Greenland’s growing appeal to key global powers

Greenland is about 80 percent ice-capped and, until the 1940s, was a protected, isolated society. Today, the growing geopolitical and geoeconomic focus on the Arctic Circle has made the world’s largest island a major prize for powers as far away as Asia-Pacific, especially China.

As the region’s melting ice caps expose unclaimed ocean and lands, what has been called a modern gold rush has commenced over the Arctic’s territory, natural resources and strategic position. The economic value of this is obvious, but the geopolitical dimension is also key given the Arctic’s critical location between North America and Eurasia.

In this context, the approximately 2.1 million sq. km of territory of Greenland is an increasingly prominent player, with huge potential. This is not least as it boasts the world’s most northernmost territory just off its coast — the closest point of land to the North Pole.

In recent decades, Greenland, which has a population of under 60,000, has gone from direct Danish rule to much greater independence. Today, Denmark — one of the 27 EU states and a NATO member — retains only the powers of monetary and foreign policy.

Beijing’s interest in the region is, in part, related to developing trade through new North Atlantic shipping lanes

Andrew Hammond

One signal of Greenland’s growing prominence came in 2019, when then-US President Donald Trump floated the idea of buying the huge island. This was dismissed by Danish Prime Minister Mette Frederiksen as “absurd.” Nonetheless, the US opened a consulate on the island in 2020. It has also had, since 1943, an agreement to house US military assets on Thule Air Base (now Pituffik Space Base), which has a ballistic missile early warning system and satellite tracking.

Meanwhile, China proposed building new airports and mining facilities in Greenland in 2018, but eventually withdrew this idea. Beijing’s interest in the region is, in part, related to developing trade through new North Atlantic shipping lanes that are opening up due to melting ice caps. These have significantly decreased maritime trade transportation times, which generally include travel via the Suez or Panama canals to navigate the globe.

Given the US and Chinese interest in Greenland, it is no surprise that the EU is also raising its profile there. The bloc is especially alert to the island’s vast natural resources, including coal, zinc, copper, iron ore and rare earth metals. Europe tends to lack access to both mines and raw materials processing and is seeking to reduce its reliance on China, which dominates the production of rare earths and other critical minerals.

To this end, the EU and Greenland in November signed a memorandum of understanding creating a strategic partnership on developing the sustainable raw materials value chains needed for the transition to a low-carbon future. More than two-thirds (25 of 34) of the critical raw materials identified by the European Commission as strategically important for the bloc’s industry and the green transition are located in Greenland.

As part of the EU’s Global Gateway strategy, Brussels has already recently established similar strategic partnerships on raw materials with Ukraine, Kazakhstan, Namibia, Argentina, Chile, Zambia and the Democratic Republic of the Congo. These partnerships enable trade and investments into a secure, sustainable and resilient raw materials value chain, which is key to achieving the transition to climate-neutral and digitalized economies.

Such is the importance that Brussels places on its deepening relationship with Greenland, the first EU office will be opened there on Friday by European Commission President Ursula von der Leyen, who will be joined by Frederiksen. Von der Leyen’s trip includes a stop-off in the Faroe Islands, another self-governing territory in the Kingdom of Denmark.

The memorandum of understanding may evolve into one of the EU’s international Green Alliances, akin to those it has with Canada, Norway and Japan. It will contribute to the development of sustainable projects along the raw materials value chains and to the deployment of the infrastructure required to develop them.

The EU is especially alert to the island’s vast natural resources, including coal, zinc, copper, iron ore and rare earth metals

Andrew Hammond

The agreement establishes particularly close cooperation between Greenland and the EU in five areas, starting with the economic and industrial integration of value chains for critical raw materials and other resources. This includes developing projects jointly, creating and promoting new business models, attracting investments, supporting access to finance, facilitating trade linkages and developing and integrating support for economic diversification.

Another area is cooperation to leverage high international environmental, social and governance standards to ensure that Greenland’s minerals sector drives sustainable and inclusive economic growth with local and domestic value creation. This includes sustainable exploitation of mineral resources in close dialogue with Greenland, applying high ESG standards.

In terms of next steps, Von der Leyen has agreed, as part of the memorandum of understanding, to implement a joint EU-Greenland roadmap with multiple actions to put the strategic partnership into practice. The goal is to ensure that the island’s resources underpin sustainable, fair and inclusive socioeconomic development following the strictest ESG standards. Equally, it will enable the EU to deliver on its ambitious European Green Deal, empowering the green and digital transitions in both regions.

This will also help Europe deliver on its need to secure a diversified sustainable supply of raw materials, especially critical raw materials, following Russia’s invasion of Ukraine. As part of the action plan for the EU Critical Raw Materials Act, the bloc has committed to developing strategic international partnerships and associated funding with Greenland.

Von der Leyen’s trip will therefore help to cement the new EU-Greenland memorandum of understanding and may provide a big boost to bilateral ties. As interest from world powers in the Arctic grows, the bloc is keen to double down on relations, not only to seize new economic opportunities but also to boost its geopolitical punch in the region.

• Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.