Following former President Donald Trump’s victory in the Presidential election, there has been renewed talk of the United States buying Greenland. The idea had previously been floated by the Trump administration in 2019, though Greenlandic and Danish political leaders were quick to reject the possibility of a sale.
The purchase of Greenland is an intriguing prospect, with advocates pointing to a strengthened American security and economic presence in the Arctic, the exploitation of Greenland’s rich mineral resources, and a more abstract opening of a new frontier, among other justifications. A “Greenland Purchase” is an exciting prospect that draws obvious parallels with two of the most impactful American foreign policy decisions of the 19th century – the Louisiana (1803) and Alaska (1867) Purchases. And at prices of $371 million and $129 million in current dollars, the economic returns of each acquisition have been enormous. Even a “bad” Greenland deal relative to these bargains could reap significant long-run returns.
However, it’s still worth discussing potential obstacles to a US acquisition of Greenland, or to a successful integration into the American sphere. These obstacles can broadly be grouped into three categories: (1) Greenlandic opinion; (2) governance and economics; and (3) geostrategic considerations.
Greenlandic Opinion and the Price Elasticity of Sovereignty
A purchase of Greenland should only go forward if Greenlanders themselves are broadly supportive of such a move. Overt annexation is not and should not be considered an option. However, the question of a “sale” of territory is really the wrong framing for this discussion. Greenland was granted home rule by the government of Denmark in 1979, followed by full self-government in 2009. So while Greenland remains under the sovereignty of Denmark, in practical terms it really isn’t Denmark’s to sell. Denmark isn’t going to sell Greenland if Greenlanders don’t want it, in addition to Denmark’s own strategic reasons to want to retain Greenland. A more accurate framing might be to say that the US wants to buy sovereignty over Greenland, from Greenland itself, rather than purely as a deal with Denmark which ignores Greenlandic agency in the matter.
So how do Greenlanders feel about their sovereignty? The public has largely been supportive of greater independence from Denmark. The 2008 self-government referendum was passed with 76% voting in favor. A 2019 poll reports that two-thirds of Greenlanders supported full independence from Denmark, consistent with other polling on the issue. This suggests there is strong support for independence, though not universally so. And while a 2021 poll reports 69% support for closer cooperation with the United States, the same poll also reports 68% support for greater cooperation with Denmark. Support for greater cooperation with Canada, notably, is much higher at 85%.
It’s hard to gauge exactly how the Greenlandic public would feel about an American purchase absent a specific price. Given the support reported for full independence from Denmark, it’s unlikely that Greenlanders would respond positively to the United States simply taking Denmark’s place in the abstract. Let’s say, however, that the United States offers to pay $500 billion for Greenland, which is paid out equally to every Greenlandic citizen. This works out to about $8.7 million per person. What’s the price elasticity of sovereignty for the average Greenlander? An $8.7 million check might change some minds, but it does not seem far-fetched to suggest that sovereignty might be a very price inelastic good for Greenlanders passionate about their independence.
Elite opinion matters too. Among the parties with seats in the Greenlandic parliament, the Inatsisartut, those favoring full independence currently hold 26 out of 31 seats. The remaining five seats are held by parties that support remaining under Danish sovereignty. Secretary of State Anthony Blinken met with Greenlandic Prime Minister Mute Egede in May 2021, and while Prime Minister Egede expressed strong support for US-Greenland cooperation on trade, research, environmental protection, and security, he clearly views the US as a friendly partner and has no intention to adopt the US as a new sovereign.
There is also the question of cultural ties. Greenland has its own rich culture rooted in Inuit traditions, coupled with some degree of Scandinavian influence. Any common cultural ties to the US are weak. As of this year, there are just 39 Americans living in Greenland. That being said, the annual number of American tourists visiting Greenland by ship and by air has been increasing, and next year United Airlines will begin offering the first direct flight from the US to Greenland, with twice-weekly service between New York and Nuuk from June through September. A sale is of course likely to deepen these ties, albeit slowly given both the cultural and geographic distance to the rest of the United States.
Governing Greenland and its Economy
How Greenland will be governed after a sale is an important question. The most obvious answer would be to treat Greenland like the major unincorporated territories of American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the US Virgin Islands, which endows each with various rights and privileges, but not those of a full US state or incorporated territory. How Greenlanders would respond to such a status is unclear. American opinion matters here as well – it seems unlikely that even if the public were supportive of acquiring Greenland, statehood would be another matter entirely. The American public generally supports Puerto Rican statehood and it has not yet happened. I suspect that any move towards Greenlandic statehood would produce an outcry about the current non-state status of Washington DC and Puerto Rico.
Lumped in with many of the calls for acquiring Greenland is to create something akin to a charter city or special jurisdiction and allow for frontier scientific and technological research and development to occur outside the restrictive domestic regulatory environment. In principle, as you might guess given where this blog can be found, I support the idea of using special jurisdictions to foster innovation, entrepreneurship, and progress. But I think there are some unanswered questions as to what this would look like in practice.
The first question that comes to mind is of course, why haven’t we already done this somewhere else? There’s nothing unique about Greenland in the context of creating a special jurisdiction to facilitate innovation, other than that it’d be new territory. There’s plenty of federal land in the Nevada desert – the state government even proposed something like this a few years ago. However, the United States has no real experience with the kind of special jurisdictions pioneered abroad, which carve out unique spaces outside the standard regulatory framework to foster innovation. It’s possible that bundling a special jurisdiction with the acquisition of new territory would help overcome the unfamiliarity with the approach, but I’m still a bit skeptical. Something like Utah’s regulatory sandbox or the greater usage of soft law governance for emerging technologies would be more feasible steps.
There are also two common problems associated with charter cities that pose serious challenges for this conception of a Greenland acquisition: the first mover/agglomeration problem and the expropriation problem. How many Americans are going to relocate to Greenland? It’s a tough climate, far away from the conveniences of the continental US, and well outside any of the existing innovation-research-funding ecosystems like those that exist in Silicon Valley. Greenland doesn’t doesn’t have the local resources or talent base to staff these efforts, either.
The other problem is that of expropriation – in this case, not the literal physical takeover of any investments or property, but via regulation and the courts. It would be great if the incoming Trump administration greenlights such a proposal and Congress passes the necessary supporting legislation. But if we somehow end up with President AOC in an election or two, or an insufficiently supportive Congress, the entire enterprise risks falling apart. The two governing political parties in Greenland may also be unlikely to go along with such a scheme, as they are democratic socialists and social democrats. We’re seeing an extreme version of this play out in Honduras now, with a radical far-left government repealing the ZEDE (Zones for Employment and Economic Development, i.e. charter cities) law and taking action to shut down successful ZEDEs like Prospera and Ciudad Morazan.
As a remote, Arctic island, Greenland poses additional challenges with respect to governance. Take the Jones Act, for instance, which requires maritime trade between US ports to be conducted using US built, owned, crewed, and registered ships. By one estimate, this draconian regulation imposes $1.4 billion in costs annually on the economy of Puerto Rico, depressing investment in the island and incentivizing Puerto Ricans to import foreign-produced, rather than mainland-produced, goods. Jones Act restrictions could devastate Greenland and make meaningful investment in the island extremely costly without a repeal or exemption. Greenland’s Arctic location also obviously requires an active icebreaker fleet – something the pitiful US shipbuilding industry is completely unequipped to deliver.
There is also the question of Greenland’s relationship with the European Union. Greenland, by virtue of Danish sovereignty, enjoys free movement and residence within the EU for its citizens, financial support for local development, and far more substantial trade relations than exist with the US. Although Greenland originally left the European Community in 1985 over the Common Fisheries Policy, it maintains actively engaged with the EU on fishing agreements. Given the importance of fishing to the Greenlandic economy, relatively poorer trade terms with the EU, by virtue of coming under US sovereignty, could pose significant challenges.
What the US would be willing to provide, in terms of regular financial support, to maintain Greenland, is another unknown. Denmark subsidizes Greenland by approximately $591 million annually, which comprises 60% of the Greenlandic government budget. Whether or not Congress and the American public are willing to subsidize the existence of Greenland to such an extent is unclear. High rates of unemployment, suicide, alcoholism, and other social problems also plague Greenland – these become our problems if the territory is acquired.
Finally, one of the most important reasons to acquire Greenland is its abundance of critical minerals. Greenland is home to a largely untapped wealth of minerals, metals, and fuels needed to build clean energy infrastructure, electric vehicles, and other products of economic and strategic value. And as Greenland’s ice sheet recedes in response to rising global temperatures, new opportunities for exploration and exploitation abound.
However, the Greenlandic government has been receptive to protests against the expansion of mining operations, issuing a ban on the exploitation of uranium exceeding a concentration of 100 ppm in 2021. That same year, the government also banned further oil and gas exploration projects within Greenlandic territory. Greenland is not Guyana, and is seemingly willing to forgo the extraordinary wealth that could be created through expanded mining and drilling operations in the name of environmental protection. If the US is going to acquire Greenland with an eye toward resource exploitation, local political opposition will need to be addressed. To the extent that expanded resource exploitation operations are feasible, the path forward may simply be through the existing regulatory process, new concession agreements, or other solutions. The value of buying Greenland is highly questionable if we’re unable to sustainably exploit its rich mineral resources.
The Russia Problem
The opening of Arctic trade routes and resource exploitation requires an expanded American economic and military presence in the region to counter Russia, and increasingly China. The US maintains Pituffik Space Base in Northern Greenland, in addition to installations in Alaska and our cooperation with allies Canada, Iceland, Denmark, Norway, Sweden, and Finland. Acquiring Greenland could allow for an expanded American presence in the Arctic. However, in addition to the deficiencies in the US icebreaker fleet and shipbuilding capacity mentioned above, there are additional risks and options worth considering.
Acquiring Greenland would create a new border with Russia beyond Alaska, as Russian claims in the Arctic border Greenland’s exclusive economic zone. The acquisition of Greenland would introduce a new territorial dispute between the United States and Russia, that being the undersea Lomonosov Ridge, to which Denmark, Canada, and Russia have all made claims. On its own, this isn’t reason enough not to acquire Greenland. But acquiring Greenland may be seen as a highly aggressive move by Russia which could provoke a serious response.
The US cannot and should not simply roll over at the first sign of agitation by hostile foreign powers, but we should think seriously about the existential risks created by increasing the likelihood of direct conflict or disputes between nuclear-armed powers. Leasing additional land from Greenland for bases could be a cheaper, and geopolitically safer, route to an expanded American security presence in the Arctic. Returning again to the shipbuilding question – the value of new bases in Greenland is severely kneecapped if our broken naval procurement process and shipbuilding industry can’t supply the vessels needed to operate in the Arctic.
Conclusion
Acquiring Greenland could become the Alaska Purchase of the 21st century given its economic potential and geostrategic significance. But there are real challenges to successfully acquiring and integrating Greenland into the United States which we should bear in mind. Greenland isn’t just a “new frontier” to do with as we please, as much as the American Western frontier LARP is a fun meme. The Greenlandic and Danish politics of an acquisition will be an uphill battle for the Trump, or any American, administration. Those local Greenlandic politics, and economic and social realities, won’t be going away, even if we do successfully acquire the island. The exploitation of its rich economic potential is far from straightforward. The domestic American politics of an expensive acquisition, and then figuring out the governance of Greenland, are also highly uncertain. And while Greenland is also at the heart of a more open Arctic in a warming world, it’s also the frontline against a hostile Russia. Let’s think through the implications of a Greenland Purchase in full before we pull the trigger – we break it, we bought it.
