Why Denmark’s crown prince is boosting Greenland business prospects

Even as Greenland edges toward independence, Crown Prince Frederik and the Kingdom of Denmark have a stake in its economic success.

By Martin Breum - March 8, 2019
The Kingdom of Denmark’s Crown Prince Frederik speaks at an event in Toronto where he and other Danish and Greenlandic officials traveled to promote Greenland’s mining sector. (Karolina Vaseva / Udenrigsministeriet)

Last weekend the future king of Denmark, Crown Prince Frederik, acted as a very welcome lead figure within a large business delegation that traveled to Canada to promote Greenland as an attractive place for mining companies to do business. This marks the culmination of wide-ranging Danish support for Greenland’s efforts to attract businesses and investors. Denmark’s minister for Energy, Utilities and Climate Lars Christian Lilleholt also took part.

For some Danes and certainly for foreigners such unambiguous support from the royal house and the Danish government will no doubt seem paradoxical: Why do the royals and the government of Denmark act so vigorously in support of economic growth in Greenland, when so many in Greenland evidently seek to divest themselves of the old ties to Denmark? The latest poll revealed how two-thirds of the electorate support the vision of Greenlandic independence. Why then this strong and purposeful Danish support for a partner who so evidently seem to favor divorce?

Largest ever delegation

Tangibles first: The Crown Prince was invited by the Confederation of Danish Industry and Greenland Business Association in Nuuk and subsequently led a delegation of some 70 representatives from 36 small, medium sized and larger Danish and Greenlandic businesses. The aim was to promote Greenland as an attractive partner for the global mining industry at the world’s largest mining convention, organized by Prospectors and Developers Association of Canada (PDAC).

This convention happens every year in Toronto; this year some 26,000 people from 125 countries were expected. The Greenland-Denmark delegation was small in this context, but it was the largest ever of its kind at an event which decision makers in Nuuk consider to be very important. Thus, the Crown Prince acted in fine alignment with the policies of Naalakkersuisut, the Self Rule Authority in Nuuk.

The development of a strong mining sector is a central part of Greenland’s efforts to minimize its dependency on financial aid from Denmark, but it is not a fast process.

In the course of just a few years, Greenland has fallen from seventh to 63rd place in a survey from the Fraser Institute, who asks every years more than 2000 operators in the mining industry to rank potential mining destinations. This is no good news for Nuuk, since Greenland badly needs to diversify its economy.

Fish and shrimp still account for some 96 percent of Greenland’s total exports, while grants from Denmark covers about half of all public expenditures.

Oil and gas in Greenland is not really happening; there is no ongoing gas or oil production. A small British company, Greenland Oil and Gas Ltd., has asked for permission to look for oil on land in East Greenland, but no drilling has taken place off shore since 2011 and several companies have given up their concessions.

The mining sector is showing more progress, but from a low point of departure. After the closing of a gold mine in southern Greenland in 2013, no extraction of minerals took place for four years. In 2017 LNS Greenland Gems began extracting of rubies south of Nuuk and now employ some 30 workers in the small community of Qeqertarsuatsiaat. Hudson Greenland employs about the same number in a new open-pit mine not far from the international airport in Kangerlussuaq. The object there is anorthosite, used in the fiberglass industry. A Canadian operator wants to mine close to Thule Air Base; North American Nickel want to mine at Maniitsoq, and in 2016 Ironbark Zinc, an Australian company, was granted permission to extract zinc and lead in the very north of Greenland. Ironbark now tries to convince investors that it is worthwhile.

Finally, a few projects are talked about in southern Greenland. A Canadian-Icelandic company wants to resume mining in the old gold mine while two Australian operators aim for rare earths used in a range of modern electronics. None of these have yet asked for license to extract, and the one best known to the public, which would see a mine on the top of the Kuannersuit mountain close to the town of Narsaq, is quite controversial in Greenland. The politicians in Nuuk are split in two groups for and against the mine, mainly because the extraction of rare earths from Kuannersuit would mean also extraction of uranium as a valuable bi-product. A minor part of Greenland Mining and Energy, the company behind the project, is owned by Shenge, a Chinese company.

To sum up: Greenland’s mining industry is not developing with any breathtaking speed and the authorities in Nuuk are no doubt grateful for the help of the Crown Prince.

Why the support?

And then to the seemingly paradoxical: Why does the Royal House of Denmark and the government in Copenhagen so actively support Greenland’s search for foreign companies and investors when the leadership in Nuuk makes no secret of its ambition to use the resulting economic activity to ready Greenland for secession?

A few points worth noting in this regard.

The Crown Prince’s personal affection for Greenland is well documented. He travels often and happily in Greenland; he is an accomplished dog sled driver. Two of his children bear Greenlandic middle names — Ivalo and Minik — and his acceptance of the invitation to front the delegation to Canada came as no surprise.

The Danish government, likewise, probably acted more or less instinctively in this case. Since the Second World War it has been part of basic political thinking in Copenhagen that an increased engagement in Greenland by the Danish business community will have two related and equally beneficial outcomes: It will do good for Greenland and its people, and it will do more to uphold the historic relations between Denmark and Greenland, its old colony, than any bouquet of flowery declarations of friendship and respect.

Danish prime minister Hans Hedtoft established this as early as 1948: “If we establish a business policy between Denmark and Greenland … we will build a foundation for a lasting relationship between Denmark and Greenland stronger than any sentimental phrasing of common national sentiments,” he wrote.

The present prime minister Lars Løkke Rasmussen followed suit in September last year by investing some $200 million in two new airports in Greenland and by allocating an additional $26 million in support of new business ventures.

Also worth noting is the fact that Greenland’s economy is not singularly a Greenlandic matter. The inhabitants in Greenland have been Danish citizens since a rewrite of the Danish Constitution in 1953 and the responsibility for their well being still rests with the government in Denmark. Should the economy in Greenland — against expectations — collapse any time in future, leaving children to starve, old people to freeze and living standards to drop painfully below those in Denmark, the problem would be for the Danish government to solve. This remains the case, despite the fact that Greenland was granted Self Rule and wide powers over its own affairs in 2009. (Current social ills in Greenland, especially those affecting children, already prompted a key political party in Denmark, the Danish People’s Party, to suggest that Copenhagen retake control of the social services in Greenland — in what would be a flagrant violation of the Self Rule arrangement.)

When the Danish embassy in Beijing assists Greenland’s hunt for investors in China and when the Crown Prince promotes Greenland in Canada, it most certainly happens because those involved wish to make life better for the people in Greenland. But underneath circulates a desire to make sure that the current Danish-Greenlandic political arrangement remains long-lasting and that Greenland’s long term financial stability is preserved, so that no need will arise for additional help or painful and controversial political interference by Denmark in Greenland’s internal affairs.

Perhaps it is also worth noting that a number of larger Danish companies and their subsidiaries in Greenland are amongst those who expect to gain from the mineral resources in Greenland. If a vibrant mining industry really takes flight in Greenland, the local economy will benefit from every job created, from royalties from the mining operations and taxes from companies and their employees. But a substantial part of the profits would belong to the international conglomerates who will run the actual mining businesses, and their subcontractors which would include, most likely, Danish entrepreneurs and consultancies and their Greenlandic subsidiaries.

Generally, the current government in Denmark seems genuinely focussed on creating visible results in Greenland; a strategy into which the appearance of the Crown Prince in Canada fits well. By actively supporting Greenland’s politicians, institutions and businesses in their efforts to create jobs, growth and prosperity in Greenland, the government in Denmark means to illustrate that Greenland’s place within the Kingdom of Denmark is beneficial to Greenland — and not a problem as a substantial number of people in Greenland seem to believe.

The difficult question, of course, is whether the electorate in Greenland will be ready anytime soon to accept this line of Danish political thinking as their own.

Martin Breum is a journalist and author based in Copenhagen and specialising in Arctic affairs. His latest book, Cold Rush, investigates Danish-Greenlandic engagement in the Arctic in the ten years from 2007 to 2018.