Thursday, July 09, 2009

Greenland: Dubai on the Arctic or slow decline?

Earlier this year, Greenland celebrated an expansion of home-rule, which was widely seen as an important step towards possible independence. For Greenlandic nationalists, the main goal has long been to end centuries of Danish rule, even though as colonial masters go, the Danes have been about as benevolent as they come. Greenlanders have a strong sense of nationhood and has under Danish rule been able to preserve its culture, notably its language since Denmark has mostly had a policy of leaving the Inuits alone except for the Christianization in the 18th century. But how viable is Greenland really as an independent nation?

The first obstacle that comes up is economic. Greenland today is dependent upon subsidies from the Danish state to the tune of 30% of Greenlandic GDP and more than half of government revenues. The usual solution to this is the hope that there is vast reserves of oil, natural gas and minerals, which will become accessible if Greenland continues to warm up. The idea is that global warming will make it possible to exploit off-shore resources despite the harsh climate. There is a lot of uncertainty and good reasons for scepticism about this, the climate is too harsh and the extent of the natural gas and available is uncertain. but even if the petroleum dream comes true, the demography does not work in Greenland’s favour.

One problem is, simply put, that Greenland’s population is too small with only 56 000 people for an area which is more than two million square kilometres, three times the size of Texas or half the size of the European Union. About 50,000 are Greenlandic while the rest are mainly Danes. The lack of population alone means that Greenland would be dependent on other countries for education. Having to send people abroad for university education is an obstacle, but still, there are successful statelets with small populations, like Iceland (pop. 300,000) and the Cayman Islands (pop. 50,000) in addition to relatively poor island states.

However, unlike the more successful states but just like many indigenous peoples elsewhere, Greenland suffers from severe social problems. The native Greenlandic population, mostly Inuits, although often with mixed Inuit-Nordic heritage, has widespread problems with alcoholism. A recent survey (in Danish) indicated that 38% of Greenlandic men and 12% of the women showed signs of “damaging abuse of alcohol or alcohol dependency”. Greenland has the highest suicide rate in the world with an annual rate of more than 1 in 1000. (And no, it is not the latitude and lack of sun. The Scandinavian countries have, contrary to popular myth, suicide rates that are about average for the developed word, i.e. 0.1 in 1000) and the education level is very low. In 1996 (Danish) only 2.8% had a university education and people with higher education are disproportionally not native but recruited from elsewhere, mostly Denmark. In addition there are problems with violence, including relatively high rates of domestic abuse.

All of this makes it difficult for Greenland both to retain its own and attract new immigrants. Although fertility rates are relatively high and stable in the 2.2-2.4 range, Greenland has had a net emigration of 300-500 people annually in recent years, which is obviously significant in a country where 800-900 people are born annually. In fact, Greenland’s population is now definitely declining despite high birth rates

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Where does this leave Greenland? Well, it is absolutely dependent on Denmark, not just for subsidies but also for qualified labor. Compared to its neighbour Iceland, it not only has a smaller population but also significantly lower human capital. Even if natural gas exploitation became viable, Greenland would be completely reliant on foreign labor to exploit it since the Greenlandic population has neither the numbers nor the qualifications required. In the unlikely scenario that the most optimistic predictions become true, the Greenlandic people, like the Emirates, risk becoming a minority in their own country. Moreover, there are serious questions about whether the Greenlandic authorities have the institutional resilience and strength required to manage a sudden influx of oil wealth in a responsible manner. Certainly, in the past there has been accusations of widespread nepotism, if not outright corruption, which does not bode well for the future.

The sad fact is that Greenland does not have the demographic and social strength to become a viable independent country. Thus, even in the best-case scenario it is likely to remain dependent on Denmark or other countries if not for money, then at least for qualified, educated people. In perhaps the most likely scenario, there will continue to be a dual dependency. Meanwhile, Greenlandic youth will continue to emigrate and Greenland will continue to suffer a demographic decline.


ironrailsironweights said...

there are successful statelets with small populations, like Iceland (pop. 300,000) and the Cayman Islands (pop. 50,000)

The Cayman Islands are pretty much sui generis, being both a center for offshore banking and a tourist destination. And in any event it's not a fully independent country.


Aslak said...

You're absolutely right on both counts, and perhaps I should have picked a different example. -In any case, the Cayman island would probably be succesful even if it were fully independent country -but as you point out, Greenland doesn't have any of the advantages they do.

Anonymous said...

Cayman islands is a place you want to life even if you have no money (atleast if you look at it from the postcards)

Greenland is a place to become a millionaire fast so you can move to the Caymans.

Advertising slogan for Greenland:"Not so bad, only 1% of the population leaves each year"

ironrailsironweights said...

Adventure tourism is a growing segment of the travel business. It might be a good source of income for Greenland.


Anonymous said...

True, but there is a difference between going on holiday and living somewhere. Greenland in the winter doesn't sound to me a place where i want to life.

Anonymous said...

I think you overstate the importance of University education and the importance of having Universities in a given area. Universities only lead to lower birth rates.

Aslak said...

Well, I'd say Universities lead to other things too - like education - and developed countries do need an educated work force to run everything. Greenland can't produce enough skilled labor by itself to run the basic functions of a modern government.

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