[Q&A] "Trump Will Not Bring Direct Economic Benefits to Greenland"

"U.S.-Greenland Economic Exchange Not Significant"
Key Issue: Establishing Systems Suited to Greenland's Realities

Even before his inauguration, U.S. President Donald Trump expressed interest in purchasing Greenland, making it the most closely watched island in the world. The United States is currently considering providing a $120 million loan for the development of rare earth mines in Greenland. Previously, the Trump administration reportedly considered offering $10,000 per year to each Greenland resident as a way to incorporate the territory. However, there is significant skepticism within Greenland that the United States will not bring any direct economic benefits to the island.

Torben M. Andersen, Chair of the Greenland Economic Council and professor at Aarhus University, stated at a press conference on the 16th (local time) following the release of the 'Greenland Economic Report' that even if the United States supports mining development in Greenland, it will only have indirect effects on the Greenlandic economy and will not bring direct economic benefits to Greenland. The following is a Q&A.

-You said that while various sectors of Greenland's economy have great potential, none alone can make Greenland fully economically independent. If so, is there a possibility that Greenland could achieve economic independence someday by diversifying into various sectors such as mining, tourism, and fisheries?

▲Yes, but it is more appropriate to view this as a 'process.' If development proceeds in that direction, and if the dependence on fiscal transfers from Denmark can be reduced, a broader and more diverse economic base can be established, which would also contribute to securing tax revenue. This is a clear and realistic goal, but it will take time. The scale is simply too large to accomplish easily. Many people only see the lump-sum grants from the Danish government, but there are also various other forms of fiscal transfers that accompany them.

-How long do you think it will take to achieve this goal? Are we talking about several decades, or is it virtually impossible?

▲I believe Greenland could build an economy completely different from the current one within 10 to 20 years.

-Greenland's resources have great potential, but is there a possibility that the island might not be able to gain any real added value from them?

▲If foreign companies come and extract resources while taking all the profits for themselves, Greenland might not gain anything at all. The flow of revenue that the government can receive is as follows: the more local workers are employed, the more government income (taxes) can be generated through income tax, and since foreign workers will also pay a certain portion in taxes, additional revenue is possible. The most important source of revenue is the 'resource tax.' This tax is imposed on the net profit, which is the profit generated from mining after deducting costs.

-There have been repeated somewhat pessimistic outlooks for the economy each year. Is the current economy moving in the right direction? A new government has taken office, and a pro-business party is now in power. What reforms do you think are needed?

▲Since the new government took office, there have been several urgent issues to address first. However, the government has stated its commitment to reform in its policy agreement. There are still many challenges to solve, but I believe the most critical issue is education. It's not just a matter of not spending enough on education; there are too many intertwined problems. When more than half of a generation fails to obtain proper educational qualifications, it is extremely difficult to build a self-sustaining economy. In connection with this, a review of the public sector is also necessary. While Denmark or Sweden are often said to have the largest public sectors in the world, in reality, Greenland ranks first.

-What specific measures are needed for education reform?

▲Primary education is key. Studies from various countries have shown that addressing problems at the basic education stage is most effective. According to our analysis from a few years ago, test results at the third grade level in elementary school could predict later educational pathways with considerable accuracy. There needs to be a focus on improving basic academic skills. If compulsory education ends as a negative experience and students do not learn enough, it becomes extremely difficult to continue further education.

-You mentioned that many students do not advance to the next stage of education. Why does this problem occur?

▲There are geographical challenges. Many schools have very few students. In some cases, a single teacher has to cover all grades and subjects. Especially for those living in very small villages, graduating requires moving to a larger city, and this is not just a matter of moving; it often means going so far that returning home on weekends is not possible. In reality, students might only be able to visit home twice a year. This is a huge challenge for teenagers. In addition, as students move to higher levels of education, if they do not speak Danish or English, they face even greater difficulties. Greenland is a young country, but even the parents of the younger generation may not have received sufficient education, and it is highly likely that the grandparents' generation received almost none at all. In such a society, educational change takes a very long time.

-Do you think it is appropriate for Denmark to support the expansion of Greenland's autonomy through financial assistance?

▲This can be viewed from three perspectives: the financial aspect of who pays for it, the capacity issue of whether there are skilled personnel to carry out the work, and the decision-making authority of who makes the policies and decisions. Some responsibilities can be transferred to Greenland, with decision-making authority given to the Greenlandic government, while Denmark continues to provide partial financial support. However, this raises the issue of who has the final say. What always needs to be discussed is how well these systems are tailored to Greenland's realities and conditions.