Identifier
Created
Classification
Origin
08COPENHAGEN614
2008-11-21 15:45:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Copenhagen
Cable title:  

GREENLAND VOTES ON GREATER AUTONOMY

Tags:  PGOV PREL DA 
pdf how-to read a cable
VZCZCXYZ0029
PP RUEHWEB

DE RUEHCP #0614/01 3261545
ZNR UUUUU ZZH
P 211545Z NOV 08
FM AMEMBASSY COPENHAGEN
TO RUEHC/SECSTATE WASHDC PRIORITY 4590
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
UNCLAS COPENHAGEN 000614 

SENSITIVE
SIPDIS

FOR EUR, EUR/NB, AND OES

E.O. 12958: N/A
TAGS: PGOV PREL DA
SUBJECT: GREENLAND VOTES ON GREATER AUTONOMY

REF: 07 COPENHAGEN 1010

UNCLAS COPENHAGEN 000614

SENSITIVE
SIPDIS

FOR EUR, EUR/NB, AND OES

E.O. 12958: N/A
TAGS: PGOV PREL DA
SUBJECT: GREENLAND VOTES ON GREATER AUTONOMY

REF: 07 COPENHAGEN 1010


1. (SBU) This cable contains sensitive but unclassified and
proprietary business information.


2. (SBU) Summary: In a November 25 referendum, Greenlanders
are expected to approve "self rule," another step toward
eventual independence from Denmark. Under the Self Rule Act
agreed upon last summer by a joint Danish-Greenlandic
Commission, Greenland's Home Rule Government will get
expanded powers. Most important, Denmark cedes authority
over the administration of justice and home affairs and
splits revenues from Greenland's natural resources with the
government in Nuuk. Foreign affairs will remain largely in
Danish hands, though with some concessions to Greenland.
Under self rule, the Greenland Home Rule government retains
its Prime Minister and 31-member parliament, whom we assess
will continue to value Greenland's close and growing
relationship with the United States. End Summary.


3. (SBU) Self rule is widely viewed in Greenland and Denmark
as the penultimate step to Greenlandic independence, but the
road to independence is far from smooth, straight, or short.
In Greenland, political aspirations for sovereignty are
weighed down by the economic reality of precarious finances
and dramatically different levels of development, both
compared to Denmark and within Greenland itself. The Self
Rule Act implicitly recognizes this, in that it grants
Greenland the ability to take on new authorities like the
administration of justice and home affairs, but does not
require Greenland to do so until Greenland is able to finance
these new responsibilities. Greenland's economy is a
struggling enterprise, still largely dependent on fishing and
Denmark's generous annual block grant subsidy, which
constitutes nearly half of the Greenlandic government's
revenues.


4. (SBU) The Self Rule Act provides economic risks and
rewards to Greenland. Under self rule, the Danes will freeze
Greenland's annual block grant at the 2007 level of 3.2
billion kroner (about 500 million dollars),and it will no
longer be renegotiated every three years, as has been the
case until now. Instead, the annual subsidy will be indexed
to Danish inflation. Since Danish prices have in recent
years risen more slowly than those in Greenland, the value of
the block grant is thus, in real terms, expected to shrink in

the years ahead. On the other hand, Greenland gains clear
rights to its underground and potential riches from minerals,
oil, and natural gas. The Self Rule Act grants the first 75
million kroner ($12.7 million) from mineral/oil/gas resource
revenues to Greenland outright, with further revenues split
equally between the two governments with Denmark's share
subtracted from the annual block grant. Once the Danish
block grant is eliminated, any additional revenue would be
subject to additional negotiation between Greenland and
Denmark. New responsibilities under self rule could cost
Greenland as much as 300 million kroner ($50 million) per
year, with the largest expenditures required to fund an
independent judiciary and law enforcement and correctional
systems.


5. (SBU) Although the Self Rule Act provides for the first
time a mechanism for independence, such a decision is
dependent on development of a sustainable economy. Much
depends on the extent of Greenland's actual natural resource
base and the speed with which it can be developed. A 2007 US
Geological Survey study estimated significant probabilities
of oil and gas reserves of approximately 31.4 billion barrels
off Greenland's eastern coast. If realized, these reserves
could make the region the 19th largest hydrocarbon reserve in
the world, on par with Alaska's North Slope. Greenland's
western waters could also yield additional billions. Initial
licenses for oil and gas exploration off the western coast
were granted earlier this year to a four-company
international consortium that included American companies
Chevron and Exxon-Mobil. Additional exploration and
exploitation licenses have since been granted to Canada's
Husk Energy and Cairn Energy and Sweden's PA Resources. And,
in addition to oil and gas, Greenland has to-date issued
sixty-eight mining licenses for minerals as diverse as gold,
diamonds, coal, zinc and olivine. Some of these mining
projects are underway, others have now stalled as companies
take the temperature of the international financial crisis.
Greenland is also counting on another natural resource,
hydropower, as a possible source of riches. The American
aluminum giant Alcoa is currently working with Greenland's
government on a USD three billion aluminum smelter and
associated hydroelectric facility. Greenland's economic
potential is thus potentially enormous, but still very
uncertain.


6. (SBU) Another less talked-about but also significant
impediment to Greenland's self rule, and eventual
independence, lies in its own democratic development. While
some polls note the November 25 self rule referendum may
garner the approval of as much as 75 percent of the
electorate, many Greenlanders wonder whether their political
leaders and institutions are ready for increased autonomy.
The debate on the referendum has opened up surprising
divisions in society, with young Greenlanders in particular
showing markedly less enthusiasm for self rule. Other
critics point to the failures of the government to deal with
severe and growing social problems, and ask whether expanded
authorities offered under self rule can fix them. Many
Greenlandic towns and villages are marked by poor educational
systems with high drop-out rates, rampant alcoholism, and a
chronic lack of economic and social opportunities. Some
voters worry that the Self-Rule Act will make Greenland too
reliant on mineral extraction. They wonder whether, with
such a small population base (57,000),Greenland can ever
develop the economic scale and social cohesion to sustain
itself as an independent state, even if natural resource
revenues do materialize. Still, nationalist sentiment runs
strong in Greenland, and the prospect of additional
sovereignty, formal legal recognition as a people, the
elevation of the Greenlandic language to official status, and
even the exercise of some foreign affairs authorities (for
those areas where Greenland already exercises domestic
authority),appear to have successfully swung a clear
majority for the November 25 vote.


7. (SBU) Comment: While it is not yet clear if and how
self-rule will impact the day-to-day lives of Greenlanders,
the U.S. can be sure that Greenland will still value its
growing and ever-closer relationship with us. U.S. interests
in Greenland are significant: our upgrade to the early
warning radar at Thule Air Base will ensure that our
northernmost military facility remains a vital component of
U.S. missile defense architecture. Trade and investment ties
are also expanding. Our Joint Committee process, launched
with the 2004 Igaliku agreements, has broadened non-defense
cooperation with Greenland to include increased scientific
collaboration, additional educational and cultural exchanges,
and growth in tourism. Sustaining those successes, and
taking advantage of new opportunities, requires continued
strong U.S. engagement in Greenland. Our 2007 proposal
(reftel) for a seasonal American Presence Post in Nuuk could
be an important platform to develop this relationship further
as Greenland moves deliberately toward eventual independence.
CAIN