mandag den 15. december 2008

Greenland - icy Path to Independence

On November 25. Greenland held a referendum on 'Namminersorneq' – self rule. Many international observers seemed to be slightly misled by this and commented as if the Greenland community won it's independence from Denmark over night.
The purpose of the referendum was to obtain the Greenland Peoples acceptance of a new treaty between the home rule of Greenland and the Danish Government that will replace the current law of home rule from 1978. The content of the new treaty is to define the areas where Greenland step by step could take over the regulatory and administrative areas from Denmark, that is currently not covered by a treaty, which costs that Greenland will have to carry for each of these areas and which economic impact exploitation of oil (believed to be in plenty supply in North-East Greenland) will have on the Danish annual contribution to the Greenland Economy.
It also clarifies that Greenland will have the right to explore natural mineral resources.
But total independence is in no way just around the corner – the realities are too harsh.
The annual Danish contribution is 3.5 billions Dkr – about 590 Mio $, or one third of the Greenland GDP, 2/3 of the Home Rule income. Next year the Greenland fiscal plan has a deficit of 300 Mio Dkr, mainly allocated to investment in infrastructure , new water driven power plants, harbours and other items needed to attract mining industry. (Read Lars Emil Johansen’s comments to the fiscal law for Greenland for 2009 (In Danish))
So there is really not so much available to start financing new areas for many years to come – Police and Legal autonomy is estimated to cost at least 300 Mio Dkr, but the real problem is – as in many sectors – lack of skilled Greenland speaking trained policemen, judges, lawyers, administrators.
What was expected to improve this position has now been postponed for several years: The mines that would contribute to the Greenland economy by taxes on workers and spin off from investments, are faced with ice cold outlook: The Bloomberg metal ad mining index is down to 1/3 compared to spring time, the only working goldmine is closing down because of heavy deficit, and the Alcoa aluminum company that still has a LOI to start building an Aluminum plant once a couple of more power plants are installed, is faced with adverse trends, stopping new investments, closing down some facilities.
So there is not much hope for the Greenland self rule quickly to undertake new areas and being able to pay for it. Even if 75% votes yes.

So the referendum may be only little more than a political victory for the parties in Greenland that advocated for increased self rule. But as such it will be helpful for a more equal partnership with Denmark. The Greenland language will be the national language, Danish and English 2nd
and 3rd. Language. The People of Greenland will be recognized as a separate people according to the International Law. Even many resident Danes in Greenland voted for the acceptance of the treaty, and one of the stated that 'Now the handle is on the inside of the door, they are free to open it at any time!'. Some even expect the requests for support from Denmark from now on will be more realistic.

The strategic importance of Greenland has been clear since 2. World War – the Thule Radar is an important part of the US defense system ever since the Cold War and particularly since Ronald Reagan's 'star wars' project was launched. The latest treaty is dated 2004. A Greenland with substantial oil reserves would of course be even more interesting for US, and there is no doubt that the Greenland politicians are very much aware of their favorable position, particularly the more socialistic IA party would probably have hoped for a faster way to independence – but also very much aware of the risk of ending with a heavy embrace by the American neighbour.
But Greenland is also a symbol of the global warming – Al Gore was early to visit the melting glaciers, the Danish Climate Minister, Conny Hedegaard, enjoys showing her colleagues the glaciers at the Icefjord, now moving at a speed 20 times the speed in 1980'is.
It suddenly dawned on the Greenland political leaders that a part of the new treaty and earlier treaties with Denmark on the climate issues demanded that Greenland stuck to the Danish scheme of reducing the CO2 emissions. This however, may be completely impossible. Where could the savings come from once Alcoa's aluminum plant starts producing CO2 in a volume 20-40 times the current Greenland emission? As the Greenland Industry Association points out, Greenland has not yet become industrialized and should be allowed special treatment. This conflict is going to be interesting with an Obama administration in US and with Denmark hosting the UN climate conference in November in Copenhagen. From both sides the demand for CO2 reduction will be difficult to neglect.

And again, if the aluminum plants are postponed, and mines will be delayed for decades, the financing of increased independence is non-existing, and the best the Greenland Self rule Government can do right now is to invest heavily in education and try to become independent of Danish and other experts in key areas like mining, IT, transportation, construction – and administration.

The current financial crisis has not yet hit Greenland with any strength – I participated in a seminar for the ICT key players in Greenland, Nuuk last week and presented the overall problems with a particular twist on Greenland strategic options that are still open for discussion. The investment in infrastructure has called for the installation of a sea cable, and TeleGreenland expects to open this almost 1 billion Dkr. investment in March 2009. Still the radio stations transmitting the signals along the coast needs additional investments – probably around 100 – 200 Mio Dkr. during the next 5 years. This is a lot for a country of less than 60.000 inhabitants, and the political pressure from the Greenland Government to keep investing is enormous; during the last few years a GPS system for sheep farmers have been built up at a cost of 65.000 Dkr. pr. Sheep farmer. And still Tele Greenland has managed to deliver a surplus to the Home Rule – it’s only owner.

It is ironic to note that at the same time as the educational system and telemedicine suddenly becomes possibilities within reach, the politicians are trying to step in and open broadband connections to everybody as a low priced flat rate. It seems to be a recurring problem in Greenland where political participation in the major industries has been – to put it best – a very close alliance. In this case it would result in drowning the capacity and taking any sort of control out of a professional company management team. The price parameters could in stead be used as a budget support to education and health sector while TeleGreenland build up its capacity - and then eventually adjust rates downwards. Compare with the Tele Company in North West Canada that has been a heavy receiver of subsidies for decades.

But so far TeleGreenland has got its financing in place – next in line may not be so lucky – whether it is Royal Greenland, Umiaq Line, the construction sector, AirGreenland. Tourism will probably soon begin to drop slightly housing is still in short supply in the bigger cities.
In the short run the lower price of oil will benefit the fishing industry, but demand for fish is also likely to drop.
There is no doubt that even if Greenland so far is hiding behind Denmark, the global crisis will be felt. And the first victim will be the mines - and with the mines the hope of early independence.

But the Greenland people will undoubtedly struggle to protect their culture, language. If you have never really encountered this people, listen to this beautiful christmas carol performed by a choir of Greenland women in their traditional dress: Guuterput on Facebook.
Merry Christmas – Santa Claus is highly needed everywhere this year. But remember: He lives in Greenland! I met him at his home last Saturday!

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