Greenland: what is China doing there and why? | Presence before power

There was more to Trump’s offer to buy Greenland than the callous bravado of a property mogul. Greenland’s geostrategic importance is recognised by all the great powers, except, perhaps the EU.

A geopolitical timeline of Greenland

1946 | United States offers to buy Greenland

1950 | US opens Thule Air Base

1972/1973 | The Kingdom of Denmark enters European Communities

1979 | The Kingdom of Denmark grants home rule to Greenland

1985 | Greenland leaves European Communities

2004 | The Kingdom of Denmark ratifies United Nations Convention on the Law of the Sea (UNCLOS)

2008 | Greenlanders vote in favour of the Self-Government Act

2012 | China’s Minister of Land and Resources visits Greenland

2014 | First Memorandum of Understanding between Greenland Minerals and Energy (GME) and China Non-Ferrous Metal Industry’s Foreign Engineering and Construction Co. (NFC)

2014 | The Kingdom of Denmark claims an area of 895,000 km2 extending from Greenland beyond the North Pole to the limits of the Russian Exclusive Economic Zone

2015 | Minister Qujaukitsog talks about airport, port, hydroelectric and mining infrastructure development with Sinohydro, China State Construction Engineering, China Harbour Engineering

2016 | Shenghe Resources buys one-eighth of Greenland Minerals and Energy stocks, which develops a uranium and rare-earth site at Kuannersuisut (Kvanefjeld)

2016 | State Oceanic Administration signs agreement with Greenlandic ministry on the construction of a research station

2016 | Danish government stops Hong Kong-based General Nice from taking over the abandoned naval base Gronnedal

2017 | Prime minister visits China

2017 | Ironbark appoints NFC to develop the Citronen Fjord Zinc Mine, exploitation rights remaining with the Australian company until 2046

2018 | High-level ceremony to launch the process of building a satellite station that could be used for the Beidou navigational system, widely reported in China but unknown to Greenlandic authorities

2018 | China Communications Construction Company bids to build airports in Greenland, prompting Danish government to finance half of the airports

4.1 The presence of voids (II): how China came to Greenland

Trump’s failed attempt to buy the autonomous territory of Greenland was not a first: after the Second World War, in 1946, President Truman also attempted to buy the constituent of the Kingdom of Denmark. Only four years later, the US opened Thule Air Base, currently the US Armed Forces’ northernmost base, demonstrating US interest in the area .

As Greenland was not autonomous until 1979 it joined the European Community as a county, following the Kingdom of Denmark’s accession in 1973; six years later, Greenland was granted home rule. Subsequently, in 1982 Greenland voted to leave the European Community , and actually left in 1985, to obtain the status of an EU overseas country and territory (OCT). Similar to Iceland’s motivations to not accede the EU, Greenland left the EEC following disagreements over Common Fisheries Policy and to regain autonomy over Greenlandic fish resources.

Nevertheless, as an OCT, Greenland’s citizens remain EU citizens under treaties and Danish national law. In contrast to other OCTs, EU financial support to Greenland is provided by the general budget, on basis of the Greenland Decision.[62] The Multiannual Financial Framework 2014-2020 indicated an amount of €217.8 million to be allocated to Greenland as financial assistance.[63] As such, Greenland is not eligible for budget support from the European Development Fund (EDF). It can, however, apply for an EDF regional cooperation programme for all OCTs that is aimed at sustainable use of natural resources, for which €16-18 million was made available.[64] Additionally, Greenland is eligible for general EU programmes and the aforementioned loan opportunities provided by the European Investment Bank.

For the MFF 2021-2027 , the European Commission has proposed a sum of €500 million (current prices) to be allocated to OCTs, of which €225 million (45%) is to be allocated to Greenland and another €225 million to the other OCTs. There is an additional €15 million available for regional integration projects that are open to all OCTS including Greenland (this is a project similar to the €16-18 million for natural resources of the 11th EDF).[65] This means that EU funding for Greenland is unlikely to increase very much and will continue to be about €30 million per year. This is unlikely to rise, as after Brexit the only EU member states with OCTs are Denmark, the Netherlands (in the Caribbean) and France (mainly in the Pacific). Only the latter is keen to increase the amount for OCTs, with the former two known to be frugal states when it comes to the EU budget, which they wish to constrain. Therefore, even if various EU insiders realise the strategic importance of Greenland (and the Arctic as such), more funding is not on the cards. The EU nonetheless still gives more than the USD 12 million per year the US has recently offered as support to Greenland, and which is considered part of its effort to reduce China’s influence on the island.[66]

In 2008, Greenlanders voted in favour of the Self-Government Act. This Act provided the Greenlandic authorities with increased autonomy , including the possibility ‘to negotiate and conclude international agreements with foreign states and international organisations, which exclusively concern Greenland and entirely relate to the fields of responsibility taken over by Greenland’.[67] Matters that directly affect defence and security policy are not covered by the Self-Government Act. Nevertheless, this Act leaves room for Greenland to conclude agreements with foreign states, including China.

Given the strategic Arctic coastal dimension and the enormous reserves of natural resources, Greenland is highly attractive to foreign states, including China . China’s interest in Greenland is recent – it dates back to 2005 when the then-Premier of Greenland, Hans Enoksen, paid a visit to China. In 2011, Greenland’s minister for industry and natural resources was the next to pay a visit to China, being welcomed by the vice-premier.[68] Chinese interest in Greenland’s natural resources has been confirmed with the visit of China’s then-Minister for Land and Resources, Xu Shaoshi, in April 2012.[69] The various visits carried out by representatives of both China and Greenland demonstrate their mutual interests. While for China the focus is on polar research, natural resources and infrastructures, Greenland is looking for investments to further develop its economy,[70] as currently, China serves mainly as one of the most important markets for the Greenlandic fishery industry.[71] China has become the second most important export destination for Greenland, although it still imports very little from China.

Source: OEC, Greenland Country Profile , 2017.

In 2013, Greenland repealed a law banning the mining of radioactive material and rare earth elements in order to diversify its economy.[72] To combine this with the erosion of the Greenland ice sheet, which makes more areas of Greenland open for mining projects, ensures increased (economic) opportunities. Consequently, since 2013 there has been greater cooperation between China and Greenland in the field of natural resources .

The first clear sign was the Memorandum of Understanding (MoU) in 2014. The non-binding MoU was signed between the Australian company Greenland Minerals Energy (GME) and China Non-Ferrous Metal Industry’s Foreign Engineering and Construction Company (NFC). Under the MoU, GME and NFC will create a ‘ fully-integrated global rare earth supply chain ’.[73]

In addition, the most visible Chinese mining venture in Greenland is the Kvanjefjeld Project. China’s Shenghe Resources bought 12.5 percent of GME’s shares, which are of particular interest considering that GME calculated that about 270,000 tons of uranium are deposited at Kvanefjeld.[74] In August 2018, GME and Shenghe agreed upon an MoU, which gave Shenghe the opportunity to take the lead in the processing and marketing of materials extracted from the Kvanefjeld site. In addition to the Kvanefjeld site, Ironbark, in 2017, appointed the NFC to develop the Citronen Fjord Zinc Mine project further, while the right to exploit the mine remains with Ironbark. In 2019, further steps were taken towards commencing mining operations when it was announced that Shenghe would be partnering with another Chinese firm, China National Nuclear Corporation, to enhance the procedure for separating rare earth elements from uranium and thorium deposits at the Kvanefjeld site.[75]

It is clear that China considers Greenland’s minerals of strategic value, but they are for the EU as well. The EU’s Institute for Strategic Studies recently pointed out that exploitation of rare earth elements in Greenland would reduce a significant strategic EU vulnerability, as it now relies on China for a majority of critical rare earth elements used for the EU defence industry.[76] It would bolster its technological sovereignty, the ability to digitalise European armed forces, if the EU had direct access to these rare earth elements. This would ensure a proper implementation of the European Commission’s 2020 Industrial Strategy. In the midst of the Corona crisis, calls to become less dependent on China are on the rise, and this point may well be taken up more seriously in Brussels now than it was a year ago.

Next to natural resources, infrastructure has also become one of the main pillars behind China’s presence in Greenland. This has become apparent in various talks between Greenlandic authorities and potential Chinese investors, as early as 2012. Moreover, during a visit to China in 2015, Minister Qujaukitsoq outlined Greenland’s infrastructural development plans (including for airports and hydraulic and mining projects) to representatives from Sinohydro, China State Construction Engineering, and China Harbour Engineering, a clear sign of continued Chinese interest in investing in Greenland.[77] Currently, Greenland, together with Iceland, invites the highest levels of Chinese investments relative to GDP of all Arctic countries.

Chinese Investment in Arctic Littoral Nations, 2012-2017

Source: Rosen, M.E. and Thuringer, C.B. 2017. Unconstrained Foreign Direct Investment: An Emerging Challenge to Arctic Security , Arlington, VA., CNA.

Chinese interest in Greenlandic infrastructure becomes clearer when looking at the attempt of Hong Kong-based company General Nice to take over the abandoned naval base Grønnedal in 2016. Here we see that when strategic interests are at stake, Denmark steps in.

Then-Prime Minister, Rasmussen, allegedly, prevented General Nice from acquiring the naval base, confirming Danish concerns about the prospects of a growing Chinese presence in Greenland.[78] A similar situation occurred in 2018, when the Danish government was prompted to finance half of the airports in Greenland. This was a reaction to China Communications Construction Company’s bids to build the respective airports. This was another indication of the Danes not being eager to let Chinese involvement in Greenland grow extensively .[79]

Finally, China has significantly invested in the establishment of research stations over the last years. In general, Beijing is determined to ensure it is a frontrunner in the Arctic, which closely relates to their objectives.[80] To this end, Beijing aims to ensure that Chinese companies most effectively seize the new opportunities in the Arctic.[81] The core of Chinese activities in the Arctic has centred around building a solid Chinese polar research capacity, with a specific focus on climate change. In addition, these research stations are essential for China’s civil-military ‘BeiDou-2’ satellite navigational system. [82] In line with these ambitions, China has plans to establish a research station in Greenland. Back in 2016 the State Oceanic Administration had already signed an agreement with the Greenlandic ministry on the construction of a research station.[83]

In conclusion, the void created when Greenland was given greater autonomy from central authorities in the Kingdom of Denmark and subsequently left the EEC was happily filled by China. Even though the Kingdom of Denmark remains responsible for foreign policy and defence, Greenland can now conclude international agreements with foreign states on its own. This raises issues for both the Kingdom of Denmark and the EU.

4.2 A contested presence? A strategic perspective on China’s presence in Greenland

Against an emerging great power competition in the Arctic, Greenland has surfaced as a potential sore point in Danish-Chinese relations and an upcoming front in Sino-American geopolitical rivalry.

Chinese investment has put significant pressure on the political relationship between Nuuk and Copenhagen . Greenland, eager to diversify its economy away from a dependence on the seafood industry and Danish financial aid, mainly sees the economic opportunities that arise from increased cooperation with China.[84] Meanwhile, the Kingdom of Denmark has met Beijing’s presence on the island with strong opposition, perceiving it as an infringement of Greenlandic sovereignty and, in turn, a potential security threat to the entire Kingdom.[85] The Kingdom of Denmark’s approach towards governance of Greenland is balanced on competing factors of security and support for local decision making. On the one hand, Copenhagen is interested in keeping Greenland as part of the Kingdom due to its strategic significance in Denmark-US relations and the access to the Arctic it provides. On the other hand, it has committed to a policy of expanding Greenland’s autonomy, which could eventually move towards full independence.[86]

An example of this dilemma is a disagreement on the mining of uranium and rare earth elements, which, it was argued, falls under national security policy in Copenhagen and under local resource extraction in Nuuk.[87] This issue was ultimately resolved in 2016, allowing the Kvanefjeld project to proceed.[88] Another example were the prospects of Chinese financing for the construction of three commercial airports in Greenland, which was quickly shot down by Copenhagen after the Pentagon raised its concerns.[89] With Danish attempts to securitise certain economic sectors, China’s economic presence on the island is expected to remain a significant factor in ongoing discussions about future Greenlandic independence .[90] Greenland’s plan to open a diplomatic representation in China seems to suggest a closer alignment between the two than the Kingdom of Denmark and the US would desire.[91]

It is important to mention, however, that were Greenland to open a representation in China, as it has recently announced, its representatives would function as Danish diplomats. Moreover, such a representation would be responsible for diplomatic contact with East Asia in its entirety, and not for China alone.[92] Nevertheless, significant debate is still expected in the autumn on this matter and it is therefore not certain that a Greenlandic representation in China similar to the one that exists in Brussels would materialise.

On the other side of the Atlantic, the strategic significance of Greenland has been recognised with renewed vigour under the Trump administration .[93] Recently, the US State Department declared that:

the United States remains committed to increasing our already robust engagement with Arctic allies and partners. Our strong partnerships with the people of Denmark and Greenland help us better coordinate our efforts in this strategically important region. [94]

To enhance its physical presence beyond Thule Air Base, the US has allocated half a million dollars to re-establish a consulate on Greenland.[95] Additionally, plans for greater strategic cooperation between the US and the Kingdom of Denmark were announced in December 2018, and more recently in April 2020.[96]

So far, Sino-American confrontation on Greenland has only materialised in issues of direct strategic concern to the US. Washington pushed back against Chinese investment plans for Greenlandic airports, fearing it would be used by Beijing to gain a military foothold, whereas Chinese participation in the mining industry has received less attention.[97]

Compared to China and the US, EU engagement with Greenland is like a drop in the Arctic Ocean, despite it paying about €30 million per year . While the Arctic rises in geopolitical and geo-economic significance, the EU has been slow to reconsider its strategic interests. In a strategic note published in 2019, the European Political Strategy Centre recognised the need for the EU to step up its engagement with Arctic states and other stakeholders. To this end, it recommended that the EU adopt ‘a more strategic, visible and integrated’ approach following the Chinese example , as well as to open a ‘programme office’ or ‘open contact point’ in Greenland.[98] While Greenland has had a representation office in Brussels since 1992, the EU has no official representation to match the US diplomatic or Chinese commercial presence.[99] The Commissions Work Programme of 2020 does not refer to the need to update EU Arctic Policy.[100]

To summarise, the greater accessibility of mineral deposits has turned Greenland from a geopolitical void into a focal point . China’s economic interests in the mining sector and infrastructure projects have put serious strain on relations between the Kingdom of Denmark and Greenland, who struggle to agree what types of foreign investment fall under whose jurisdiction. At the same time, both governments have to manage their relations with the US. The US, in turn, is increasingly assertive towards a Chinese presence in such close proximity to its borders.