A Touch of Frost: Danish Concerns over Chinese Investment to Greenland

Climate researchers have recently released alarming reports indicating that the thaw of Arctic permafrost has already reached record levels for this year. Although a sign of a looming climate catastrophe, many actors, from east to west, view it as an opportunity: the Arctic Circle is becoming more accessible for trade routes and resource excavation.

The Island of Greenland has consequently attracted the attention of many large and powerful global actors, most recently displayed by U.S. President Trump’s surprising proposal of an outright purchase of Greenland from Denmark. However, whether it be Chinese or U.S. interest, the island is currently in a state between dependence and independence from its former colony Denmark and a charged Danish-Greenlandic relationship has shown to be a critical component not only for infrastructure development and resource excavation in Greenland, but also for understanding how the Arctic region is evolving politically.

The Pursuit of an Equal Partnership in the Midst of Great Power Rivalry 

With a territory covering over two-million square kilometers and roughly 57,000 inhabitants, Greenland is one of the world’s most sparsely inhabited areas. This is understandable given that the territory is primarily covered by ice, making it one of the least accessible places on earth. The world’s largest island has nevertheless become a staging area in an international rush for the Arctic’s natural resources and has been thrust into new stage of strategic rivalry between great powers, notably China and the U.S.

In 2009, Greenland changed judicial status from home-rule to self-rule. The preamble of the self-rule agreement emphasizes its purpose to be “the desire to promote equality and mutual respect in the partnership between Denmark and Greenland”. However, the case relating to the shortlisting of the Chinese Communication Construction Company (CCCC) to bid on airport expansion projects in Illullisat and capital Nuuk respectively and on the construction of a new airport in Qaqortoq, by Greenlandic authorities in March 2018, illustrates the limitations of this status.

Interestingly, under the self-rule agreement, the Greenlandic authorities assumed control of a number of areas previously under Danish control, such as raw-materials (which are of great interest to China). Other areas continue to be under Danish control, including foreign relations and security policies, unless they “concern Greenland alone”. What does and does not concern Greenland alone is to be assessed on a case-by-case basis.

From a Danish, and American, perspective speculations on whether China would be building an airport or military presence in Greenland have persisted, even though Greenlandic and other Western actors themselves have encouraged Chinese businesses to come to Greenland. As such, the CCCC bidding exists in a legal grey area between infrastructure and security policy, i.e. between Greenlandic and Danish jurisdiction. When CCCC was shortlisted, the Danish government stepped in and offered Greenland 700 million Danish kroner, as well as a lucrative loan of 450 million Danish kroner from the Nordic Investment Bank, to finance the airport projects. The Greenlandic Premier, Kim Kielsen, accepted. The CCCC withdrew their bid in June this year.

Reasons to Tread Lightly

The jurisdictional conundrum is exacerbated by the political sensitivity underlying Danish-Greenlandic relations, stemming from Greenland’s history as a former Danish colony until 1953. Moreover, the question of independence has permeated Greenlandic popular culture and politics, although views on an actual timeline as well as what form of sovereignty it would pursue differ substantially. The debate on independence gained particular traction after 2009, as the self-rule agreement recognized the Greenlanders as “an indigenous people” under the 2007 UN Declaration on the Rights of the Indigenous People. The Greenlanders were thereby granted the right to be de jure independent if they so wish.

There is, however, a significant discrepancy between rights and reality for Greenlanders. While legal independence is now an option, independence would, at this stage, mean de facto Greenlandic dependence on someone else. Greenland has a GDP of roughly 2,7 billion dollars and is heavily dependent on a yearly grant from Denmark which makes up more than a third of the island’s GDP.

An independent Greenland could place China in a highly advantageous position, since the power imbalance between the two would be staggering. The official explanation from the CCCC upon their withdrawal of the bidding, reported in Greenlandic and international media, was that their engineers had faced difficulties obtaining visas (administered by Denmark), which hindered equal competitiveness. Such explanation would arguably suggest that Beijing is perfectly aware of the tense post-colonial relationship between Denmark and Greenland and is actively playing Copenhagen and Nuuk off against each other. What’s more, the scenario also exposed a paternalistic relationship that Denmark uses to maintain control over Greenlandic affairs.

China would have their reasons to tread lightly in this relationship. China’s official rhetoric on the rules guiding international relations proudly and firmly endorses the principles of respect for other nation’s sovereignty and territorial integrity as well as non-interference in other’s internal affairs, often in opposition to what they see as typical Western undermining of these principles. Interfering too directly in matters which are essentially within Danish sovereignty, and concern territorial integrity, would not necessarily strengthen China’s image as a protector of the aforementioned principles, nor would it benefit its one-China policy, which Denmark openly supports.

A Neutral Position?

Approaching investment opportunities in Greenland is complicated at best and often means picking a side between Denmark or Greenland. However, as shown from the CCCC case even when done subtly this can quite easily backfire. The grant and loan from the Danish government for the airport project came with conditions: Denmark were to approve any other investors in the airport projects. When the Premier of Greenland, Kim Kielsen, accepted the Danish offer, his government’s junior coalition party, Partii Naleraq, resigned from his administration in protest. Their leader, Hans Enoksen, stated that the Danes with their financial contribution “questioned the Greenlanders ability to decide anything for themselves”.

Many Greenlanders have a proclivity to view Danish actions as paternalistic, or even illegitimate, which hampers the ability of Nuuk and Copenhagen to cooperate. Strong anti-Danish sentiments are to be found among parts of the Greenlandic population and resentments are easily provoked. For some Greenlanders, Chinese business interests are seen as an opportunity to diversify their economy and break dependence on Denmark. Chinese involvement has therefore been encouraged by the Greenlandic government in the hopes that this could eventually underscore independence.

As the Arctic opens geographically and waterways are exposed, so too is the history and political reality of the region revealed to the world. So when pursuing investment opportunities on the autonomous territory (or buying the entire island for that matter) the case of the failed CCCC bid demonstrates that building a clear understanding of the Greenland-Denmark relationship is well advised.