Why Trump wants to buy Greenland — and how much it could cost – Financial Post

United States President Trump continues to raise another old flight of fancy from his first tenure in the White House — the possibility of purchasing Greenland.

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Leaders from Denmark and Greenland (an autonomous territory in the Kingdom of Denmark with self-government and its own parliament) have repeatedly asserted that the territory is not for sale.

But why does Trump want Greenland so badly? Is it even possible to purchase sovereign territory in the 21st century, and if so, how much could it cost? While a precise valuation is hard to calculate, some experts offered insights into the Arctic island’s worth.

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Why does Trump want to buy Greenland?

Rob Huebert, a political science professor at the University of Calgary, said he’s scratching his head at Trump’s possible motivations for purchasing Greenland.

From a military standpoint, Huebert pointed out that the United States already has a military base on the northwest coast of Greenland, called Pituffik Space Base. And while there’s been speculation about offshore oil (Greenland suspended exploration due to the climate crisis), Huebert feels this still doesn’t fully explain Trump’s fascination.

“You sit there, and you think, ‘Is he truly only doing this because he’s got some warped understanding of Manifest Destiny?’” Huebert said. “He wants to attach his name to that the same way people like Theodore Roosevelt (did) — again, it almost seems like expansion for expansion’s sake only.”

Marc Lanteigne, a professor of political science at The Arctic University of Norway, Tromsø, suggested Trump is looking to create “a good old fashioned 19th century buffer zone around American interest,” pointing to the president’s interest in Canada, Gaza and the Panama Canal as well.

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“It’s very reminiscent of 19th century great power behaviour,” Lanteigne said. “The idea that if you can surround yourself with occupied territories, you have a buffer zone against your enemies.”

Lanteigne said Trump might want Greenland for the potential value of its critical minerals and resources.

“It has a great deal of raw materials, everything from oil, gas, base metals, precious metals, rare earths,” Lanteigne explained. “A lot of which has been untapped because up until very recently, it was simply too expensive and unworkable to set up mines there — just because of floating ice off the coast and the difficulties involved with the local climate that is changing.”

Trump has said that the United States needs to control Greenland to ensure international security and for the “protection of the free world,” but Huebert noted that Denmark is part of the North Atlantic Treaty Organization (NATO) and Greenland’s surveillance systems are tied into the North American Aerospace Defense Command (NORAD) through the Pituffik Space Base.

“You can’t think of a more fulsome participation in geopolitical security than what the Greenlanders and Danes are already doing.”

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What happened the last time the U.S. tried to buy Greenland?

In 1946, before the official onset of the Cold War, President Harry S. Truman quietly proposed to pay Denmark US$100 million in gold for the northern island after Senator Owen Brewster called it “a military necessity.”

Truman’s advisors coveted Greenland for its geographic advantage, since it could help defend against Soviet bombers flying over the Arctic Circle to reach the U.S.

Documents from the National Archives also show a proposed alternative: the U.S. could trade land in the Point Barrow district of Alaska for the portions of Greenland that were considered to hold military value. This plan, had it gone through, would have also provided the Danes with rights to any oil discovered in Point Barrow, which would then be sold to the United States.

While Denmark ultimately declined the offer, the two countries established a defence treaty in 1951 to build Thule Air Base (since renamed Pituffik), displacing Thule’s indigenous Inughuit community in the process.

Three decades prior to that, the United States purchased the Virgin Islands for US$25 million in gold from Denmark due to fears that the German government might annex Denmark and use the islands as a naval base during the First World War.

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Secretary of State Robert Lansing reportedly suggested that if Denmark was unwilling to sell, the U.S. might forcibly occupy the islands to prevent its seizure by Germany.

How much might Greenland cost today?

Placing a dollar value on a territory with its own economy, government and resources isn’t an easy estimation, but some experts suggest using historical land deals as a reference.

David Barker, a real estate developer and former economist at the New York Fed, told The New York Times that Greenland could be worth anywhere between US$12.5 billion and US$77 billion, based on some rough math.

Barker used the Virgin Islands and Alaska purchases as comparison points (the U.S. bought Alaska for US$7.2 million in 1867).

Barker adjusted these purchases based on the change in GDP for the U.S. or Denmark, to account for inflation and economic growth. So, for the lower end of the valuation, he adjusted the purchase price of the Virgin Islands for the growth in Denmark’s GDP since 1917. For the higher end, he adjusted the Alaska purchase price for the growth in U.S. GDP since 1867. 

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One of the most recent geopolitical land deals occurred in 2017, when Egypt ceded sovereignty of the mostly uninhabited islands of Tiran (80 square kilometres) and Sanafir (33 square kilometres) to Saudi Arabia. Arab Center Washington DC reported that the controversial transfer followed the nearly US$22 billion in economic, financial, and oil aid Saudi Arabia pledged to Egypt, leading some analysts to speculate the land transfer could have been part of the deal.

It took another six years for Saudi Arabia to add the islands to its maps, with some reports suggesting Egypt was stalling the transfer.

Greenland, the world’s largest island, is of course, much more expansive at 2.166 million square kilometres and home to more than 56,000 people. And Lanteigne said it’s difficult to even estimate Greenland’s geological value, especially with mineral surveys still ongoing — although some estimates peg its natural resource wealth in the tens of billions of dollars.

Could Trump still strike a deal?

Lanteigne said Trump’s offer to buy Greenland from Denmark (again) shows his lack of knowledge of the local situation in Greenland, the relationship between Denmark and Greenland and the issue of colonialism.

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Lanteigne pointed to the Self-Government Act, which was signed with Denmark in 2009, guaranteeing Greenland the right to self determination. Hypothetically, if Trump were to negotiate for Greenland, he would need to negotiate with Nuuk, Greenland’s capital and seat of government.

“We’re long past the period of colonialism, when you could buy and sell and exchange in that context,” agreed Huebert, who doesn’t see any possible scenario in which Greenland could be bought.

“I think a more realistic scenario would be … the Americans start working on trying to sway the popular opinion within Greenland to move for independence,” Huebert suggested. “In other words, maybe the Americans would get more control over a sympathetic government leader.”

A recent opinion poll commissioned by the Danish newspaper Berlingske and Greenlandic daily Sermitsiaq revealed that 85 per cent of Greenlanders do not want their island to become a part of the United States, with nearly half saying they see President Trump’s interest as a threat.

Danish Prime Minister Mette Frederiksen has repeatedly said that Greenland is not for sale, but recently added, “If this is about securing our part of the world, we can find a way forward.”

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Greenland Prime Minister Mute Egede has also said the use of the territory’s land was “Greenland’s business,” but expressed willingness to work more closely with the U.S. on defence and mining.

Lanteigne said that Greenland’s plans for independence mean it needs to seriously diversify its economy, noting that it primarily depends on the seafood, tourism and services industries, as well as an annual stipend from Copenhagen.

The issue with mining in Greenland is the amount of money and material needed to set up even a single mine, he added, given its isolation and the fact that it’s surrounded by ice. He said it could take 20 years for a mining operation to become profitable — a conservative estimate.

In a January opinion piece for The Washington Post, Naaja H. Nathanielsen, minister of business, trade, mineral resources, justice and gender equality in the government of Greenland, wrote that while Greenland did not want to be part of the U.S., it is open to forming a business deal that could benefit both economies.

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Nathanielsen noted that Greenland possesses 39 of the 50 minerals the U.S. considers critical to national security and economic stability, such as zinc and nickel, and called for private investors to commit capital to grow Greenland’s mining operations. 

“Greenland has high hopes of signing a new agreement with the United States as soon as possible,” she wrote, adding that the U.S. currently holds just one mining license in the territory. “There are existing, upcoming and as yet unknown possibilities available for investments.”

• Email: slouis@postmedia.com

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