In 1946, the US offered to buy Greenland from Denmark for $100 million which was turned down. This would have been about $1.5 billion in today inflated money. President Trump has recently made inquiries to buy Greenland from Denmark. Denmark’s Prime Minister has said that Greenland is not for sale.
#Greenland is rich in valuable resources such as minerals, the purest water and ice, fish stocks, seafood, renewable energy and is a new frontier for adventure tourism. We're open for business, not for sale❄️🗻🐳🦐🇬🇱 learn more about Greenland on: https://t.co/WulOi3beIC
— Greenland MFA 🇬🇱 (@GreenlandMFA) August 16, 2019
What is the Fair Value of Greenland?
Greenland has a GDP of $2.7 billion. If it were to be bought at 10X GDP then it would be $27 billion.
Greenland has a tiny aging population of 56,000.
Alaska has a population of almost 750,000 and this population increased from 150,000 in 1950.
As the Arctic ice melts due to global warming, Greenland’s mineral and energy resources – including iron ore, lead, zinc, diamonds, gold, rare earth elements, uranium and oil – are becoming more accessible. Greenland has made natural resource extraction a central part of its plans to become economically self-sufficient, and ultimately politically independent, from the Kingdom of Denmark.
Two productive oil fields can be on stream in the near future; the first field of roughly
500 million barrels of reserves could be in operation by 2020, while the second of nearly 2 billion barrels of reserves could come online by 2025. Together these fields could contribute more than 435 billion DKK ($78 billion) to the Natural Resource Wealth Fund in the period until 2060.
In Greenland, the estimated costs for drilling one exploration well are around $100 million in the most favorable circumstances, and based on current estimates, developing an entire oil field will cost around $6 billion to $7 billion.
A discounted price for future energy and other resources suggests a price in the $30 billion range could be fair value. Even adding the 10X current GDP and the energy resource value together would be a value of about $57 billion. There could be an additional premium for water way and other rights.
A fair price for Greenland seems to be $30-70 billion.
The US would be able to increase the value of Greenland by fully developing resources and by replicating Alaska development in Greenland.
When companies are bought they get a buyout premium. A buyout premium for Greenland could be assigned and this would be a price of about $100 billion.
At the higher valuations, there could be some interesting structures for the purchase.
A $56 billion fund could be established where each current citizen of Greenland has $1 million made available under certain conditions related to the purchase. Norway has its Oil fund and pension fund. The Oil fund has about $160,000 for each citizen of Norway.
The fund for each citizen could be used to entice votes in support of a US buyout of Greenland. There is whatever Denmark needs to sell Greenland and then there is the value for the citizens of Greenland to support a deal.
Greenland is Subsidized by Denmark
Greenland has been subsidized by Denmark by about $500 million per year. This is about $9000 per person in Greenland. Denmark has 5.7 million people. Denmark views Greenland as being symbolic. Greenland was made a full province of Greenland in 1953. Greenland got home rule in 1979.
Greenland is mostly independent and wants full independence.
American protectorate and occupation
During the Second World War, Denmark was occupied and controlled by Nazi Germany between 1940 and 1945. The Danish and US governments signed an agreement to hand over defense and control of Greenland to the United States on 9 April 1941. The US did not recognize the Nazi government of Denmark. The US-built two airports with full-length runways, which as of 2018 still are the main international airports of Greenland. Greenland was effectively independent during these years and allowed the United States to build bases on its territory, in spite of the Danish pre-war neutrality. After the war the pre-war situation was restored, the US bases remained and Denmark, with Greenland as a part of the Kingdom, joined NATO.
SOURCES – Wikipedia, Brookings Institute
Written by Brian Wang, Nextbigfuture.com
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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