Greenland’s Airports: A Balance between China and Denmark?

by Marc Lanteigne

The Government of Denmark announced this week that it was going to enter into discussions with Greenland/Kalaallit Nunaat about potential Danish financial support for the expansion and refurbishment of three Greenlandic airports, a decision which couldshut down a bid by a Chinese firm for that contract. The declaration, confirmed by the Prime Ministers of Denmark and Greenland, may be a further indication of Copenhagen’s growing unease about expanded Chinese economic interests in Greenland as Beijing’s ‘Belt and Road’ (一带一路), or BRI, trade routes begin to expand further into the Arctic.

A statement [In Danish] released by the Danish Prime Minister’s Office confirmed Copenhagen’s interest in negotiations regarding Denmark potentially underwriting the development of the airports in the capital of Nuuk as well as Ilulissat and Qaqortoq. At present, Kangerlussuaq and Narsarsuaq are the only (civilian) airports [In Danish] capable of handling large aircraft. Prime Minister Lars Løkke Rasmussen of Denmark pledged his support for improving Greenlandic infrastructure in order to improve the island’s economic competitiveness and fledgling tourism industry.

The pledge was a result of talks between PM Rasmussen and Greenland Prime Minister Kim Kielsen, who recently began a second term following parliamentary elections in April which led to an unusual four-party coalition government [pdf, In Danish] between Mr Kielsen’s Suimut Party [In Danish/Greenlandic], Partii Naleraq [In Danish/Greenlandic], Atassut, and the newly-created Nunatta Qitornai, or NQ.

High on the priority list for the new coalition was the improvement and diversification of the island’s economy, which at present remains heavily dominated by the fishing industry. Siumut has been open to the prospect of increased foreign investment in Greenland, including potentially by Chinese interests, and has suggested [In Danish] that a Greenland representative office should open in Beijing.

When it was announced that a contract to develop the airports would be open for bidding in cooperation with the Greenlandic state-owned firm Kalaallit Airports, one of the main contenders was a Chinese firm, the China Communications Construction Company (CCCC), which was shortlisted along with five other firms, with a final decision originally scheduled to be announced later this year. However, the Danish announcement may place the Chinese bid in doubt, especially if some sort of cost-sharing deal can be achieved over the next few months.

Danish officials had previously expressed concerns about the Chinese company’s bid due to reservations about Greenland’s economic sovereignty, especially at a time when the debate about the eventual independence of Greenland from the Danish Kingdom continues tocirculate. Siumut has been open to the possibility of eventual independence, while Nunatta Qitornai is strongly pro-independence, as is PN, which at one point suggested independence from Greenland could be achieved as early as 2021. Atassut has been traditionally supportive of greater Greenlandic autonomy from Denmark, but with conditions short of complete independence. After the election, Vittus Qujaukitsoq, a member of NQ and Greenland’s new Minister of Independence, recently called for a jump-start [In Norwegian] of debates about constitutional reform in preparation for potential independence.

Any move towards independence would require Greenland to seek out deepened trade agreements to offset the annual stipend from Copenhagen, and China has been very visible in current and potential development projects on the island. In addition to the airports bid, Chinese firms are also involved in two potential mining projects [paywall] in Greenland, and there was previous interest expressed by Beijing in a potential scientific base [In Danish] there. It was also revealed last year that Hong Kong company General Nice had sought to purchase abandoned US-built military facilities at Grønnedal, but was interdicted by the Danish government due to security concerns and worries about the reaction from Washington, which operates an active air force base at Thule in the northern part of the island.

As detailed in China’s first Arctic White Paper which was released in January of this year, over the past year, China has made greater expressions of interest in adding the Arctic to its expanded network of trade routes as part of the BRI. For example, on the sidelines of this past week’s leadership summit of the Shanghai Cooperation Organisation (SCO) in Qingdao, an agreement worth approximately US$10.1 billion was completed between Russia’s Vnesheconombank and the China Development Bank for joint investment initiatives, potentially as many as seventy projects, in the Russian Far East (RFE), including along the Russian Northern Sea Route (NSR). Exactly how far the Arctic tier of the BRI will extend towards the Nordic region including Greenland is not clear, but as a presentation [video] at the recently concluded Arctic Circle conference in Tórshavn detailed, China retains a strong interest in developing various economic partnerships with Nuuk.

In May of this year, the Danish leader stated publically that he was not in favour [In Danish] of a Chinese firm winning the airports contract, and noted that a decision of this magnitude had significant effects on Greenlandic foreign policy. Under the 2009 self-rule [pdf] agreement between Copenhagen and Nuuk, the Danish government retains oversight of Greenland’s international affairs.

The Danish-Greenlandic discussions this week did not mention specific Danish financial contributions to the airports project, which was expected to cost approximately 3.5 billion DKK (US$550 million). However, the two governments agreed [In Norwegian] to reach a decision by the autumn session of the Greenlandic parliament on a possible partnership, as well as to discuss other initiatives designed to improve overall Danish investment in Greenland. Both the independence factor and the possibility of deepened Chinese investment have appeared to be guiding the calls in Copenhagen for enhanced economic engagement with Nuuk.

Even if the Chinese company ultimately does not succeed in winning the bid, it is unlikely this issue will be last word on the subject of the delicate balancing act which has been taking shape between Denmark, which wishes to maintain its leading role in Greenland’s economic future, and China, a rising power with growing interest in Arctic diplomacy and investment.

[Many thanks to Mingming Shi, Mikkel Møller Schøler and Lau Øfjord Blaxekjær for their assistance with the researching of this post.]