The Greenland Crisis

Key Judgements

• U.S. pressure to take control over Greenland triggered a major NATO internal conflict, prompting Operation Arctic Endurance, a coordinated NATO military exercise deployment to Greenland to deter escalation and signal alliance resolve.
• Washington frames its Greenland strategy around the $175 billion Golden Dome and Arctic defence, but the primary objective is likely to be securing rare earth access to counter China’s 90% dominance of global supply chains.
• The Davos Framework has eased tensions temporarily with a negotiation period focused on expanding NATO Arctic operations but suspended U.S. tariffs are set to rise to 25% and tensions resume if no agreement reached by 1 June 2026.

Objective

This report assesses the strategic, economic and alliance risks arising from the Greenland sovereignty crisis. It examines U.S. interest in Greenland’s potential role in strengthening Western rare earth supply chain resilience, explores the impact of U.S. trade and security leverage on NATO and EU cohesion, and  evaluates the Davos Framework as a temporary de-escalation mechanism.

Context

The U.S. move on Greenland created serious tensions within NATO and on transatlantic relations. While the U.S. remains a central security partner, its approach has raised concerns among European allies about respect for sovereignty, alliance norms, and collective decision-making. The situation is shaped by two parallel pressures: U.S. strategic priorities in Arctic defence linked to the Golden Dome missile programme, and intensifying competition over rare earth supply chains, which remain heavily dominated by China. Following a temporary U.S.–China agreement in November 2025 that eased rare earth export restrictions, China’s current licensing regime is due to expire on 10 November 2026, creating uncertainty over future supply. This has increased U.S. interest in alternative sources, bringing Greenland’s mineral potential into sharper strategic focus.

Analysis

Alliance Shock: Western Europe and the NATO Stress Test

The diplomatic crisis between the United States and Denmark raised widespread European concern, and President Trump’s 11 January 2026 statement that he would act on Greenland ‘one way or another’ suggested coercion against a fellow NATO member.  Just a few days later on 15 January,  Operation Arctic Endurance, a Danish-led military deployment supported by seven allies was deployed to Greenland, formally framed as an exercise to counter potential Russian activity but understood to signal deterrence and allied solidarity in response to the perceived U.S. threat. The episode exposed European vulnerability to U.S. unilateralism and raised broader concerns about alliance cohesion, sovereignty norms, and the predictability of U.S. leadership within NATO.

National Security Framing: Executive Leverage and European Risk

The strategic value of Greenland exists due to its missile warning capabilities and for North Atlantic security, and a national security narrative serves as political cover for Washington to achieve its wider strategic goals without appearing to engage in a territorial land grab. Positioning Greenland as a national security priority, anchored in the $175 billion Golden Dome missile-defence program, also enables expansion of presidential legal powers such as use of the Defence Production Act, with reduced Congressional and allied oversight. For European allies, this situation creates a precedent risk, signalling a willingness by the U.S. to prioritise executive power of alliance consensus, which has implications for trade, defence and security.

Core Strategic Driver: Rare Earths, China, and Supply Chain Leverage

The primary driver behind U.S. interest in Greenland is likely rare earth access, aimed at weakening China’s 90% dominance of the market. Greenland holds an estimated 36.1 million metric tonnes of rare earth reserves, positioning it among the world’s most significant untapped sources. Against this backdrop, Trump’s strategy is likely shaped by a desire to approach the November 2026 expiry of China’s rare-earth export controls with greater leverage and contingency options, reducing U.S. exposure to Chinese economic pressure.

Greenland’s resources are not as inaccessible as often assumed, with several major deposits located in ice-free coastal regions that are increasingly viable for extraction. Although infrastructure investment remains substantial, commercial momentum is growing. Energy Transition Minerals has committed $150 million to Greenlandic rare earth development, though the project is currently stalled due to ongoing legal and regulatory disputes, while the Tanbreez project has secured approximately $120million in government-backed financing to support a Western-aligned supply chain.  These developments suggest Greenland’s rare earth sector is commercially viable, strategically significant and financially attractive, with clear implications for long-term industrial resilience.

The Davos Framework: A Six-Month Strategic Pause

The Davos Framework brokered on 21 January 2026 saw the United States pause threats of force and suspend 10% punitive tariffs while Denmark and its allies pursue negotiations on the proposed NATO-led ‘Arctic Sentry’ mission. This mission allows for an expansion of U.S. operations in the Arctic region without a formal transfer of sovereignty. President Trump later revealed there was also discussion regarding Greenlandic mineral rights which suggests that access to natural resources is an implicit condition of the agreement so far as the U.S. is concerned.  Failure to reach an agreement by 1 June 2026  risks renewed trade escalation and further alliance strain. As such, the Davos Framework currently functions as a temporary truce rather than a durable resolution, leaving the underlying drivers of the crisis unresolved.