Will U.S. threats to Greenland upset the U.S.-EU trade deal?
Trump’s warnings that he must “own” Greenland have Europe on edge. Some European members of parliament are considering a “freeze” on last year’s trade deal, which could disrupt LNG flows.
The Trump administration’s threats to take control of Greenland have made it increasingly difficult for European policymakers to continue to make the case that the U.S. remains a close ally. The rising tensions suddenly put the U.S.-EU trade deal in doubt, and with it, the enormous trade in LNG between the two continents.
On Wednesday, the foreign ministers of Denmark and Greenland met with U.S. Secretary of State Marco Rubio and Vice President JD Vance. Ahead of the meeting, the American officials suggested they’d offer to purchase Greenland, but the overtures have come with the not-very-subtle threat of a potential military takeover.
Greenland’s Prime Minister Jens-Frederik Nielsen has ruled out a sale to the U.S., and said “the mere talk of being able to buy another people is disrespectful.” On Wednesday, Denmark announced that it would increase its troop presence in Greenland, and other European nations also decided to move some military personnel to the island, including from Sweden, France, Norway, and Germany.
The meeting in Washington did not go well. Danish Foreign Minister Lars Løkke Rasmussen said there remains a “fundamental disagreement” between Denmark and the United States over Greenland, although he added that talks would continue.
Ominously, President Trump said anything other than U.S. ownership of Greenland would be “unacceptable.” Rasmussen said in a press conference that it was clear that Trump remains intent on “conquering” Greenland.
What happens next? How might Europe respond to what appears to be an issue that the U.S. government will not let go? European policymakers have not mounted a unified response to date. Some have downplayed the threat, or have sought to promote potential mineral deals that could be made available to American companies. Others have worried about rocking the boat too much, fearing a U.S. abandonment of Ukraine at a dire moment. Similarly, European Atlanticists want to avoid a breakdown of NATO, so have discussed beefing up Arctic security. At the same time, Denmark has warned that a seizure of Greenland would mean the end of NATO.
While Trump has vacillated between varying justifications for his desire to “own” Greenland, none of which are convincing, he has made it very clear that “owning” it is the ultimate goal.
“I would like to make a deal the easy way, but if we don’t do it the easy way we’re going to do it the hard way,” Trump said on January 9th.
The issue is not just about natural resources. “The business case for critical minerals in Greenland is still not there. These critical minerals, rare earth minerals, they sell at extremely low prices,” Nick Bæk Heilmann, senior associate at Kaya Partners, a business consultancy operating in Greenland, said on a press call, expressing skepticism of one theory of why Trump wants to seize Greenland.
He added that military security also does not make a lot of sense because the U.S. and Greenland have a longstanding treaty allowing U.S. troops on the island, and Trump could ramp up a military presence if he wished.
“This leaves the last, maybe most scary, important driver, which is the expansion of US territory, the idea of manifest destiny, which was also mentioned in Trump’s speech,” Heilmann said. “We are increasingly convinced that this is the main driver, which is, for Greenland, Denmark, the EU — non-negotiable.”
“I see rough waters ahead,” he added.
A freeze on the U.S.-EU trade deal?
In response to American aggression, at least one Danish member of the European Parliament has called for a “freeze” of the U.S.-EU trade deal. MEP Per Clausen has circulated a letter among colleagues, hoping to drum up European support for such an action.
In an email to Gas Outlook, MEP Clausen said there is “absolutely no need to reward Donald Trump for threatening an EU country.”
“We also have to remember that it was Donald Trump that pushed so heavily for the agreement, using threats of economic pressure, and that it is very clearly almost exclusively to the benefit of the US,” MEP Clausen said.
“So not ratifying the agreement right now sends a clear signal: that threatening those that thought they were your friends, comes with consequences – including economic ones.”
Last summer, in the face of U.S. tariffs on European goods, the EU agreed to purchase $750 billion worth of energy imports from the United States as part of a broader trade deal. That included a heavy emphasis on American LNG.
Freezing the trade deal could disrupt the enormous flow of U.S. LNG to Europe. It’s not clear how it would impact existing commercial contracts, but a suspension of the trade deal, or worse, a more fundamental rupture in Trans-Atlantic relations, could prevent new contracts from being signed.
For Clausen, European dependence on U.S. LNG is part of the problem.
“I think several European countries made a big mistake when they switched from Russian gas to, for instance, US and Qatari gas, and even invested heavily in new gas infrastructure,” Clausen said.
“In the end, any large reliance on outside suppliers of gas – whether it be autocratic countries like Qatar and Azerbaijan or a country like the US – is a clear strategic vulnerability,” Clausen said. “It leaves us open both to political pressure and to huge price fluctuations. Doing that, when we know we have renewable alternatives, is to me quite frankly very short-sighted, not to mention deeply irresponsible.”
Clausen said that the trade deal is currently moving through the European parliament, but that it should be suspended until the U.S. backs off from threats to Europe.
The U.S. Department of Energy did not respond to questions from Gas Outlook about the potential impact to LNG shipments if the European parliament takes action on the trade agreement.
Fading fossil fuels
The imperial ambitions of the American president come quickly after U.S. special forces abducted Venezuelan President Nicolas Maduro. Eschewing any sense of the need to offer a legal justification, Trump has stated very nakedly that he wants to take and control their oil.
This new age of American imperialism has rattled erstwhile allies. A column in the FT argues that many countries should consider “de-risking” from the U.S.
Pauline Heinrichs, a lecturer in war studies at King’s College London, says that Trump’s recent actions, which appear designed to create and disseminate images of American power, are actually a sign of weakness or fragility, rather than strength. Petrostates, such as the U.S., are struggling to recognise that the world is rapidly changing. The energy transition is already underway and the importance of fossil fuels as not just a key source of energy, but also as a source of geopolitical power, is beginning to wane.
This is not set to occur in the future, but is unfolding today. “This is transition politics at play, where some fading fossil fuel powers, rather than accepting a reality of change, decide to hold onto it,” Pauline Heinrichs, a lecturer in war studies at King’s College London, said on a public webinar on January 8th.
The EU “needs to work seriously in reducing dependencies on both volatile leaders and energy sources,” she said.
(Writing by Nick Cunningham; editing by Sophie Davies)