Published by Global Banking & Finance Review®
Posted on January 10, 2026
5 min readLast updated: January 20, 2026
Denmark faces a strategic challenge as Greenland moves towards independence, impacting geopolitical and financial interests.
By Jacob Gronholt-Pedersen and Stine Jacobsen
COPENHAGEN, Jan 10 (Reuters) - When U.S. Secretary of State Marco Rubio meets his Danish and Greenlandic counterparts next week, Denmark will be defending a territory that has been moving steadily away from it and towards independence since 1979.
President Donald Trump's threats to seize Greenland have triggered a wave of European solidarity with Denmark. But the crisis has exposed an uncomfortable reality - Denmark is rallying support to protect a territory whose population wants independence, and whose largest opposition party now wants to bypass Copenhagen and negotiate directly with Washington.
"Denmark risks exhausting its foreign policy capital to secure Greenland, only to watch it walk away afterwards," said Mikkel Vedby Rasmussen, a political science professor at University of Copenhagen.
STRATEGIC RELEVANCE
Denmark cannot let Greenland go without losing its geopolitical relevance in the Arctic territory, strategically located between Europe and North America and a critical site for the U.S. ballistic missile defence system.
Yet it may ultimately have nothing to show for its efforts if Greenlanders choose independence - or strike their own deal with Washington.
The stakes extend beyond Denmark's national interests. European allies have rallied behind Denmark not just out of solidarity, but because giving up Greenland would set a dangerous precedent that could embolden other powers to pursue territorial claims against smaller nations, upending the post-1945 world order.
Denmark's foreign ministry declined to comment, but referred to joint remarks by Danish Prime Minister Mette Frederiksen and Greenlandic Prime Minister Jens-Frederik Nielsen on December 22.
"National borders and the sovereignty of states are rooted in international law," the two leaders said. "They are fundamental principles. You cannot annex another country ... Greenland belongs to the Greenlanders."
This week, Frederiksen said: "If the U.S. chooses to attack another NATO country, everything stops, including NATO and the security the alliance has provided since World War Two."
THE 'GREENLAND CARD'
For now, the Trump administration says all options are on the table, including buying the territory or taking it by force.
Copenhagen professor Rasmussen said any discussion of whether holding on to Greenland is worth the cost has been drowned out by outrage at Trump's threats.
"It is not part of the political debate in Denmark. I fear we have gone into patriotic overdrive," he said.
During the Cold War, Greenland's strategic location gave Denmark outsized influence in Washington and allowed it to maintain lower defence spending than would otherwise be expected of a NATO ally.
This became known as "the Greenland Card", according to a 2017 report by the University of Copenhagen's Centre for Military Studies.
But Greenland's aspirations for self-determination have been brewing since the former colony got greater autonomy and its own parliament in 1979. A 2009 agreement explicitly recognised Greenlanders' right to independence if they choose.
All Greenlandic parties say they want independence, but differ on how, and when, to achieve it.
Trump's pressure has accelerated a timeline that was already in motion, forcing Copenhagen to spend political capital and financial resources on a relationship with an increasingly uncertain endpoint.
"How much should we fight for someone who doesn't really care about us?" Joachim B. Olsen, a political commentator and former Danish lawmaker, told Reuters.
THE FINANCIAL BURDEN
Copenhagen provides an annual block grant of roughly 4.3 billion Danish crowns ($610 million) to Greenland's economy, which is near stagnation with GDP growth of just 0.2% in 2025.
The central bank estimates an annual financing gap of approximately 800 million Danish crowns to make current public finances sustainable. Denmark also covers police, the justice system and defence - bringing total annual spending to just under $1 billion.
In addition, Copenhagen last year announced a 42 billion Danish crowns ($6.54 billion) Arctic defence package in response to U.S. criticism that Denmark has not done enough to protect Greenland.
Some reject framing the relationship in transactional terms, pointing to Denmark's legal and moral obligations under international law and centuries of shared history.
"We're talking about family relations, long history of relations between Denmark and Greenland," said Marc Jacobsen, associate professor at the Royal Danish Defence College. "So this is much more, it's not just about defence and economy, it's about feelings, it's about culture."
DIFFICULT BALANCING ACT
Prime Minister Frederiksen faces a difficult balancing act, said Serafima Andreeva, researcher at Oslo-based Fridtjof Nansen Institute.
For now, Denmark has little choice but to stand firm to maintain its diplomatic credibility, but in doing so risks the relationship with the United States at a time "when Russia is an accelerating threat and being on the U.S.'s bad side is no good for anyone in the West".
Frederiksen also faces an election this year, though Greenland has not been a major theme.
"I don't understand why we have to cling to this community with Greenland when they so badly want out of it," Lone Frank, a Danish science writer and broadcaster, told Reuters. "To be completely honest, Greenland doesn't inspire any sense of belonging in me."
(Reporting by Jacob Gronholt-Pedersen and Stine Jacobsen in Copenhagen; additional reporting by Soren Sirich Jeppesen and Tom Little; Editing by Alex Richardson)
A financial crisis is a situation in which the value of financial institutions or assets drops significantly, leading to widespread economic instability and loss of wealth.
International organizations are entities formed by multiple countries to work together on common goals, such as economic development, security, and humanitarian aid.
Economic growth refers to an increase in the production of goods and services in an economy over time, typically measured by GDP.
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