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In this precise moment of this video, (found on this this article) Donald Trump says about Greenland:

It's hurting Denmark very badly because they are losing almost $700m a year carrying it, so they carry it at a great loss

The fact that Greenland is subsidized by Denmark is on CIA world factbook (inside the "economy" tab):

Greenland’s economy depends on exports of shrimp and fish, and on a substantial subsidy from the Danish Government. Fish account for over 90% of its exports, subjecting the economy to price fluctuations. The subsidy from the Danish Government is budgeted to be about $535 million in 2017, more than 50% of government revenues, and 25% of GDP.

Is it fair to say that Denmark loses money because of Greenland, or do they make money enough because of Greenland so that the profits outweigh the costs?

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Santropedro
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    In the USA, territories tend to "cost" rather than "payout" or "profit". But even some states "cost" in the same way. Could be a similar thing. It's debatable if that's even the right outlook, but when you're trying to convince someone to sell ... –  Aug 20 '19 at 01:56
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    Note that the subsidy is an important factor in allowing Greenlandish "home rule" as opposed to the historical "everything in this colony is ruled from Denmark". Understanding this development is as important as understanding that US expansion in the West was not into uninhabited lands. – Thorbjørn Ravn Andersen Aug 20 '19 at 02:07
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    We have some empirical answers addressing the question: "How much is the subsidy?" We have a pure opinion answer addressing the subjective question "Can we use the word 'carrying' the describe a subsidy?" Let's fix the question so the former are on topic. The latter can be taken to Politics.SE or Elnglish Language Usage.SE. – Oddthinking Aug 20 '19 at 04:18
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    It might help if the question defined what they think "carry" means. It's possible that, as a business person, Trump might be using it in the technical sense of the economic term "carrying charges" (_an expense or effective cost arising from unproductive assets such as stored goods or unoccupied premises_). – Ray Butterworth Aug 20 '19 at 16:02
  • @RayButterworth How many interpretations of "carry" are you considering? When I made the post, I just assumed "carrying Greenland" was not a technical word, but just a synonym for "paying/subsidizing Greenland expenses". That's the interpretation in your comment. Is there another one? – Santropedro Aug 21 '19 at 00:48
  • @Santropedro, For economic terminology, consider a company that moves to a new location, tearing down its old buildings and retaining the original property. It spends money maintaining the grass and paying property taxes yet gets nothing in return. That expense goes on the books as "carrying charges". Someday, they might sell the property at a large profit, or expand their business there without having to buy new land. That could be the sense of "carrying" that Trump meant. Denmark isn't subsidizing Greenland; if no one lived there, they'd pay someone to occupy it to maintain ownership. – Ray Butterworth Aug 21 '19 at 02:40
  • "carrying" is almost never used in everyday speech as a synonym for "supporting", but is extremely common in the business world for something like inventory costs. Given the context of the quote, it seems almost obvious that Trump meant it in this business sense. It is odd to refer to the world's largest island as if it were a piece of inventory or other business asset. – John Coleman Aug 22 '19 at 18:08

2 Answers2

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Trump's claim isn't too far off from the subsidy Denmark pays to Greenland, but it's off by $150 million. Moreover, his characterization of the subsidization as a "loss" misrepresents Greenland's economic value, and drastically overstates the importance of the subsidy to Greenland.

Danish subsidies to Greenland

Denmark currently pays an annual subsidy to Greenland, currently under the provisions of the 2009 Act on Greenland Self-Government. Section 5 of the Act reads

  1. (1) The [Danish] Government shall grant the Greenland Self-Government authorities an annual subsidy of DKK 3,439.6 million, but see section 8 (1). The amount is indicated in 2009 price and wage levels. (2) The subsidy shall be adjusted annually in accordance with the increase in the general price and wage index of the Finance and Appropriation Act for the year concerned. (3) The subsidy shall be paid in advance in the form of a monthly payment of 1/12. (4) Subject to agreement with Naalakkersuisut, the Minister for Finance may lay down rules on changed dates for disbursement.

To check the CIA Factbook number, I looked at an government publication of Greenland's statistics (published by Greenland's government). In the Økonomi ("economy") subsection of the Nøgletal ("key figures") section (pages 37-38), the table lists

Bloktilskud 3.722,4 kr. (2017) og 3.822,9 kr. (2018) millioner i tilskud fra Danmark

"Bloktilskud" means "block grants/subsidies", so that in 2018, Denmark gave Greenland 3.8229 billion Danish kroner in aid. Based on current exchange rates, this comes out to $553 million (United States dollars).

$553 million is close enough to $700 million that Trump isn't too far off. So Denmark does subsidize Greenland - but to the tune of about $553 million per year, not $700 million. Moreover, the government statistics do not imply that Denmark is "carrying" Greenland; the total subsidy is equivalent to only 25.5% of Greenland's GNP of $2.17 billion.

Tor-Einar Jarnbjo noted that Denmark also pays some additional management costs, supposedly under the 2009 Act, and that these bring the total amount paid by Copenhagen closer to Trump's figure. I unfortunately have not been able to find more detail information on these costs (yet), and not for recent years.

It's also notable that Section 8 of the Act provides for Denmark to gain some of the profits from Greenland's mineral resources (which I'll discuss below):

  1. (1) If revenue from mineral resource activities in Greenland accrues to the Greenland SelfGovernment authorities, cf. section 7, the Government’s subsidy to the Self-Government authorities shall be reduced by an amount corresponding to half the revenue which, in the year concerned, exceeds DKK 75 million. (2) With effect from 1 January the year after the commencement of the Act, the amount of DKK 75 million referred to in subsection (1) shall be adjusted annually in accordance with the increase in the general price and wage index of the Finance and Appropriation Act for the year concerned. (3) Calculation pursuant to subsection (1) shall take place the subsequent year with a view to payment the following year.

The language doesn't seem to indicate that Denmark could make a net profit from the natural resources (primarily oil off Greenland's coast), but it does mean that the subsidies could drop even more drastically than they are planned to decrease with time.

The benefits of Denmark keeping Greenland

In terms of imports and exports, Greenland imported $787 million in 2018, exporting $603 million. The primary trading partners are Denmark and Sweden, although the rest of the EU also trades with Greenland. Denmark's relationship with Greenland, therefore, may be beneficial from a trading standpoint, gaining it money compared to a scenario where the US (or another country) owns Greenland. This is another thing that has to be considered when determining what Denmark gets out of the present setup.

That said, Trump's implication, of course, is that this subsidy is a waste of money for the Danish government. This is nonsensical, as Denmark is merely paying money to maintain an asset. Now, valuing that asset is extremely difficult; the Washington Post writes

So when The Washington Post asked the experts at the Arctic Institute to take a crack, Marc Jacobson, a senior fellow there, put it bluntly: “I’m not aware of any who would be capable” of doing that sort of calculation.

The Post tried several different ways of evaluating what Greenland is worth, and came up with values between $200 million and $1.7 trillion. The latter figure is close to an estimate by Jason Barr based on putative values of Greenland's land. However, land isn't what makes Greenland valuable; instead, its resources do. A fairly comprehensive 2014 report by the Brookings Institute reached several conclusions:

  • There is an unknown amount of oil in around Greenland, although exploitation of that is years in the future.

  • The same holds for precious metals (gold, iron, rare earth elements, etc.):

    Greenland is widely believed to hold excellent potential for a host of natural resources, including zinc, lead, gold, iron ore, heavy and light rare earth elements, copper and oil. Considering that only a small fraction of this massive island has been properly explored, in the coming years more data gathering and analysis would be helpful to assess the full potential of Greenland.

  • Large-scale mining is possible in Greenland, especially if Chinese companies take interest.

    . . . because of the slowdown in investments in new mining activities, it is less certain that Greenland will be able to get major mining projects off the ground on the ambitious schedule that it announced in its mineral and energy resource strategy in 2014. We do believe however that eventually large-scale mining will take place in Greenland.

A true estimate of the value of Greenland is impossible until we can determine whether these future developments will occur and how much natural resources Greenland holds. New commodities like river sand are opening up for trade. The crux of the Brookings report is that Greenland has the potential to make a lot of money in the future. Even if Denmark is, at this minute, losing money by owning Greenland, it is impossible to say whether it will reap many more benefits in the decades to come, if development opens up.

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HDE 226868
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    It's ridiculous to give Trump a pass by saying that $553 million is "almost" $700 million, even ignoring the fact that the subsidy doesn't imply that Denmark is "carrying" Greenland. It would make no sense in any circumstance to round up $553 million to $700 million unless you're an idiot or pathological liar (or both). It would be like saying that the 5 inch fish I caught was almost 11 inches long. – spacetyper Aug 20 '19 at 01:25
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    @spacetyper I disagree with your characterization of it as ridiculous, but I've made an edit that is harsher on the claim. I don't think my answer was giving him a pass, as I had explicitly described the implications of his claim as nonsensical later on. – HDE 226868 Aug 20 '19 at 01:55
  • Thanks for your edits, I think the answer is (appropriately) more critical now. – spacetyper Aug 20 '19 at 02:01
  • @spacetyper I'm glad. Let me know if you have any other feedback. – HDE 226868 Aug 20 '19 at 02:02
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    @spacetyper 5/11 is 45%. 553/700 is 79%. If any characterization here is ridiculous, it's probably yours. –  Aug 20 '19 at 02:03
  • You should clarify that the $2.17 is in billion dollars, and that it is the GDP of Greenland, not Denmark. – Daniel R Hicks Aug 20 '19 at 02:42
  • @DanielRHicks Done. Looks like I made a typo before and completely neglected to correct it. Thank you. – HDE 226868 Aug 20 '19 at 02:43
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    I take the opposite view to @spacetyper. The DEK:USD exchange range has grown stronger by 25% over a 5 year period. Having an estimate out by 26% suggests to me Trump might be quoting some figures that are a little out of date plus obviously some rounding off to the nearest $100 million (plus maybe using some slightly different definitions). The "idiot or pathological liar" options are a false dichotomy. – Oddthinking Aug 20 '19 at 04:14
  • It's getting late here, I have had a really long day, I am trying to double-check that I got the direction of the trend right and it is eluding me. These days you get 6.73 Kronor to the USD. Five years ago it was 5.63. So when you divide a constant number of Kronors by the exchange rate, the number you get is lower now than it used to be, so I was right... right? I better stop Modding until I get some sleep. – Oddthinking Aug 20 '19 at 12:42
  • @Oddthinking Less Kronors per US dollar *then* means bigger USD number. Yes, you're right. It's a weird comparison because you usually only translate into a different currency if that is the currency that's actually paying. I blame news media for translating everything into "local dollars", the pitfalls among many being this one, that if exchange changes in the future, you're figure becomes wrong. –  Aug 20 '19 at 21:50
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    The block grant is just one part of Denmark's 'expences' related to Greenland. In 2015, additional costs of about DKK 600 million accumulated for management of Greenland related subjects, giving a total 'cost' of DKK 4294.8 million. With the exchange rates from 2015, this corresponds to USD 625-700 million. Source: https://www.ft.dk/samling/20161/almdel/fiu/spm/396/svar/1415520/1771500.pdf – Tor-Einar Jarnbjo Aug 21 '19 at 15:16
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According to this BBC article from the time of the independence vote, the "block grant" subsidy was fixed at DKK 3.2 billion / year. At today's exchange rate, that's about USD 480 million. It is somewhat less than 700.

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    I have two questions: First, does this account for inflation between 2008 and the present; second, has the amount changed in the intervening decade or so? The CIA Factbook figure is 9 years newer. . . – HDE 226868 Aug 19 '19 at 17:38
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    Hmm I first undersd https://dk.usembassy.gov/our-relationship/u-s-greenland/about-greenland/ to say the block grant was frozen at the 3.2 level but it does say it would be adjusted for inflation. – Dimitri Vulis Aug 19 '19 at 17:44
  • This is probably good enough to refute the claim, but is still only half of the equation. Does Denmark gain anything in the form of taxes or other payments? – Jeff Lambert Aug 19 '19 at 17:48
  • The BBC and other sources say that Denmark contributes "less $$" toward NATO because it "contributes" the Thule military base. I haven't been able to find any concrete numbers. – Dimitri Vulis Aug 19 '19 at 17:54
  • I found article https://warontherocks.com/2018/07/denmark-in-nato-paying-for-protection-bleeding-for-prestige/ . If Greenland left (and Denmark stopped paying the block grant, then NATO would expect Denmark to spend 2% of its GDP on military. – Dimitri Vulis Aug 19 '19 at 18:22