Chinese investment may help Greenland become independent from Denmark

SHORTLY before the start of UN climate talks in Paris, in December 2015, giant blocks of ice were shipped in from Greenland and left to melt outside the Panthéon, reminding conference-goers to get serious about global warming. Ironically, a mere 48 hours after the talks concluded, Greenland, a self-governing part of Denmark, said it wanted to opt out of the climate agreement that had just been reached. The melting of Greenland’s ice sheet, which covers 80% of the island, has turned out to be an economic blessing for most of its 56,000 residents, 90% of whom are Inuit. The territory boasts a tenth of the world’s known deposits of rare-earth metals, and the receding ice is making more minerals accessible for the first time. More bits of the island are also being opened to tourists.

Greenland is over-reliant on fishing; some 90% of its exports taste good with butter and lemon juice. Danish subsidies keep its economy afloat. Last year the annual block grant from Denmark was 3.8bn kroner ($610m), more than a third of Greenland’s budget. Many Greenlandic politicians reckon that new revenue streams from mining and tourism can help to wean the territory off Danish handouts. “We want to rid ourselves of the block grant because we want independence,” says Kim Kielsen, the prime minister, whose ruling centre-left Siumut party won the most votes in an election on April 24th. More radical pro-independence parties did well. One such party, Naleraq, wants to see Greenland become independent by 2021.

Unlike mainland Chinese, whose anger would undoubtedly boil over were Taiwan ever to declare independence, most Danes would be “fine, maybe a little sad” if Greenland left, says Jon Rahbek-Clemmensen of the Royal Danish Defence College. Denmark’s government, however, is less sanguine about a potential separation, even though it accepts that Greenland has the right to secede if it wants to. That is because Denmark uses Greenland to punch above its weight, notes Mr Rahbek-Clemmensen. In 2014 Denmark laid claim to some 900,000 square kilometres in the Arctic, including the North Pole, citing its association with Greenland. And Denmark has been able to get away with skimping on NATO’s defence-spending target of 2% of GDP, many suspect, because it has long allowed America to operate a military base in Greenland. (Greenlanders were not consulted.)

In recent years Chinese state-backed firms have been pouring money into Greenland’s rare-earth mines. One Chinese-financed mine in Greenland’s south is reckoned to contain the world’s second-largest deposits of rare earths.

Greenland is open to investments regardless of where they come from, explains Mr Kielsen. Chinese money is helping Greenland to reduce its reliance on Danish subsidies, thus boosting the pro-independence cause. That is also why Mr Kielsen is keen to attract Chinese tourists. In October he led a delegation to China and gave an impassioned pitch about Greenland’s natural wonders. As Greenland drifts away from its old colonial master, it might need to worry about becoming a vassal state of another.