, the United States has a long history of managing international relations with a commercial approach: in 1803, President Thomas Jefferson purchased French Louisiana, which was the largest territorial expansion in US history; 64 years later, the White House paid Russia $7.2 million (about $160 million today) for Alaska. In both cases, time has shown that Washington has made excellent deals. It is uncertain whether the verdict of history will be favorable to Trump, especially if he wrests Greenland from Denmark by force.
The situation would be different if it were resolved peacefully: this would certainly be the deal of the century, the British weekly commented, because it would strengthen the security of the United States and therefore of its NATO allies, would deal a heavy blow to autocracies and could benefit the 56,000 inhabitants of the island, who should in any case be called upon to give their opinion on the deal.
But how much could the island be worth? "The Economist" tries to make some calculations. It starts with the value of Greenland's gross domestic product (GDP), which in 2021 was $3 billion, a drop in the ocean compared to more than $27.3 trillion in the United States. Moreover, a large part of the island's GDP is formed by civil servants, who make up 43 percent of the workforce. More than half of the state budget is actually paid for by Denmark, which allocates $500 million to Greenland each year. If we exclude the state administration and assume that the island’s economic growth remains stable, and the United States collects revenues equivalent to 16 percent of its GDP (if the island’s current tax collection level is maintained) and takes advantage of the yield on 30-year bonds, the final price of the island could be $50 billion, or about one twentieth of U.S. GDP.
But is it worth the investment? Some are convinced that it is not, at least in the short and medium term. This is the case with Javier Blas, Bloomberg’s commodities expert. From time to time, the Spanish journalist writes, the commodities sector is swept up in a fleeting fad that promises to solve all the world’s deficits. The list is long: it ranges from mining minerals from the depths of the oceans to exploiting asteroids in space. Today it is the turn of something more earthly: the cold and endless Greenland, which is credited with all the mineral wealth that the world needs. The problem, Blas emphasizes, is "that this idea is complete nonsense." There are indeed deposits on the island, and some are quite large, "but so far they have not yielded results, since the 1970s there has been a lot of talk about Greenland oil, to which iron was added after 2000, but currently the island does not produce a single barrel of crude oil and the only mining company that tried to exploit an iron deposit failed," he concludes.
A study by the Geological Survey of Denmark and Greenland, published in 2023, identified at least fifty locations that could contain mineral deposits. But more than half of them are located north of the Arctic Circle, making their exploitation difficult, if not impossible. Only a small part, in the southern part of the island, is free of ice, but these are almost always small deposits. The only really interesting deposit is "Tanbreez", which contains rare earth elements. According to the study, Greenland has 1.5 million tons of rare earth elements, which puts it among the top ten regions in the world, along with China, Brazil, Vietnam, India and Australia. But in all these countries, under current conditions, the extraction of rare earth elements is easier and cheaper than on the Danish island.
In order for mining to become profitable, prices must rise dramatically, and the climate crisis must melt the ice, making it easier for mining companies to work. In this regard, "The Economist" recalls that "The Arctic is warming four times faster than the rest of the world, which leads to the melting of ice equal to the area of Austria every year. Since the 1980s, the volume of ice has decreased by at least 70 percent".
Greenland Prime Minister Mute Egede rejected Trump's proposals, who, by the way, had already made a similar proposal during his first term in 2019. Egede noted that the islanders are striving more for independence from Denmark than for an alliance with the United States. To achieve this goal, however, the local economy must develop in such a way that it can afford to give up the millions guaranteed by Copenhagen. It is for this reason that Greenland has always cooperated with Washington and looks favorably on investments by American companies and a defense alliance, notes the "Financial Times". So far, however, there are only two open mines on the island, although the local authorities have issued over a hundred licenses. Of these, only one is in the hands of an American company (Canada and Britain each have 23).
In addition to the difficulties caused by the climate, Greenland has few settlements, even fewer roads, traffic along the coast is difficult and it will also have to accept many foreign workers. In addition, the recent decision to ban uranium mining is further keeping investors away from the island. For now, the Trump administration should take into account that as fascinating and promising as Greenland is, the United States already has a region that offers the same things from both an economic and strategic and defense perspective - Alaska, writes the "Wall Street Journal".