Is Greenland the Final Breaking Point of Transatlantic Relations?

Hi! Today is January 18, and here is your EU news summary for the week. Feel free to share this newsletter with friends and colleagues, and follow us on LinkedIn.

This week’s briefing is brought to you by Juraj Majcin, from the European Policy Centre (EPC) in Brussels. Juraj is a policy analyst focusing on European and transatlantic security and defence, the defence industry and innovation. His analysis has been featured in international outlets including Euractiv, Newsweek, Reuters, CNN, and Sky News. He is from Slovakia.

Donald Trump has revived his claim that the US should annex Greenland, arguing that rising Chinese and Russian activity in the Arctic threatens US and NATO security and that Denmark is incapable of responding.

The demand has been rejected by Denmark and Greenland, though both have offered to discuss security concerns with Washington, bilaterally and within NATO. Trilateral talks have nevertheless ended in what officials describe as a “fundamental disagreement”.

Several European NATO allies have since deployed troops to Greenland for a joint exercise in support of Denmark, signaling Europe’s willingness to assume greater responsibility for Arctic security.

Trump has responded by escalating pressure, threatening to impose a 10 per cent tariff on allies involved in the exercise (rising to 25 per cent by June), unless Copenhagen agrees to transfer sovereignty.

The confrontation risks shattering the transatlantic bond, as Russia’s war in Ukraine continues and NATO warns of a possible Russian attack on the alliance within three to four years.

Is Greenland a Real Security Issue?

Greenland’s strategic importance lies in its geography, lying along the shortest routes between North America, Europe and Russia across the Arctic. Denmark, a key NATO ally, has for decades granted Washington extensive access to the island under the 1951 Greenland Defence Agreement.

The United States operates Pituffik Space Base, whose radar systems form a core part of the U.S. ballistic missile early-warning network, designed to detect launches across the Arctic from Russia, including from the Kola Peninsula, where Moscow stations much of its nuclear submarine fleet.

The 1951 agreement allows Washington to expand its military presence if deemed necessary, a step Denmark has indicated it would accommodate. Nonetheless, Danish Arctic Command has rejected claims of increased Chinese or Russian naval activity around Greenland.

By contrast, under the 1920 Svalbard Treaty, Russia maintains a civilian presence on the Norwegian archipelago, and Chinese and Russian vessels regularly operate in nearby waters without prompting comparable security concerns from Washington.

If Not Security, Then What?

Donald Trump’s pressure on Denmark to cede sovereignty over Greenland is driven more by ideology than by genuine security concerns. The U.S. has never meaningfully raised Greenland-related Arctic security issues within NATO. Neither does the 2024 Department of Defence Arctic Strategy single out Greenland as a particular vulnerability.

Economic arguments, particularly Greenland’s rare earth resources, are often cited to justify U.S. interest. Yet American companies can already obtain mining licences without any transfer of sovereignty. However, the economic benefits of large-scale extraction in Greenland remain contested.

Instead, this move fits the Trump administration’s broader expansionist worldview. The new U.S. National Security Strategy revives the Monroe Doctrine, defining the Western Hemisphere as a primary U.S. sphere of influence. As Greenland is geographically part of the Western Hemisphere, Trump appears to view it as naturally falling under U.S. control.

This logic was made explicit in Trump’s inaugural address, in which he spoke of the U.S. as a “growing nation” that would expand its territory and carry its flag into “new and beautiful horizons.” The language of expansion is not incidental but reflects a clear foreign policy goal.

What are possible scenarios?

Worst-case scenario

In the most alarming scenario, the U.S. could resort to limited military action against Greenland, including blocking key airports and deploying a small number of troops to establish control on the ground, a move that could unfold in ways reminiscent of Russia’s invasion and annexation of Crimea in 2014.

Danish and several European officials have warned that such an operation would amount to the end of NATO. Opposition is also growing in the US Congress, where a bipartisan bill seeks to block the use of federal funds for any military action against Greenland.

Most likely scenario

More plausibly, Washington will pursue a strategy of linkage, tying unrelated issues, such as security guarantees for Ukraine, commitments under NATO’s Article 5, or U.S. trade policy, to pressure Denmark and European allies into accepting U.S. control over Greenland.

Under such circumstances, NATO would not formally collapse but would become paralysed, resembling the dysfunction of the UN Security Council. Such an outcome would be a strategic gift to Vladimir Putin, whose core objective is to push the U.S. out of Europe.

This explains why the Kremlin has avoided criticising Washington’s demands over Greenland and has instead accused Europeans of “militarising” the Arctic by deploying troops there in support of Denmark.

What’s next?

European leaders went to great lengths last year in a display of diplomatic acrobatics to lock the U.S. into continued support for Ukraine and NATO. They overlooked serious breaches of international law, including Venezuela, and even U.S. sanctions on former European Commissioner Thierry Breton. Yet this strategy seems to be failing.

Considering new tariff threats, the European Parliament has signalled that it cannot proceed with the ratification of the highly unbalanced trade agreement reached with Washington last summer.

At the same time, discussions within NATO are under way to accelerate planned Arctic operations under the banner of Arctic Sentry, modelled on the Baltic Sentry mission, as a demonstration of allied resolve in the region.

However, it remains doubtful that any offer short of surrendering Danish sovereignty over Greenland would satisfy Donald Trump. The EU should therefore push back where it has leverage, notably in trade and technology regulation, by seriously considering activation of its Anti-Coercion Instrument, as requested by France, to support Denmark and other member states targeted by U.S. tariffs.

This would enable the EU to adopt retaliatory trade measures, including tariffs and other restrictions on U.S. goods and services. The EU should also take a more assertive stance in enforcing its digital regulations against U.S. technology giants, particularly those closely aligned with the Trump administration.

MERCOSUR • After 25 years of negotiation, the EU and South America’s Mercosur bloc signed a landmark trade deal on January 17 in Asunción, Paraguay.

The “deal” actually consists of two separate agreements with Mercosur, with different routes to becoming law.

The first is an interim trade agreement (ITA) covering the strictly trade-related aspects of the agreement. As trade policy falls under the EU’s exclusive competence, this agreement will only require the European Parliament’s approval (by a simple majority).

The second is the broader EU-Mercosur Partnership Agreement (EMPA), which touches on shared competences (such as the environment or transport). This text will have to be approved by the European Parliament, but also ratified individually by each Member State in line with national procedures — most often involving a vote in the national parliament. The agreement will then be deemed concluded by the EU.

The agreement, endorsed last Sunday by the European Commission, European Council and Mercosur leaders, will phase out over 90 % of tariffs, creating a free trade area covering more than 700 million people.

Goods trade between the regions already reached €111 billion in 2024. The pact promises €4 billion in annual EU tariff savings and could boost exports of cars, chemicals and agri‑food, though French farmers and Green MEPs remain opposed.

UKRAINE • EU officials are floating a “membership-lite” track that would bring Ukraine (alongside other candidate members) into the EU more quickly, while stopping short of full rights from day one.

The idea is to reshape traditional enlargement rules and offer Kyiv a phased entry into EU institutions and parts of the single market, with political influence and financial support growing as internal reforms make progress.

Backers see this as a way to lock Ukraine into the European camp and tie it more closely to future security arrangements.

Skeptical governments fear a blurry, second-class status that could unsettle existing members and complicate accession for other candidates, especially with some capitals already using veto threats over Ukraine’s file.

The blueprint is still tentative and politically sensitive, and could be significantly revised or even shelved as negotiations continue in Brussels. Other candidates, especially in the Western Balkans, are watching closely because any new model for Ukraine could reshape the entire enlargement toolbox.

• For the PIIE, Olivier Blanchard and Citadel’s Angel Ubide argue that now is time for Eurobonds. To bolster Europe’s strategic and financial autonomy, the EU should rapidly build a large, safe Eurobond market by swapping up to about 25 percent of national public debt for senior Eurobonds, creating a deep alternative to US Treasuries without full fiscal risk sharing or new EU competences.
• In the FT, Martin Sandbu argues that Europe should embrace the idea of going it alone. With the US, “the more Europe pays for its supplication, the less convincing its strategic rationale becomes.”