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C Gopinath | Updated on August 21, 2019 Published on August 21, 2019

Can’t take lightly Trump’s plan to buy the island

Never a dull moment with Donald Trump as the US President. His Twitter pronouncements at all unearthly hours manage to revise prepared headlines. Politicians are frequently busy reacting to his views rather than framing their own agenda. And now, Greenland.

Trump provided a diversion from the world’s problems when, about a week ago, he thought aloud about the possibility of the US purchasing Greenland. Many could not make out if he was serious. To play it safe, his administration refused to comment.

Officials in Greenland, and the Danes under whom Greenland operates as an autonomous territory, when contacted by reporters, pondered about whether to laugh or to cry. They took the safe diplomatic route with the Ministry of Foreign Affairs announcing that they were ‘open for business but not for sale.’

Even as Trump stirred the pot, analysts went scurrying for reasons to support or dismiss the idea. And since Trump did not himself provide a reason for his suggestion, it allowed anyone with time to spare to speculate.

The US already has interests in Greenland. It operates an air base and has a treaty with Denmark giving it extensive rights over the island. This base is part of the US ballistic missile defence system and hence of national security importance. In 2018, when China tried to gain a foothold on the island by trying to finance the construction of three airports, the US managed to scuttle those efforts by encouraging an alternative financing plan.

Owning the island would allow the US wide latitude to strengthen its military activities north of the Arctic circle. There are vast natural resources, including minerals, fish stocks, and even pure water to be exploited.

Purchasing territory is a well-established tradition in US history. The apocryphal story is about how the early Dutch settlers bought Manhattan from the Lenape natives for a handful of beads. Other examples abound. The territory of Louisiana was bought from the French in 1803 for $15 million. Alaska was purchased from the Russian Empire in 1867 for $7.2 million. An earlier offer made to acquire Greenland from Denmark in 1946 for $100 million was refused.

But who would be the seller in this deal? Presently, Greenland’s autonomy leaves it with all domestic matters while Denmark takes care of foreign policy and security. So perhaps we should allow the 56,000 residents of Greenland to decide through a referendum. If Denmark claims ownership, Trump can claim responsibility for stirring up a problem that does not exist. Currently Greenland receives an annual subsidy of about $590 million from Denmark. Using business valuation techniques, one can make an offer to Denmark as a multiple of their subsidy. Greenlanders could argue for a multiple of their GDP of about $2.7 billion for their acquiescence. China has the cash to jump into the fray and make a counter bid. Maybe Jeff Bezos of Amazon may want to buy it as a personal skiing field.

Considering that Trump’s background is in real estate, one should not expect that a refusal from Denmark would let him drop the idea. He knows that it is all in the price, now that he has put Greenland into play. One can even expect him to open the UN General Assembly next month by suggesting that nations, instead of going to war to acquire territory, should just negotiate good deals and buy what countries they want.

The writer is at Suffolk University, Boston

Published on August 21, 2019
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