NUUK, Greenland—If President Trump were to take over Greenland, he would find himself in charge of a slow-growing economy that relies on annual government subsidies of more than $1 billion and is largely driven by shrimp sales.
is the largest island in the world Awarded by the US President As a lifetime real estate purchase. It boasts a strategic location and untapped mineral reserves buried deep under the ice.
Right now, however, the economy is dependent on something more promising: fishing and a recent surge in investment to build new airports. And both of these are leading to declining revenues, which will cause the economy to stagnate in 2025.
Opinion polls in recent years consistently show that Greenlanders are more concerned about the state of their economy than about foreign takeover by the US or anyone else.
Greenland officials quietly admit that, at least in the short term, anyone running the island is more likely to end up in a money pit than a gold mine.
The island is home to one of the world’s largest welfare states, a vast expanse of snow-covered villages whose residents – accessible only by helicopter and propjet – are still accustomed to the benefits of Denmark’s social democracy, from free healthcare to strong schools. Transforming an economy that exports 98% of seafood into a mining sector could take years and billions of dollars.
“This is not a diversified economy and it will take a while for it to become self-sufficient,” said Otto Svendsen, a fellow at the Center for Strategic and International Studies. The Greenlandic government has not made “a ton of progress,” he said.
Greenland’s population of 57,000 is spread thinly along the coast of some of the world’s most environmentally hostile regions, with the country covered 80% by ice. There is a lot of variation in living standards. In the capital Nuuk, locals can play golf and dine in a fine Thai restaurant. In small remote settlements, where wages are on average 50% lower, people cut ice and take baths to melt it. The island, which is slightly larger than Mexico, has less than 100 miles of paved road.
The basis of this existence is deep dependence on the Kingdom of Denmark, of which Greenland is a semiautonomous region. About 40% of the Greenlandic workforce is employed by the state. Denmark provides grants that account for approximately half of the Greenlandic government’s revenue and 20% of the island’s GDP. It also pays for the police, courts, banking regulators, and largely free health care for some of the world’s most remote settlements, as well as the management of foreign affairs and defense.
This equates to just over $1 billion per year, said Torben Andersen, chairman of the Economic Council for Greenland. If he disappeared overnight, “it would be a dramatic thing,” he said.
If the US were to replace that Danish grant, the island’s residents would become the largest per capita recipient of federal grants, surpassing residents of Alaska or Washington, DC.
The Trump administration has offered to buy the island, which has been purchased by the Greenlandic government. says not for sale. Administration officials have discussed making direct payments to Greenlanders to win them over.
They are also considering a proposal that would involve Greenland becoming independent from Denmark and receiving US payments to cover some operating costs in exchange for preferential access to the US.
One point of comparison is the Marshall Islands, which recently renewed a so-called agreement of free association with the US. The government of the Pacific islands, which is completely independent from the US, receives $115 million a year from Washington in return for giving the US authority over defense matters.
This works out to approximately $2,875 per person per year. To match Denmark’s annual payment of about $1 billion to Greenland, the US would have to hand over the equivalent of about $17,500 per capita.
Trump has argued that if the US does not annex Greenland, it could fall into the hands of the Chinese or Russians. Danish officials say China has shown little interest, while Russia—whose forces are stuck in Ukraine—rarely brings naval assets near the island.
The US already maintains a large military base in northern Greenland rent-free. A decades-old agreement with Denmark gives the US the ability to deploy more troops to Greenland, as long as it notifies Copenhagen first.
“I think we can accommodate both the American interest and Greenland’s interests,” even though they may differ on many points, Greenland’s trade minister, Naja Nathanielsen, said in London on Tuesday. He denied that Greenland wants to tap China for investment, saying the government wants to partner with “like-minded” countries and gradually become less dependent on Danish subsidies as it becomes more autonomous. “It’s not a sprint, it’s a marathon,” she said.
For a decade, a combination of Danish subsidies, infrastructure investment and rising global prices for halibut, cod and shrimp have helped propel the economy. There is also a construction boom in Nuuk, including a new international airport.
Those good times are coming to an end. According to the Danish central bank, Greenland’s economy is projected to grow by 0.8% in 2024 and 0.2% in 2025. Part of this slowdown is related to declining shrimp stocks as well as falling prices. Shrimp breeding is being affected by rising sea temperatures. Meanwhile, the population of cod that eat shrimp has increased.
On a recent visit to the port of Nuuk, fishermen privately complained about restrictive fishing quotas and some wondered whether Trump might not open up some new trade opportunities.
Jens Frederiksen, who works in a fishing business running a large shrimp trawler in Nuuk, said there is a divide in opinion between people in the capital and other coastal areas.
“The standard of living on the coast is quite low, so they can be positive about America because they can make positive changes,” he said. He said the US could do to Greenland what it did to Alaska, pointing out how citizens there are paid dividends from oil revenues invested in wealth funds. Frederickson said he was willing to listen to Trump’s offer.
For now, Frederickson appears to be in the minority. Polls consistently show that most Greenlanders do not want to become part of the US, they may even be wary of giving up Denmark’s social-welfare protections for an uncertain future with the US.
Earlier this month, the central bank warned of a “surprisingly sharp deterioration” in Greenland’s public finances. Longer term, Greenland faces challenges familiar to many Western economies, including a growing population and brain drain as educated locals pursue careers in Denmark. This risks exacerbating labor shortages on the island, which has a workforce of 29,000. There is a wave of immigration from Asia—particularly the Philippines—to fill the vacancies.
“Manpower shortages, low capacity levels, a growing population and significant inequality place pressure on both the economy and social cohesion,” the Bank of Greenland, the island’s largest commercial lender, said in a recent report.
But it clearly has potential, too. Much depends on whether Greenland can exploit the mineral wealth beneath the ice, economist Anderson said. There is currently only one active mine in Greenland. “Many things were on the table for the last 20 years and were taken down because there was no business case,” he said.
Building a mine in Greenland often also means building a road and a port, not to mention housing, clinics and facilities for workers, who are scarce and difficult to recruit. cold weather This could make the mine inaccessible for a year.
The Greenlandic Government owns and exercises control over all mineral resources. In 2021, it imposed a moratorium on oil and gas exploration licenses. It also banned the exploitation of uranium reserves.
Further investment on the horizon could help boost the economy, including the expansion of the Buksefjord power plant near Nuuk and the construction of new hydropower plants. These plants can provide cheap energy to attract data centers. Continued efforts are also being made to promote tourism, with direct flights now operating from Newark to Nuuk during certain months of the year. Some analysts believe Greenland is copying Iceland’s success, combining tourism with fishing and cheap energy to attract tech companies.
Facing the threat of a US takeover, Denmark is also injecting extra cash. It recently announced $250 million in additional funding over the next three years to cover the cost of a new regional airport and a new deepwater port in eastern Greenland.
Despite the economic cost, the Trump administration is unlikely to stop, CSIS’s Svendsen said. He concluded that Trump just wants to make America bigger. “It’s easy to jump to the conclusion that this is about territorial expansion.”
Write to Max Colchester at Max.Colchester@wsj.com
