China in Greenland

Procedence: “Northern rare earth potential”, North of 56

China in Greenland: Way Beyond the Truth?

Beijing’s increasing interest in the Arctic has led to intense speculation – and now a warning from the central government

By Martin Breum, CaixinOnline, April 12, 2013

It was a startling remark. It was made during an otherwise ordinary press conference in Beijing by the spokeswoman from the Ministry of Foreign Affairs , Hua Chunying, in the middle of March.

“I think that current discussions about China’s investment in Greenland have gone way beyond the truth,” she said.

Her remark was soon forgotten and only briefly reported in Denmark, the country that should be most concerned, but it carried an astonishing message: Many months of unprecedented international attention to China’s designs in Greenland may have been based on less-than-solid evidence.

If her remark represents the whole truth, the implications cannot be overestimated.

Speculation on China’s desire to win influence in the new dynamics in the Arctic has mushroomed and is still gaining speed – with Greenland in a pivotal role. This was most recently illustrated in the International Herald Tribune, the international edition of the New York Times. On March 13, Einar Benediktsson, formerly Iceland’s ambassador to the United States, and Thomas Pickering, former U.S. undersecretary of state, explained how China’s investments in Greenland would be the opening bid in China’s move to win substantial influence in Iceland, the small island on the emerging Arctic shipping routes. The two advised the U.S. government to take appropriate countermeasures. Other commentators and think tanks have speculated that China’s investments in Greenland could lead to the establishment of Chinese military bases in Greenland and/or Greenland’s rapid independence from the Kingdom of Denmark, to which the semi-autonomous Greenland has belonged for more than 300 years.

In real terms, as Hua indicated, there are at the time of writing only miniscule Chinese investments in Greenland. Yes, it is certainly true that a private British mining-company, London Mining, would like Chinese investors to put US$ 2 billion into an iron-ore mine in Greenland. And yes, a member of Greenland’s previous self-rule government, Ove Karl Berthelsen, twice visited China to lure investors to his island. And yes, in 2011 he was received by no less than Li Keqiang and also met with Chinas’ International Development Bank. And yes, there are important minerals in Greenland, used in modern technology and weapons systems. The intelligence services of many countries are concerned that these should not fall under Chinese control.

But so far, there are no large Chinese investors in Greenland. There are no publicly known plans to invest in Greenland by any Chinese banks or other financial institutions, no larger private enterprises or conglomerates are yet involved in Greenland. When I recently interviewed Graeme Hossie, the CEO of London Mining, he declared with no hesitation that he had no agreements with any Chinese investors on the proposed iron-ore mine in Greenland.

It is in this light we must understand the remarks by Hua.

What if she is right? How then should we understand the fact that the speculations on Chinese investments in Greenland have already had substantial consequences in both Greenland and Denmark and maybe elsewhere?

Scores of media outlets have speculated that China will use its financial might to manipulate the tiny political establishment in Greenland and its 57,000 inhabitants – eagerly helped by academics, politicians and commentators. In Greenland this was part of the backdrop to the elections in early March, which led to a landslide victory for the local opposition and to the ousting of the previous self-rule government under Kuupik Kleist. His policy was to explicitly welcome foreign investors – also Chinese.

In Denmark, the political opposition has put the Danish government under intense pressure with repeated requests for clear answers as to how the government will prevent China from using its financial muscle to manipulate the small Greenlandic community, how Chinese mine workers in Greenland will be treated, how their impact on Greenland’s social fabric will be managed and how the government will prevent strategic minerals in Greenland – rare earth minerals in particular – from falling under Chinese monopoly. And, as in the IHT, the US government in Washington is now being asked to make countermoves to the Chinese moves in the Arctic.

The situation is symptomatic of current affairs in the Arctic. Political developments in the region are shaped not necessarily on facts and figures but on looser perceptions of what might happen – and perceptions are very volatile since so many factors in the Arctic change so rapidly. Climate change, of course, is the main driver. The ice is receding in the entire region, allowing traffic all over the Arctic for the first time in modern history. Chinese President Xi Jinping’s recent visit to Russia brought new agreements on massive Chinese involvement in Russia’s Arctic oil and gas; the polar ice would have made this irrelevant just ten years ago. New Arctic shipping routes are opening between Asia, Europe and North America – some up to 40 percent shorter than routes in the southern hemisphere. Recent predictions say that perhaps 10 to 15 percent of all Chinese goods to Europe may travel through the Arctic just 20 years from now.

Arctic governments are making long-ranging decisions, so perceptions about the future matter greatly. In May, for instance, the eight Arctic states will decide whether or not to allow China a seat in the Arctic Council as a permanent observer. The Council is the only political body where Arctic affairs are discussed by the relevant governments. China, India, the European Union and others all want to join – but the Arctic states have been unable to agree on how to deal with this interest from non-arctic states. At the moment, indications are that China and the other applicants will once again be disappointed. The Scandinavian members of the Arctic Council are mostly in favor of China’s inclusion. Others are far more reluctant.

Again, perceptions matter. At the moment China’s interest in the Arctic is often construed as a wish to manipulate lesser nations in the region. This is why Hua’s warning was so startling. No common perception on what really is going on in the Arctic seems to be emerging, and the Chinese government seems to be painfully aware of that.

The author is a current affairs TV anchor with the Danish Broadcasting Corporation and the author of When the Ice Disappears – Denmark as a major power in the Arctic, the riches of Greenland and the quest for the North Pole