The renewed focus on Greenland highlights its strategic importance and immense potential, and reflects Arctic’s influence as the upcoming “far west”. The interest stems largely from the geopolitical ambitions of the United States, particularly during Donald Trump’s second term, which has prioritized Greenland alongside Canada and the Panama Canal. The motives go beyond immediate U.S. interests—Elon Musk’s ventures may also benefit from Greenland’s resources.

Greenland, an autonomous territory of Denmark since 1979, holds dual appeal as a strategic military and commercial outpost and a source of untapped natural resources especially for electric cars’ batteries and other electronical devices.

With its position at the crossroads of Arctic routes, the island is central to the evolving dynamics in the polar region. It also harbors reserves of rare earth minerals, oil, and gas—resources that could bolster U.S. national security and diminish the influence of rivals like China and Russia.

Arctic routes and rising tensions

The Arctic is becoming a global hotspot as melting ice opens new shipping routes, breaking old geopolitical balances. Russia has responded by reactivating Soviet-era military bases, while China seeks to expand its Arctic trade activities.

In response, Trump declared that the U.S. “needs Greenland for national security” and proposed purchasing the territory, even hinting at the possibility of military action to secure it. The U.S. already operates military infrastructure on the island, underscoring its strategic value.

Historically, the U.S. has used commercial deals to expand its territory, such as the Louisiana Purchase (1803) and the acquisition of Alaska (1867), not to mention the Virgin Islands they bought from a declining Denmark in XIX century.

Whether history would favor a similar judgment for acquiring Greenland remains uncertain, particularly if force were involved. However, a peaceful agreement could strengthen NATO security, challenge autocracies, and potentially benefit Greenland’s 56,000 residents, provided they agree to such a deal.

Greenland’s weak economy

Greenland’s economy, with a GDP of € 3 billion in 2021, pales in comparison to the U.S.’s $27 trillion economy. Much of Greenland’s public budget depends on Denmark, which contributes DKK 4,3 billions (€ 500 million) annually.

A valuation by The Economist suggests that the island could be worth $ 50 billion—a manageable sum for the U.S. Yet, profitability remains doubtful in the short and medium term. Bloomberg’s commodities expert Javier Blas notes that Greenland’s resource potential is exaggerated. While it has rare earth reserves and other minerals, harsh Arctic conditions make extraction costly and hard.

A 2023 study by Denmark and Greenland’s geological survey identified 50 potential mining sites. However, most are located in the ice-covered Arctic Circle, with only a few viable sites in the south.

Tanbreez, a significant rare earth deposit, underscores Greenland’s potential, but extracting these resources is easier and cheaper in other countries, including China, Brazil, and Australia.

Climate change changes Greenland’s destiny

Climate change is both a disaster and an enabler for Greenland’s economic development. The Arctic is warming four times faster than the global average, with annual ice loss equivalent to Austria’s landmass.

While this could ease access to some resources, it also raises environmental and logistical concerns, opening new and faster commercial routes between Asia, Europe and North America. Additionally, Greenland’s limited infrastructure, sparse population, and recent ban on uranium mining further deter investment.

Greenland’s Prime Minister, Múte Egede, has consistently rejected Trump’s overtures, emphasizing the islanders’ aspirations for independence from Denmark. Achieving this goal requires economic self-reliance, which could be aided by collaborations with U.S. businesses and defense partnerships. While Greenland has granted over 100 mining licenses, only two mines are currently operational, and U.S. companies control just one license.