Greenland’s Catch-22

It’s been a year since Greenland got Self-Rule – a governing status that gives the local Greenlandic government more responsibilities over areas such as justice and health; recognizes Greenlanders (89% Inuit) as a distinct people with a right to self-determination; and establishes a formula which gives Greenland control over the revenue earned from resource exploitation, but at the expense of a declining subsidy.  Greenlanders voted overwhelmingly (75%) in favour of Self-Rule in November 2008, replacing the era of Home-Rule government that first provided the island with autonomy from Denmark back in 1979.

Greenlanders have greeted the transition to Self-Rule with enthusiasm.  Most of the new responsibilities will take years, or even decades, to be assumed, coming only when Greenland is ready, and able, to pay for it themselves.  However many see Self-Rule as just one more step towards the ultimate goal of independence.

Greenland is heavily dependent on Denmark.  Their annual bloc grant transfers about $11,000 per person, or 55% of GDP, to Greenlanders, for a total subsidy of about $600 million per year.  With an under-educated, widely dispersed workforce, large geographic distances from European and North American markets, and the often prohibitive cost of building vital infrastructure, Greenland faces enormous challenges in reducing its financial dependence on Denmark.  But there is a game-changer: climate change. While most public attention on global warming in the Arctic focuses on the negative impact of climate change, Greenlanders are hopeful that a warming Arctic will make the exploitation of offshore oil and gas profitable enough to replace the revenue currently transferred from the Danes. Greenland’s reserves are significant: the United States Geologic Survey estimates the country’s offshore reserves could hold up to 50 billion barrels of oil and gas, or nearly one-third of the arctic total, and exploratory drilling is set to begin this summer.  In addition to oil and gas revenues, Greenland may also benefit economically from an increase in mining and shipping activity in the Arctic as sea ice retreats.

This is the Catch-22: the only way that Greenland will be able to afford its independence is if a warming Arctic results in accessible and profitable resource exploitation, leading to an influx of mining, oil & gas, and shipping companies, tourists and labourers.  But this increase in traffic will come with a host of new responsibilities, including regulating all of the new economic activity and enforcing Greenland’s laws, on land and on sea, to many new actors.  Put simply, Greenland will only be able to afford independence if there is a lot more economic activity and traffic in the Arctic.  But if there is a lot more economic activity and traffic in the Arctic, Greenland will not have the capacity to manage it.  In fact, it may become more dependent on Denmark as economic activities increase.

How a country of 58,000 inhabitants could come up with the resources to monitor and regulate an area the size of Mexico is a conundrum that has yet to be solved.  A single icebreaker, for example, costs upwards of $1 billion, and that’s before training, manpower and upkeep is added in.  (Denmark has thus far provided for the defense and security of Denmark; it continues to do so under Self-Rule.)  In fact it would be pretty near impossible for that many people to fund and manage the gamut of social services expected of the contemporary welfare state in an area a fraction of its size.

The right to self-determination is one that is recognized almost universally.  The Inuit of Greenland have every right – and seemingly intention – to pursue it.  But there are limitations to what can be achieved by such a small, dispersed, albeit determined group of people, even in the best circumstances.  Oil and gas money will not change that fact.

Heather Exner-Pirot

Heather Exner-Pirot is the Managing Editor of the Arctic Yearbook, a Fellow at the Macdonald Laurier Institute, and a Global Fellow at the Woodrow Wilson International Center for Scholars.

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