This frozen country faces great challenges in developing its tiny economy, with both its position and a highly dispersed population conspiring against growth. However, private enterprise is growing, and mineral wealth may soon create a boom. By SCOTT BERMAN 
Business is a key element of change in Greenland. Here, on the fringe of geopolitical Europe, steps toward privatisation, continuing calls for a more self-sufficient economy, the prospect of oil and mineral wealth and the local effects of global warming are converging to create a trickle of entrepreneurship that may become a flood. New enterprise will be a critical determinant of more local power, even eventual independence, for Greenland, a semi-autonomous territory of Denmark that gained administrative home rule in 1979 and left the European Community in 1985 (the only member ever to do so).
This tiny economy, a unique €1.3bn GDP mix of state and private entities, is fortified with €395m in annual grants from Denmark, or almost €7,000 per capita for Greenland's 57,000 people. About 85% of the residents are indigenous Inuits and others who are native-born, the rest are mostly Danes. Public companies are the largest players in key sectors such as fisheries, retail and wholesale trade, telecommunications and air transport. But private companies are increasingly significant in those sectors, and already dominate others, such as construction and finance, notes Birger Poppel, an economist at the University of Greenland. According to the home rule government, the unemployment rate is 6.3%, lower than some international estimates. Residents pay 37%–46% in flat tax set by municipalities, and there are price controls on utilities in addition to some on retail goods in settlements. Although shipping costs push up prices on groceries and other goods, there is no VAT. Greenland, the world's largest island with roughly 80% of its 2.17 million km2 covered by ice, depends on imports; food, energy, electronics and machinery head the list. The chief export is fish, mostly prawns and halibut. The European Union is the island's biggest customer, buying about €293m in fish products annually. In June 2006, Brussels, reportedly eyeing Greenland's energy and mineral riches and concerned about the environmental impact of extracting them, signed an agreement to give the territory €44.5m annually in exchange for control over fish, scientific research and climate change policies.
Greenland, like the Faroe Islands, another part of the Danish realm, has representatives in Denmark's parliament; representation in the United Nations, as part of Denmark's delegation; and is a member of the World Trade Organisation. Greenland's unicameral parliament, the Landstinget, sits in Nuuk. Hans Enoksen of the social democratic Siumut Party is home rule premier; his coalition partners favour more autonomy from Denmark to varying degrees. A more sustainable economy would be a big step in that direction.
Just a few metres from the parliament building, business is brisk in Nuuk's shopping district, at least during a recent pay-day weekend. Supermarkets are busy. Shoppers bustle about. Buses are full. Toyotas, Mitsubishis, Audis, Volkswagens, Hondas and Fiats buzz by. But despite every appearance of modern commerce, Greenland is constrained by both position and population. 'You don't have the basis for a traditional market economy in Greenland,' says Poppel. Public monopolies in key sectors and some price controls are a fact of life at present. Long-term strategies to grow the economy will have to take into account the Arctic way of life, including the dispersed settlement structure. Historic attempts to reach economic critical mass by uprooting people and consolidating them in a few cities instead fuelled social problems, notably alcoholism. Poppel says that leaving the population dispersed is more in tune with Greenlandic culture, and would be economically sound anyway because it would balance out the consumption of resources such as fish and minerals, upon which any sustainable growth would rely. |