Greenland Economically Benefits Denmark
False Assumption: Sovereignty over Greenland provides Denmark with economic benefits outweighing the massive ongoing subsidies required to sustain it.
Written by FARAgent on February 11, 2026
After World War II, the United States offered Denmark $100 million in 1946 dollars to buy Greenland for strategic military purposes. Denmark refused despite Greenland's tiny GDP and persistent trade deficits. The island required heavy Danish subsidies, around $512 million in 2005, equivalent to per capita costs that could fund major infrastructure like the Øresund Bridge.
Denmark retained control but allowed the U.S. extensive use of Greenland for free, including the vast Thule Air Base aimed at the Soviet Union. Speculation about oil, minerals, and the Northwest Passage failed to materialize over decades. Fishing remained the main industry, while hydrocarbons proved uneconomical, with Greenland's oil company losing money some years.
Today, Greenland remains 88% Inuit and a subsidy drain on Denmark. Future resource profits, if any, would go to Greenland to promote autonomy. Critics argue the 1946 refusal cost Denmark dearly due to pride, while U.S. acquisition seems dubious given the lack of viable exploitation without ethical issues.
People Involved
- Gwern, an independent researcher, pointed out the flaws in Denmark's approach to Greenland. He analyzed the 1946 refusal of the U.S. offer as economically irrational. He highlighted the ongoing subsidy drain and the forgone benefits from that decision. His work served as an early warning against the assumption. [1]
▶ Supporting Quotes (1)
“gwern marvels over why Denmark wouldn’t sell Greenland to the U.S., but the reasons are also good explanations of why the U.S. should be dubious of buying Greenland from Denmark in 2025.”— Will Denmark demand just payment for Greenland?
Organizations Involved
The Danish government held onto Greenland despite clear economic losses. It refused the 1946 U.S. offer to buy the territory. Instead, it continued heavy subsidies to maintain sovereignty. This stance promoted the idea that control brought net benefits. The government enforced this through ongoing financial support, even as deficits mounted. [1]
▶ Supporting Quotes (1)
“Denmark turned down 100m USD from the USA in 1946; I discuss how this was a bad idea—America got what it needed anyway while Denmark kept control of a loser.”— Will Denmark demand just payment for Greenland?
The Foundation
During the Cold War, Greenland's geostrategic value appeared solid. Military bases on the island seemed to promise exclusive control benefits. Denmark assumed this outweighed the costs. Yet the U.S. gained free access to Thule Air Base after the refusal. This undercut the supposed advantages. The assumption rested on a mistaken belief in captured value. It ignored the reality of shared access without compensation. [1]
▶ Supporting Quotes (1)
“Denmark let the US have the vastly valuable air force base of Thule for free”— Will Denmark demand just payment for Greenland?
How It Spread
After World War II, norms against territorial expansion took hold. International agreements like the Kellogg-Briand Pact reinforced these ideas. Denmark's refusal of the U.S. offer stemmed from national pride rather than economic sense. This wounded amour propre helped spread the assumption. It influenced policy despite the financial burden. The idea persisted through a mix of patriotism and international pressure. [1]
▶ Supporting Quotes (1)
“My guess is that Denmark, by turning down the US offer to buy Greenland in 1946, was embodying the post-WWII notion that countries shouldn’t get bigger.”— Will Denmark demand just payment for Greenland?
Resulting Policies
Denmark set up annual subsidies for Greenland. In 2005, these reached $512 million officially. The government also agreed that future oil profits would go to Greenland. This aimed to reduce subsidies or fund autonomy. Such policies built on the false assumption of net benefits from sovereignty. They locked in ongoing support without real returns. [1]
▶ Supporting Quotes (1)
“The official Danish subsidy was $512m in 2005. Greenland is not a going concern and would collapse within years.”— Will Denmark demand just payment for Greenland?
Harm Caused
Denmark faced trade deficits of hundreds of millions each year since 1990. It lost out on the 1946 U.S. offer of $100 million, worth $1.4 billion today. That sum could have funded major infrastructure projects. Opportunity costs piled up as subsidies drained resources. Further harm came from routing future resource revenues to Greenland. This accelerated subsidy cuts only after massive investments. The arrangement left Denmark with little to show for decades of spending. [1]
▶ Supporting Quotes (2)
“convert to per capita (multiplying by 60), to get a range from $180b to $960b—at which point it becomes clear that this is no laughing matter for a small country like Denmark. This money could have funded major projects like the Øresund Bridge.”— Will Denmark demand just payment for Greenland?
“Denmark has agreed that future oil profits will go to Greenland, left-overs will only go to reduce the annual Danish subsidy”— Will Denmark demand just payment for Greenland?
Downfall
Economic analyses exposed the truth. Greenland's GDP stood at $2 billion, with persistent deficits. No viable hydrocarbons emerged. The U.S. enjoyed free military access anyway. These facts showed Greenland as a white elephant. Denmark captured no real strategic or economic value. The assumption proved wrong, unraveling under scrutiny of the numbers. [1]
▶ Supporting Quotes (1)
“Greenland has been, is, and will be indefinitely, a white elephant. ... Greenland’s entire GDP is around $2b. The overall trade deficit is a few hundred million and has been in place for 21 years, since 1990.”— Will Denmark demand just payment for Greenland?
Sources
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[1]
Will Denmark demand just payment for Greenland?reputable_journalism