Between Dependency and Fiscal Autonomy: Public Finance Analysis of Danish-Greenlandic Fiscal Relation

Kurachi Shintaro, Meiji University

Recent international attention on Greenland, notably sparked by Trump's proposal to purchase the territory, has highlighted its unique position in global politics. Beyond its abundant natural resources, Greenland's strategic location between the U.S. and Russia makes it both economically and politically significant. While Greenland maintains its status as an autonomous territory of Denmark, enjoying considerable self-governance rights distinct from other Danish regions, its relationship with Denmark remains complex and sometimes tense. The Greenlandic government's dissatisfaction with Danish support and policies has fueled ongoing discussions about potential independence. At the heart of this complexity lies a distinct sentiment among Greenlanders who, as often expressed, "want to be neither American nor Danish." This study aims to illuminate Greenland's fiscal characteristics from a public finance perspective, focusing on two major aspects of investigation. Our first objective is to analyze Greenland's fiscal dependence on the Danish government and its implications for Greenland's welfare system. We examine this through the lens of fiscal equalization, while also considering U.S. military contributions to the region. Specifically, we investigate how Greenland fits within Denmark's fiscal equalization framework by examining both horizontal fiscal equalization patterns and the allocation of special grants over time. Furthermore, we compare the tax systems and social security structures between Greenland and mainland Denmark, evaluating relative welfare levels through various metrics including tax burden, revenue generation, and public expenditure levels. Our second objective is to assess the practical extent and limitations of Greenland's autonomy based on its current fiscal situation. In analyzing the degree of dependence on Danish fiscal equalization and grants, we pay particular attention to several key factors. We examine structural determinants such as demographic conditions and social criteria that position Greenland as a net recipient. Additionally, we evaluate the distribution criteria for special grants and their redistributive effects.

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 Presented in Session 18. Fiscal Politics from Below: Local Responses to Central Governance