US President-elect Donald Trump’s desire to acquire Greenland, an autonomous territory of Denmark, comes with a hefty price tag – between $12.5 billion to $77 billion. The estimate, provided by real estate developer and former New York Fed economist David Barker, is based on prices in the U.S. Virgin Islands and Alaska, adjusted for inflation and economic growth, according to the New York Times.
Trump’s interest in Greenland is nothing new, with him first suggesting in 2019 that the US should buy the territory. Greenland’s strategic location has been valuable to the US since the Cold War era, with President Harry Truman previously offering to purchase the Danish territory for $100 million in gold in 1946 – an offer that was rejected by the Danes.
Although the idea of one sovereign nation purchasing territory from another may seem unusual, such examples do exist. The US has purchased several territories in the past, including the Louisiana Purchase, Alaska, and the US Virgin Islands.
David Barker pointed out that Greenland’s value would increase if its role in US defense were considered, as it would be relative to the size of the US economy. But if the value is based only on minerals, the size of the economy will not matter that much.
Earlier, a report by the Financial Times suggested that Greenland’s resources could be worth $1.1 trillion. But Mr Barker called this estimate unrealistic and said the US would not fully benefit from resource extraction, as companies would buy drilling and mining rights keeping their costs and profits in mind.
Acquiring Greenland may not be as simple as purchasing. Trump’s national defense concerns are driving his interest in Greenland, but the island’s residents may not be eager to become part of the US. Greenland’s Prime Minister, Mute Borup Egede, has said that the island “is not for sale and will never be for sale”.
Putting a price tag on a country like Greenland is complicated. GDP, which measures a country’s economic output, is often used, but it does not capture long-term potential or unlimited resources. Greenland’s GDP is approximately $3.236 billion, but its real value includes future growth and untapped resources such as minerals and oil.
Other factors, such as quality of life, infrastructure and strategic location also add value. Greenland has valuable untapped resources that are not reflected in its GDP.
The US has long maintained a military presence in Greenland, which is a NATO ally, said Nicola Swan, global head of governments and multilateralism at Swissthink. Ms Swann said access to Greenland’s minerals such as copper and lithium, which are vital to technology such as batteries and electric vehicles, could be a key factor for the US.
Trump has also mentioned the possibility of using military force or tariffs in negotiations, and Denmark’s growing economy, which is fueled by pharmaceutical exports to the US, takes further advantage.
Although it is easy to buy a national asset such as the Panama Canal, buying land or territory is rare today. National pride, democracy and international norms make such transactions impossible. Greenland may have a price, but it will be hard to get a deal in today’s world. According to Mr Barker everyone agrees that buying Greenland “would be the deal of the century”.
