Perhaps the U.S. Should Support Greenland Gaining Independence Rather Than Buying It

The Trump Administration has been in place for over two and a half years now. If there is one thing we have learned during that time it is that President Trump is anything but predictable. When the President mentioned that he thinks the United States should buy Greenland from Denmark, it caught everyone off guard.

Apparently the president has discussed the idea with advisors on more than one occasion and in a press conference earlier this month he pointed out that President Truman was the first one to explore purchasing Greenland.

You Might Like
Learn more about RevenueStripe...

While the idea may have been out there for some time now, the way in which President Trump brought the idea up in a very nonchalant manner was rather bizarre. Even the Prime Minister of Denmark, Mette Frederiksen, appeared to be caught off guard and said the idea was “absurd” and that Greenland wasn’t for sale.

In somewhat of a predictable retort, President Trump called the prime minister’s comments “nasty” and said that her comments were disrespectful of the United States. The president then cancelled a planned trip to Denmark in a situation that escalated in to a diplomatic nightmare in record time.

The two leaders have since spoken on the phone and appear to have had a constructive conversation.

There are a couple of things that I thought about when all of this was going on. First, I thought President Trump’s reaction to Prime Minister Frederiksen’s comments was way overblown. I thought the president feigned his outrage and as an American, I didn’t feel disrespected at all.

My second thought on the idea was—how would the U.S. pay for such a transaction? We are already at record debt levels and running at a huge deficit. Now we want to buy Greenland, seriously?

Once I had gotten past the initial thoughts, I started thinking about the possible strategic reasons the United States would want to purchase Greenland and it turns out that the island is lush with rare-earth minerals. These minerals are used in a number of industrial processes including oil refining, glass polishing, smartphone production, solar panels, and defense technology.

Now the idea of the U.S. buying Greenland comes back around to the trade war. China controls approximately 70% of the global rare-earth mineral supply and they have been known to cut off supplies during disputes. China hasn’t taken such action in the dispute with the U.S., at least not yet, but having a secondary source of rare-earth minerals would nullify some of that power.

Regardless of the reasoning behind President Trump’s idea, there is another major hurdle for such a deal. Greenland isn’t completely controlled by Denmark. The island has its own parliament and was granted home rule by Danish government in 1979. The independence grew a little in 2008 when the people of Greenland voted in favor of a higher degree of autonomy and as part of the self-rule law of 2009, Greenland can declare full independence with a referendum vote of its people.

Given the current government structure and the possibility of Greenland becoming an independent country, perhaps President Trump should use a little more diplomacy. Rather than getting into a spat with the Prime Minister of Denmark, perhaps he should make friends with the government of Greenland and the citizens.

The biggest concern the citizens of Greenland have about becoming an independent country is a drop in living standards. Denmark currently supports the government of Greenland with a block grant and that grant represents approximately 66% of the overall budget. I’m sure having support from the United States would help the people of Greenland feel better about being independent. Perhaps a deal with Greenland that promises a certain amount of trade with the U.S. with guaranteed export purchases would help ease these concerns.

Editor’s note: If we gave each citizen of Greenland a million dollars each, it would only be about $56 Billion.  Not a bad purchase price for that big of a territory.

About Rick Pendergraft

Rick has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick’s analysis process includes fundamental, sentiment and technical analysis. Rick started college as an education major, wanting to teach economics, but eventually changed to majoring in Economics and received a Bachelor of Science in Economics from Wright State University. His desire to inform and educate people is at the heart of his writing.

Leave a Reply

Your email address will not be published.