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Resumé af Pernille Hansens speciale

Specialetitel: HUNGRY EYES ON GREENLAND | Aalborg Universitet

Introduction

This thesis seeks to answer the research question (RQ): How do Chinese investments in rare earth elements (REE) in Greenland impact the Danish roomfor manoeuvre? With a multipolar world order and the climate crisis, the security policy reality has changed. Thus, Denmark faces new framework conditions. Climate change affects the (political) landscape; as the ice melts, frozen natural resources become available in the Arctic, and brand-new ocean corridors open up that make it cheaper to transport raw materials. This gives states hope of extracting this wealth profitably in the long term. For many years, the Arctic coastal states have been in a demarcation process on the continental shelf because there are untapped energy resources on the Arctic no man’s land seabed (Wang 2015). The Convention on the Law of the Sea gives Greenland the right to investigate and extract natural resources in their “Exclusive Economic Zones (EEZ)” which extend 200 nautical miles from the coast (UM n.d). Greenland is rich in minerals and has mines with deposits of REE, but extraction has not yet begun.

REE consists of 17 different minerals and is vital to many high-tech industries. With their unique magnetic and electrochemical properties, they are the building blocks of wind turbines, solar cells, hybrid and electric cars, smartphones, communication and computing devices, defence technology, 5G and intelligent technology. As such, REE are essential for modern daily life and for the green energy transition to be realised (Greenland minerals n.d; Kalvig & Lucht 2021). In doing so, they are also fundamental for states to decarbonisation the economy and fulfil the Paris Agreement. Fighting climate change is not the only ambition for the green transition. In the wake of the Russian invasion of Ukraine, several states seek to accelerate the green transition in order to become independent of Russian gas (Clausen 2022). The green transition greatly interests Denmark, which believes it offers much. Jeppe Kofod, Minister for Foreign Affairs, says: “We have focused on global climate challenges and cooperation on the green transition, where Denmark has a lot to offer globally and, in the US” (Berlingske 2021). Denmark’s green ambitions were emphasised in the new foreign and security policy strategy by stating that Denmark must be a great green power. Climate diplomacy has become a category in itself and one of the absolute top priorities. Denmark has selected some embassies as ‘climate front posts’ to promote Danish green energy exports, public diplomacy, and access to key decision-makers and maintain Denmark’s international reputation as a green energy pioneer (Ministry of Foreign Affairs 2022). 

Helle Thorning Schmidt, former Prime Minister, emphasised the government’s opinion that REEs in Greenland are critical raw materials and demanded Danish involvement (Østergaard 2014). REE are categorised as critical when they are both essential to society, and the supply chain is uncertain. The assessment of vulnerability is being built on; import dependence, demand, number of producers, world market price, geopolitical conditions, and opportunities for substitution and recycling. Supply risks are often linked to political and economic conditions rather than actual geological availability. (Rosing Hanghøj & Kalvig 2014: 22). This is also true for REE, which is not rare, as we find them in many places worldwide (Kalvig 2021).

A high complexity characterises the REE mining industry, a long process from extraction to magnets. In addition, not all REEs are equally in demand, which is why some mines are more sought after than others (Kalvig 2021; Kalvig & Lucht 2021). China is not only involved in all parts of the supply chain of REEs but has achieved monopoly status in processing REEs (Ibid). China produces 93% of the global magnets used in many
high technologies (Europa-kommissionen 2022). Currently, no ways have been found to reuse or substitute REE (Kalvig 2021). Prime Minister Mette Frederiksen states that China “At the same time a competitor, a partner, for example, on climate, and a systemic rival” (Statsministeriet 2021).

Against the backdrop of China’s monopoly on processing REE, Western countries have categorised REEs as critical metals and initiated several initiatives to break the monopoly (Kalvig & Lucht 2021). Greenland’s Kuannersuit/ Kvanefjeld, one of the world’s largest mines, can cover up to 25% of the world’s need for REE for many years and has deposits of the most significant REE. (Ibid) In 2010, China exploited REE market dominance as a means of political pressure in conflict with Japan. DDIS and the West are concerned that China will use its dominance strategically (DDIS 2021, Klinger 2017:5). 

With China’s and the US’s interest in Greenland and REE, major geopolitical interests and great power rivalry are at stake. At the same time, Greenland’s ambition is to become independent and considers their mine and the global interest as opportunities to achieve this. Within the Unity of the Realm, there is a legal grey area because there is an unclear division of competencies, as Greenland, on the one hand, has full control over its raw materials, while it is Denmark that possesses the security policy competence. Furthermore, Denmark has the ambition to become a great green power (Ministry of Foreign Affairs 2022) and Denmark gains influence in international politics because of Greenland (Mcghie 2019). Therefore, Denmark faces some political issues when navigating the multipolar world order where REEs are crucial for the state’s development, and the Unity of the Realm is changing. Therefore, this thesis investigates how Chinese investments in REE in Greenland affect the Danish room for manoeuvre.

Methodological and theoretical foundation

I rooted the theory apparatus of the thesis in Nikolaj Petersen’s room for manoeuvres model and small-state theory and is within the neoclassical paradigm. I took a point of departure in the neoclassical realism paradigm because of the current multipolar world order and the perceptions of the Arctic as an arena for competition. It is essential to examine domestic political factors, as the Unity of the Realm’s constellation and decision-makers' perceptions influence the Danish room for manoeuvre. The neoclassical realism paradigm incorporates both the systemic and domestic political factors as well as the perceptions of the decision-makers, therefore allowing it to examine my RQ. The room for manoeuvres model positions itself within neoclassical realism. The model is designed as a triangle, in which each side represents, respectively: internal factors, external factors, and ambitions. Nikolaj Petersen illuminates the foreign policy room for the manoeuvre as the field of tension that exists between central decision-makers and its interaction with the internal and external framework conditions (Petersen 2005; 2007) He attaches a central importance to the decision-makers and their ability to navigate in the room for manoeuvre. The room for the manoeuvre is fundamental to the unfolding possibilities of the state and thus the degree to which they can realise their interests internationally (Petersen 2005). The position of states in the international power structure is central to the state’s room for manoeuvre, which is why I included the small-state theory as it contributes to understanding small states' strategic dilemmas to ensure their survival. Denmark risks being squeezed in the great power rivalry between the US and China. I seek to explain how Denmark as a small state is affected by Chinese investments in REE in Greenland. Therefore, I analyse the opportunities and challenges that shape the Danish room for manoeuvre. My starting point is the states’ relation to each other (Wivel & Mouritzen 2005: 4; Rickli 2009) and I use the following definition: “… we define small states as the weaker part in an asymmetric relationship unable to change the nature or functioning of the relationship on their own.” (Grøn & Wivel 2011: 524). Denmark must acknowledge the premise that they are the weaker party and thus do not have the resources to change the power relations or the international structures (Ibid). The room for manoeuvres model and small-state alliance theory share the same understanding that states’ position in the international system impacts the room for manoeuvre, and those small states do not have the power to influence the international power structure (Mouritzen 2006).

I have used a single case method to answer my research question (RQ). I have had an inductive approach to managing my RQ, making great use of literature as an empirical foundation alongside the observations I made during my time as an intern for the Greenland representation in Washington, D.C. Later in the process, I found the aforementioned theories to be suitable for analysing and discussing the RQ for this thesis. I then  had a deductive approach, where the theories guided more. In practice, it is rarely only inductive or deductive but rather a circular process (Metodebogen 2022), which has also been valid in my thesis. The case was elucidated through 4 qualitative semi-structured interviews which contributed to examining the decision makers’ perceptions. In addition, literature such as reports, books, scientific articles and political agreements have been used. This gave me knowledge of the internal and external framework conditions. I selected interviewees based on relevance to my RQ. I have interviewed Aaja Chemnitz Larsen, an MP for Inuit Ataqatigiit, because she contributes valuable insight into Greenlandic decision-makers’ perceptions of the Unity of the Realm. Aaja’s knowledge and perceptions have been important for examining the complexity of the Unity of Realm. I have interviewed Martin Lidegaard on the basis that he is a former Minister of Foreign Affairs and the current chairman of the Foreign Policy Committee. He has extensive knowledge of the Unity of the Realm, international politics and political decisions. Furthermore, I have interviewed Nils Wang, a former Rear Admiral of the Danish Navy who has publicly debated the issue of Chinese investments in REE in Greenland. Nils has extensive knowledge of security and international politics as well as the Unity of the Realm. Finally, Per Kalvig has been chosen based on his many years of experience and knowledge of Greenlandic REE and the architecture of the REE mining industry. Pers knowledge has had an invaluable impact on the thesis’s insight into the complex REE architecture.

Strategy for the Analysis

I examine the historical perspective in the first chapter of the analysis. Since Hans Egede arrived in Greenland, the relationship between Greenland and Denmark has been redefined many times. The historical perspective helps to understand why the relationship between Denmark, Greenland and the US is complicated and sometimes sensitive. The Unity of the Realm with the US on the sideline was characterised by great complexity even before China’s Arctic ambitions were set in motion. Therefore, the historical perspectives are important to examine my RQ.

Operationalisation of the manoeuvre room model

Ambitions

Danish ambitions are the foundation for investigating whether internal and external factors limit or expand the Danish room for manoeuvre. With Greenland’s geographic location in the Arctic, it is relevant to examine Denmark’s Arctic ambitions. Furthermore, I examine Denmark’s green energy ambitions, which are relevant as processed REEs are the building block for green energy, on which China currently has a monopoly. Therefore, I start by examining the Danish decision-makers’ ambition and motives for the Arctic and green energy. The motives are central as they illuminate how Denmark, a small state, gains influence in the global structure by realising its ambitions. To examine Danish ambitions, I included strategies that clearly indicate the government’s level of ambition, and initiatives, as actions also reflect the ambitions. By involving both initiatives and strategies, I investigate whether there is a correspondence between what Denmark says and what it does.

External factors

Concerning the operationalisation of external factors, I examine the sub-question: what position does China’s monopoly on REEs have in the world order and how it influences the Danish room for manoeuvre? This sub-question guides the choice of variables: the architecture of the REE mining industry, China’s interests and perceptions of the Arctic, and collation power.

First, I start by analysing the architecture of the REE mining industry as the REE mining industry is characterised by being global, becoming rival political systems and competitors linked in a globalised world. In doing so, I examine how China maintains their dominant position, hence why it is so difficult for the West to break the monopoly. Next, I evaluate the role of processed REEs within a broader perspective of the  multipolar world order. To understand the broader geopolitical significance of REEs, it is essential to incorporate China’s 'Made in China 2025' ambition and China's huge infrastructure project ‘One Belt One Road’. They exemplify how China manifests its global power through their dominant position in the REE supply chain. Finally, I include Danish decision-makers' perceptions of China. Thus, I can analyse the degree of Denmark’s stress sensitivity to China’s current monopoly to examine Danish room for manoeuvre. 

Since REE is not rare, in the following chapter, I analyse China's Arctic ambitions to examine the investment in Kuannersuit/Kvanefjeld is both a means of legitimating its presence in the Arctic and cementing its monopoly on REE. As China's Arctic ambitions affect Denmark's stress sensitivity which, according to Nikolaj Petersen (2005), impacts the Danish room for manoeuvre. Denmark, as a small state, has limited influence capacity in the face of a great power like China. By elucidating China's Arctic ambitions, it is possible to examine whether there is compatibility between Denmark's and China's ambitions, whether it expands or limits the Danish room for manoeuvre.

According to Petersen (2005) increased external pressure will limit Danish room for manoeuvre. Next, due to the US and China global great power rivalry, it is relevant to examine how the US containment policy towards China and the US's increasing prioritisation of the Arctic impact the collation power and hence the Danish manoeuvre room. Furthermore, the US also has a defence agreement that allows the US to have military presence in Greenland. This is relevant, as the US is Denmark’s security guarantor, and Denmark is in an asymmetric relationship with the US. Therefore, Denmark must ensure an appropriate balance between the interests of the US concerning Greenland’s interests and their own.

Internal factors

Concerning the operationalisation of internal factors, I examine the sub-question: How does the Unity of the Realms cohesion affect the Danish room for manoeuvre in relation to Chinese investments in REE? 

The domestic political factors will thus deal with the Unity of the Realm's complicated construction. The subquestion guides the choice of variables: Greenland's ambition for independence, the Unity of the Realm's colonial legacy and the legal grey area. First, I analyse REE mining and China's role in Greenland's ambition for independence. This makes it possible to analyse the significance of the divergent ambitions for the Danish room for manoeuvre, as, according to Petersen (2005), conflicts of interest limit the Danish room for manoeuvre. Due to Greenland and Denmark's complicated and sometimes sensitive relationship, I then analyse how the colonial legacy affects the Unity of the Realm's construction and an internal pressure from Greenlandic decision-makers. This is relevant to answering my RQ as, according to Petersen (2005) an, internal pressure from Greenland leads to a limitation of the Danish room for manoeuvre.

Next, I examine how much control capacity Danish decision-makers have at their disposal over the Unity of the Realm, as this, according to Petersen (2005) impacts the Danish room for manoeuvre. In the Unity of the Realm, there is a legal grey area because there is an unclear division of competencies, as Greenland, on the one hand, has full control over its raw materials, while Denmark possesses the security policy competence. Therefore, this grey area creates some fundamental doubts about the Unity of the Realm's legal hierarchy and gives rise to a struggle for sovereignty between Greenland and Denmark. We must also see this struggle for sovereignty in light of the divergent ambitions and post-colonial legacy. Therefore, it seems relevant to include the legal constellation as a parameter for examining Denmark's control capacity. First, I analyse how this grey area arises. Next, I examine how the grey area in Chinese investments in REEs affects the Danish room for manoeuvre. It also examines the extent to which the US defines what security policy is.

Analysis and conclusion

REE are the fuel of the future, and are the symbol for the emerging, shifting global order and a new security politic reality. "The Middle East has its oil, China has rare earth," (Klinger 2017: 82) People's Republic of China leader Deng Xiaoping famously said. It emphasizes that China has been aware of REE's geopolitical significance for many years, which only seems growing. The fourth industrialisation is in motion and a global political desire for decarbonisation the economy is accelerating the transition. Processed REEs are a sine qua non for this transition. In the fossil era, it was the West that dominated industry, trade, technology, as well as shaped international institutions, norms, and the economic reality of many states (Kalantzakos 2020). However, China has a significant position in the new world order, which it uses to realise ‘Made in China 2025’ and ‘One Belt One’ ambition, manifesting its global power. The supply chain of processed REE have become a frontline over who will control tech-industry and the green energy security. This causes a rivalry between US and China over global influence, geoeconomic power, supply chains, information, territories, norms, values and governance. As the ice retreats and frozen ocean corridors and resources become available, the notion that the Arctic is an exceptionalism area is melting. 

The characteristic of the REE mining industry is that the limiting factor is not access or extraction of REE, but the processing process of the REE. The West has a hard time breaking this dominance, as China has a complete supply chain from mineral to magnet, infrastructure, and has 20 years of knowledge and expertise in the extraction and processing of REE as well as patents on the processing and development of magnets (Kalvig 2021; Klinger 2017). Furthermore, China can control the price of REE because of its monopoly and has organised a production system which gives Chinese firms advantages. In addition, the REE industry is extremely toxic for the environment and people, underscoring the green transition's pollution side (Klinger 2017). This means that the West needs to find new ways to make the processed magnet, as China holds patents on the entire development. Therefore, China has to be involved for Greenland to realise the extraction of REE depots in Killavaat Alannguat/Kringlerne because the West cannot process and manufacture REE. In addition, if Denmark's green energy ambition is to be realized, it will not be without Chinese interference. In this change security policy reality, Denmark meets a high degree of complexity in pursuing its Arctic ambitions and green ambitions.

The great power rivalry between the US and China take place behind the borders of the Unity of Realms, due to Greenland's large deposits of REE and geographical location. There is speculation that Donald Trump wanted to buy Greenland because he wanted to secure access to the valuable REE in Greenland. Although this is only speculation, it is noteworthy that after the purchase was denied, the US prepared a memorandum of understanding with Greenland, in which the US can research REE in Greenland. This is remarkable in the context of the US itself getting China to process its REEs. According to Per Kalvig, the US has enough REE deposits to supply their industry. Therefore, the memorandum of understanding reflects that an investment in REEs is both about access to REEs and Greenland. For the US, it is about limiting China's access to REE and its presence in Greenland. At the same time, the US is trying to strengthen relations with Greenland.

The US no longer have national security interests in the Middle East to the same extent, where Denmark can contribute militarily. China is now the overriding rival; therefore, the Arctic can become a new security policy niche for Denmark, ensuring the close alliance with the US and achieve Danish influence (Olesen & Søndergaard 2022). However, the Unity of Realm are changing and lack cohesion. Greenland and Denmark have fundamentally different ambitions for the future of the Unity of the Realm, which is why they also have divergent views on Chinese investments in REE. Greenland, to some extent, accommodates Chinese investments because it allows Greenland to have a greater economic differentiation, which creates an internal split in The Unity of the Realm. Greenland has developed a mining strategy in which they want to position itself as a leading mining nation to attract investors. Thus, there is a good match between Chinese Arctic ambitions and Greenlandic ones. Furthermore, Greenland sees the interest from China as an opportunity to renegotiate greater autonomy, thereby increasing internal pressure and limiting the Danish room of manoeuvre. Due to Greenland's geographical location, we should see this in the context of Denmark, as a small state, gaining influence in the international structure. Greenland provides access to prominent forums such as the Arctic Council and to great powers in which Denmark can strengthen its influence. Conversely, Greenland and Denmark also have a mutual dependence on each other. Greenland economy is dependent on Denmark's block grant, but Denmark also provides an important platform for promoting Greenland, as Greenland has a sparse foreign policy presence in the world.

The post-colonial heritage is deeply infiltrated into the relationship between Denmark and Greenland, and is expressed by mistrust and fear of touch. This weakens The Unity of the Realm's construction and cohesion. Greenland wants to be actively involved in the political processes that concern Greenlandic affairs and a showdown with the Danish narrative about Greenland. Fundamental structural changes are needed, because only then can the relationship become equal. According to Thisted, Gremaud & Marnersdóttir (2021) the narrative of Denmark as Greenland's protector is difficult to change as it is a fundamental element in the Danish understanding of Danish identity. Furthermore, the story helps Denmark to cement sovereignty in Greenland as Denmark must protect Greenlanders (Ibid). In the interview Aaja Chemnitz Larsen also touches on this fear of touch and its significance for the Unity of the Realm: "The Unity of the Realm must not turn into an indifference. Indifference is the worst poison for the Unity of the Realm, and it is 10 times worse than hate, because in hate there is some kind of interest or love”.

The legal grey area expresses the post-colonial dynamics, because of the power struggle between Greenland and Denmark in the division of competences. The Unity of the Realm is thus constructed so that you can separate security policy from raw material management, with the consequence that Naalaakkersuit and Christiansborg have different starting points and legislations. Rooted in their different ambitions and postcolonial legacy Denmark and Greenland have different views on security politics. This seems even more critical now that the understanding of security is far more diverse. The legal grey area expresses the very essence of the Unity of the Realm's actual construction; it lacked cohesiveness marked by distrust, fear of touch, and the struggle for sovereignty. As well as the fact that the US has persistent interests in Greenland and considers Greenland as a matter of American national security. Denmark must both meet the interests of the US, because the US is Denmark's security guarantor and, by virtue of its small state's status, therefore the US has an influence on Denmark's understanding of what is security policy in the Unity of the Realm. Therefore, Denmark must balance its ambitions in relation to both Greenland and the US. Another problem is that Denmark cannot offer alternatives to Chinese investments in Greenland because China is always currently involved because of their dominance within the REE architecture. Furthermore, Chinese Shenghe Resource Holding has not invested directly in Kuannersuit/Kvanefjeld, but through the Australian mining company Greenland Minerals. Shenghe is also facilitating the processing of American REE. In light of Greenland's increased influence in the Unity of the Realm, thereby weakening Denmark's influence capacity, and Greenland's importance for Denmark's capacity to gain influence in international politics, it is difficult for Denmark to block Chinese investments. The lack of control capacity limits the Danish room of manoeuvre.

The lack of basic cohesion, and according to Petersen (2005), the internal pressure from Greenland results in a limited Danish room for manoeuvre. The division within the Unity of Realm has emerged before China's Arctic ambitions, but the internal strife is greatly weakening the Unity of the Realm as China is expanding like never before. The Unity of the Realm constellation is not operationally agile, and is not geared to the new security reality. The combination between the great powers' interest in Greenland and the internal division leads to a power vacuum in which great power rivalry propagates. This results in additional external pressure, which, according to Petersen (2005), limits the Danish room for manoeuvre.

China's dominance of the entire supply chain represents a very high stress factor, as it has far reaching implications for Denmark. Through their near-monopoly, China can set price and REE quantity, which distorts competition and harms Denmark's economy, industrial development and energy security. Furthermore, China's near-monopoly might limit Denmark's capacity to gain influence in international politics through Denmark's green energy niche. Danish soft power, which are executed through Danish green solutions are challenged by threatened security of supply of processed REE. Mette Frederiksen's perception of China reflects the complexity of Denmark's situation very well as China: “at the same time a competitor, a partner, for example, on climate, and a systemic rival” (Statsministeriet 2021). Therefore, it is crucial for the Danish room for manoeuvre how much Denmark becomes involved in the US's containment policy towards China because Denmark risks getting caught up in the great power rivalry. Denmark is dependent on Chinese supplies of REE and a good relationship and on the US as a security guarantor and closest ally. Denmark has limited opportunities to change external factors as a small state, so it is even more important that the Unity of Realm stands together. Therefore, a fundamental question is: how can the Unity of the Realm become more cohesive?

In relation to the Realm

This thesis contributes insight into the changed security policy reality that Denmark and Greenland must navigate, in which REE has essential geoeconomic significance for the world order and the global green energy transition. A world where the green transition provides opportunities to promote one's position in the international structure and challenges. Energy and security of supply have not only been put on the political agenda due to accelerating climate change but also as a geopolitical consequence of Russia's invasion of Ukraine. Greenland is at the epicenter in this development due to its occurrence of REE and geographical location. Therefore, this thesis is a current contribution to gaining insight into the geopolitical complexities of the global demand for the green energy transition, where China has a dominant position in the REE mine architecture, and how this affects a changing Unity of Realm. In addition, it contributes with an insight into the green energy transition's pollution side, and a need for a more sustainable production of processed REE. Doing so opens up the need to have the courage to understand the nuances.

Furthermore, my master's thesis contributes to understanding how important the colonial heritage is for the Unity of the Realms's lack of cohesion and the complex relationship between Greenland, Denmark and the USA. In it, the thesis provides insight into the unclear legal division of competencies, whether management of REE is security policy or raw materials management on a deeper level reflects a struggle for sovereignty, as the extraction of raw materials has been a central part of the colonial period. The Unity of Realm must also relate to the geoeconomic world order and that China operates through Chinese companies, and to the US, which does not accept a Chinese presence in Greenland. Small states cannot change external factors, so it is even more important that they stand together. Therefore, Denmark and Greenland must have a more common view of security policy. It is important to listen to what is being said, but perhaps more importantly, what is not being said. When I collected data, I found that Danish decision-makers rarely talk about how Denmark can create a better cohesion and security policy understanding. If the Unity of Realm remains standing, perhaps the time has come for Denmark to ask how we create a better and more equal relationship with Greenland.

It might be relevant to examine whether Denmark and Greenland can develop a convergence of interests despite their opposing ambitions. Greenland has just joined the Paris Agreement and has established a research centre in Greenland. Perhaps research diplomacy on climate and the Arctic could be of common interest. In addition, it could be a good idea to involve young people from the Unity of the Realm in these projects to better understand each other and in research, to develop ideas together. There, curiosity for each other and the world can grow and be an antidote to the colonial heritage.

Specialet er indstillet til specialekonkurrencen 2022.

Senest opdateret 16. november 2022