August 21, 2019 / 2:40 PM / a month ago

Factbox: Greenland for sale? Why Trump's bid fell through

COPENHAGEN (Reuters) - President Donald Trump’s proposal for the United States to buy Greenland from Denmark has met with surprise and a sharp rebuff from Copenhagen, with Prime Minister Mette Frederiksen calling the idea “absurd”.

A digital billboard displays a sign reading "TRUMP" in Copenhagen, Denmark, August 20, 2019. REUTERS/Nikolaj Skydsgaard

Stung by the rejection, Trump scrapped a Sept. 2-3 visit to Denmark, a NATO ally of Washington.

Following is an outline of Greenland’s attractions to the United States and big power rivals, and the obstacles to any sale of the vast Arctic territory, the world’s largest island.

STRATEGIC LOCATION, RESOURCE WEALTH

Greenland is strategically important for the U.S. military and its ballistic missile early-warning system since the shortest route from Europe to North America runs via the Arctic island. The United States maintains an air base in Thule in Greenland’s northwest under a 1951 treaty with Denmark.

The island, whose capital Nuuk is closer to New York than the Danish capital Copenhagen, boasts mineral, oil and natural gas wealth. But development has been slow, leaving its economy reliant on fishing and annual subsidies from Denmark.

“It’s hurting Denmark very badly because they’re losing almost $700 million a year, so they’re carrying (Greenland) at a great loss,” Trump said.

Greenland lacks basic infrastructure for its tiny population of 56,000. There are no roads between the country’s 17 towns and only one commercial international airport, forcing people to travel by sea or air.

Investors from the United States and Canada have been watching for signs Greenland will get a flagging mining programme back on track to exploit vast mineral resources including uranium and rare earths.

However, due to a commodity price slump and a morass of red tape, Greenland - which is three times the size of the large U.S. state of Texas - has only has one small operating mine.

Greenland also has an estimated 50 billion barrels of offshore oil and gas reserves, as yet unexploited.

LEGAL OBSTACLES TO SALE

Greenland, once a colony of Denmark, became a formal territory of the Nordic kingdom in 1953 and was granted broad self-governing autonomy, excluding only foreign affairs and defence, under legislation passed a decade ago.

Any sale would require a change to Greenland’s legal status through an amendment to Denmark’s constitution. Since 2009 Greenland has held the right to declare independence from Denmark. If Greenland do so, it could choose to become associated with the United States.

But few Greenlanders see independence as viable given their economic dependence on Denmark, part of the affluent European Union.

“The only way Trump would be able to buy Greenland would be to give them an offer they couldn’t turn down,” said Aalborg University professor Ulrik Pram Gad, a former Greenland government official.

Greenland’s premier, Kim Kielsen, declared on Monday it is not for sale and that while the island was drawing worldwide interest, anyone wanting to do business would have to respect its autonomy.

When Greenland was still a colony and the Cold War with the Soviet Union was escalating, the United States under then-President Harry Truman sought to buy the island as a strategic asset, but Copenhagen declined to sell.

WHY THE TRUMP INTEREST NOW?

The Arctic region sits at a geopolitical intersection of renewed rivalry between world powers China, Russia and the United States, and - with its melting ice cap - is a major symbol of the growing impact of climate change.

Russia has been raising its profile in the Arctic, creating or reopening six military bases shut after the Cold War ended in 1990, modernising its Northern Fleet, including 21 new vessels and two nuclear submarines, and staging frequent naval exercises in the Arctic.

Russia also hopes that as the polar ice cap retreats, a shipping lane north of Russia will develop as an alternative route for goods from Asia to Europe.

The Trump administration last year began re-establishing the U.S. Second Fleet, responsible for the northern Atlantic, to counter a more assertive Russia.

Washington wants a greater military presence in Greenland to better defend its Thule Air Base and enhance surveillance of the waters between the island and the European continent.

The Thule base mainly operates a missile warning system as well as space and satellite surveillance.

The U.S. military stationed personnel at some 50 bases in Greenland during the Cold War, but a renegotiation of their presence with Denmark in 2004 whittled it down to the Thule Air Base only. A few hundred U.S. personnel are stationed at Thule, compared with almost 10,000 during the Cold War.

In September last year, the U.S. Department of Defense said it wanted to invest in Greenland to enhance its “military operational flexibility and situational awareness”.

Slideshow (2 Images)

CHINESE FEELERS

China has also shown interest in Greenland after Beijing laid out its ambitions to form a “Polar Silk Road” by developing shipping lanes opened up by global warming and encouraging enterprises to build infrastructure in the Arctic.

Greenland, which plans to open a representative office in Beijing later this year to boost trade ties, has courted Chinese investors and construction firms to help expand three airports to allow direct flights from Europe and North America.

However, after U.S. and Danish officials voiced concern about Chinese involvement in such large-scale projects on security grounds, the Copenhagen government last year stepped in to finance the airports, effectively sidelining Beijing.

Reporting by Jacob Gronholt-Pedersen with additional reporting by Nikolaj Skydsgaard and Andreas Mortensen; Editing by Mark Heinrich

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