U.S. Pressure on Greenland to Prompt More Danish Financial Support and American Military Presence

The incoming U.S. administration has signalled renewed interest in Greenland because of its strategic military position and economic potential. Greenland is an autonomous territory of the Kingdom of Denmark (Denmark), and U.S. president-elect Donald Trump's idea to take control of the island has sparked discussions about its sovereignty and the possibility of a sale. The U.S. administration already floated the idea of a sale in 2019, but it was rejected. In our view, Denmark will eventually provide more financial support and investment to Greenland and cooperate more closely with the U.S. in terms of an expanded military presence.

Key Highlights
-- U.S. interest in Greenland for military and economic reasons puts pressure on Denmark.
-- A sale or U.S. military intervention are both unlikely scenarios.
-- Denmark will likely maintain control over Greenland, but it will be more expensive.

"In our view, U.S. purchase of Greenland is not a realistic possibility at this stage, and neither is a military intervention," said Carlo Capuano, Senior Vice President, Sector Lead, Global Sovereign Ratings. "There are numerous ways in which the United States can benefit from a close economic and military partnership with Greenland without damaging its international alliances."