CIO at PSG Wealth, Adriaan Pask

In January this year, President Trump once again caused geopolitical upheaval with an announcement of his intentions to acquire Greenland. Geopolitical tensions have intensified markedly since the onset of the Russia–Ukraine war in 2022 and have been further fuelled by the recent conflict in the Middle East.

This has become an increasingly significant factor in the global investment landscape, as their consequences are often systemic, large-scale and far-reaching. Trump’s intention to “take” Greenland will be no different. Greenland, the world’s largest island and an autonomous territory within the Kingdom of Denmark, attracts US attention primarily for its strategic and geopolitical value — including its location, defence infrastructure, Arctic shipping routes, and potential natural resources.

What’s in it for Trump?

A deal of this magnitude would be unprecedented in scale. Greenland spans roughly two million square kilometres, while its population is only about 55,000. By contrast, the United States has around 340 million people and a far larger overall landmass; Greenland alone is comparable in size to the three largest US states combined. The demographic and geographic asymmetry is stark and lies at the heart of the debate.

A key element often overlooked by analysts is Greenland’s strategic importance, particularly its potential to detect missile launches early from areas like Russia. As superpowers to the east rise, and the US’s dominance likely to be challenged in the coming decades or sooner, defence remains a major consideration in any US interest.

Beyond defence, there’s also discussion around new shipping routes and untapped resources. But it’s important to understand the potential payoff timelines. Strategic defence benefits can be realised relatively quickly—by deploying military personnel and building the necessary infrastructure for a larger base.

Other initiatives take significantly longer. Shipping routes, for instance, are emerging as Arctic ice melts, but they won’t be fully operational for decades. Current projections suggest these routes could commence in about ten years and become commercially viable only after 20 years of development.

As for commodities, Greenland has been hyped as a resource-rich territory. In reality, confirmed resources are modest: there are only two active mines on the island, with the rest being potential mineral and rare-earth deposits. Exploration and mining would take decades—estimates suggest 20 to 40 years before any economic benefits materialise.

Given all of this, from Trump’s perspective, the strategic defence angle is likely the most immediate and compelling driver of interest.

What needs to happen before Trump gets his way?

Whether the US administration would use force or move to strike a deal has flip-flopped somewhat. Initially, Trump seemed to be hinting at a “carrot or stick” approach, but after pushback from different parties, he thankfully abandoned the idea of using force.

However, there are still numerous steps that would need to happen for this deal to move forward. Firstly, the people of Greenland would need to be on board. Greenlandic voters would need to approve any change in status through a referendum, followed by Greenland’s parliament authorising and ratifying any agreement affecting sovereignty. Only after that would Denmark’s government need to consent to any territorial changes.

On the US side, there are further practicalities. The deal would need a two-thirds majority in the Senate to ratify it, and given the country’s large fiscal deficits, Congress would have to approve the funding.

The economics of the deal

The next challenge would be to settle on an amount. In terms of where the money will come from and downstream consequences, there is merit in contextualising the GDPs of the various parties.

Greenland's GDP is tiny, at about $3 billion per annum. Denmark’s is around $500 billion, and the US’s is $29 trillion. Historical figures from a previous formal offer to purchase by the US in 1946 was $100 million in gold, or $1.7 billion today. Therefore, conservative estimates for the deal amount are around $500 billion, the entire GDP of Denmark.

Given that Greenland is a territory of Denmark, the issue of who gets paid, and how much also gets complicated. Currently, Denmark makes grant payments of around $750 million per year to Greenland, in support of infrastructure and other needs. If the payment from the deal goes to Denmark, Greenland would naturally expect something in return, similar to the existing grant. This means that there could be a payment directly to Greenland, which could be quite substantial relative to their GDP.

For the US, however, the deal payment would be only 1% or 2% of GDP— not necessarily meaningful in the broader economic context. But if a permanent payment were required and Congress approved it, that would represent a year’s worth of GDP growth spent without any corresponding fiscal gain. From a financial perspective, it’s a significant capital outlay that must ultimately be covered.

Moreover, Denmark would no longer be responsible for ongoing maintenance or development payments for Greenland. Everything—from building new bases to supporting infrastructure—would become the US’s responsibility, adding further cost. It all raises the question of whether US finances can support this long-term commitment.

Will it really go ahead?

The US does not typically make financial commitments this far into the future, usually operating within the shorter span of presidential terms, typically four to eight years. It would therefore be unusual for the US to make what is essentially a 40-year investment, hoping to see financial or strategic returns over the next four decades.

In our opinion, the deal is just too complicated. It demands too much from the parties on the ground, particularly in a political system where short-term thinking dominates. Additionally, the sentiment from both the general population of Greenland and Denmark is against a deal. For now, the Greenland deal feels a bit like a dreamland, where there are simply too many obstacles in the way of success.

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