A new agreement sets the foundation for closer economic ties between the U.S. and Greenland, the autonomous Danish territory. The accord addresses the issue of the lost service contract for the Thule Air Base and spells out areas of economic cooperation and a deepening of security ties.
The maintenance contract, which historically went to a Danish-Greenlandic company but was awarded to a U.S.-based enterprise in 2014, will revert back to Greenlandic control when it is up for renewal in 2024.
“This represents a historic agreement that enhances the relations between Denmark, Greenland and the United States. Especially between the two latter, as one of the signed documents is a plan for bilateral cooperation between Greenland and the United States which – according to Premier Kim Kielsen – will provide tangible benefits for Greenlanders”, says Marc Jacobsen, a Postdoctoral Researcher at the University of Cambridge's Scott Polar Research Institute.
“Besides the economic benefits, the new agreement also has a significant symbolic value for Greenland in the way that it enhances the Self-Government’s role in the triangular relationship while strengthening its autonomous appearance on the international scene.”
The Thule Air Base, the United States Air Force's northernmost base, holds a “key role in Greenlandic, U.S. and transatlantic security,” according to the agreement.
Important security dimension
This latest agreement comes on the heels of President Trump’s “offer” last year to purchase the island from Denmark the U.S. allocated a $12m aid package and opened a consulate in its capital of Nuuk. These initiatives were seen as efforts to counter growing Chinese interest and burgeoning influence in Greenland.
“From the U.S. perspective, the agreement should be seen in the light of a renewed aim to increase its presence in the Circumpolar North which is seen as “a potential avenue for great power competition”. Here, Greenland is of great geostrategic importance and the Trump administration is therefore looking for new ways to enhance its military presence on the island,” concurs Jacobsen.
The new agreement may also help to strengthen ties between Denmark and its autonomous territory and stave off any future initiatives for full independence. Greenland ensures Denmark’s seat at the Arctic table, Jacobson concludes.
“For the Government of Denmark the agreement is especially valuable as a tangible proof that it also represents and pursues Greenlandic interests internationally. This may strengthen ties between Nuuk and Copenhagen. For Denmark, this is utmost important, as Greenland’s geographic location and membership of the Danish Realm is what legitimizes Denmark’s status as an Arctic state.”
Resolving a longtime dispute
The service contract for the maintenance, construction and canteen operations at the air base represents a substantial source of income for Greenland’s treasury. It provides for approximately 200 million Danish Kroner ($30m) in revenue and labor taxes account for about ten percent of tax revenues.
The maintenance agreement represented a way for Greenland and Denmark to benefit economically from the U.S. military’s presence on the island.
In 2014, however, the contract went to the American company Vectrus Services, representing a substantial change in the long-term agreement between Denmark and the U.S with grave economic consequences for Greenland’s national economy.
The unilateral change by the U.S. had been a point of contention since 2014 and the Greenlandic government had worked to revert back to the original agreement.
For the Government of Denmark the agreement is especially valuable.
“Since 2014, it has been a top-priority for the Government of Greenland to renegotiate the Thule Air Base service contract so the new framework agreement is certainly a feather in their cap”, says Jacobsen.
Under the new agreement companies eligible to compete for the maintenance contract must be majority-owned by Danish or Greenlandic individuals and be based in Greenland.
It also specifies “target metrics” for employing Greenlandic residents and required efforts to employ Greenlandic workers to the “greatest extent possible” including when it comes to apprenticeships and training.
Additional initiatives evolve around greater civilian benefits of the airbase, including the ability for Air Greenland to use it in case of weather diverts and “greater commercial air access for local communities as well as Pituffik’s role in access to acute and emergency care for local populations.
Deepening economic ties
In addition to resolving the Thule Air Base service contract dispute, the agreement also seeks to unlock the great potential for partnerships and future initiatives and to deepen and strengthen the relationship between the United States and Greenland.
Under the agreement the U.S. and government of Greenland aim to more closely cooperate in the sectors of trade and investment, energy and mining, education, the tourism sector and nature management.
Specific examples include an Economic Policy Dialogue for greater trade and investment, elimination of any regulatory and tariff barriers to improve market access for Greenlandic goods and business in the U.S., and increased commercial partnerships between businesses from all sectors but especially from the tourism, seafood and fisheries, and resource extraction industries.
For this purpose the US has assigned a Senior Development Advisor to Greenland who will assess and direct future assistance to Greenland.
In terms of energy and mining the U.S. aims to promote investments in the sector and strengthen technical training and expertise and improve the sector’s overall security and resilience.
This also ties in with building educational ties where the US aims to cooperate with universities to build programs focused on land and fisheries management, hospitality and sustainable tourism.
Similarly the U.S., in part through its National Park Service, aims to cooperate in the tourism sector, specifically sustainable tourism, parks management and cruise ship management and the creation of an eco-tourism sector.