Draft Version
Maria Ackrén1, Samo Nielsen2 and Martin Harms3
Greenland’s Economy in Perspective for Future Endeavours
Introduction
The situation is related to Small states or territories that often experience similar economic
conditions. These areas often face problems related to a small local market, external shocks, high
transport costs, lack of economies of scale, lack of know-how, and a one-way production focusing
on merely one product or service (Baldacchino, 2003). Some investigations show that there is a
clear connection between political dependence on larger states and levels of real per capita income
in small islands. An alternative explanation would be that each island economy has been converging
to the income level of a counterpart large economy or economies in the core of the global economy,
so island living standards derive their relativities from sources external to the region. The studies,
therefore, show that politically integrated island territories generally exhibit the highest per capita
incomes. There is a strong convergence to the metropolitan GDP, while those territories lying in the
periphery, exhibit weaker and hence lower incomes (Bertram, 2004). Furthermore, economic
studies between non-sovereign islands and small island states reveal the fact that non-independent
islands receive 36 times more bilateral aid comparable to independent island states (Bertram and
Poirine, 2007), which Greenland is one good example of. Other features of mini-economies are that
there is a small number and size of firms, a great openness in the economy, which hardly can be
influenced by external fluctuations, large fluctuations in the GDP and a very small absolute size of
administration (Jónsson, 1999).
Greenland is the largest island in the world, but most of the territory is covered by a vast ice cap.
The population is rather small with about 57,000 inhabitants and therefore the economy is
characterized with a small market and a small labour force. The economy is very much dependent
on the block grant received from Denmark. The main industries consist of the fishing industry,
mining and some small private businesses. Other characteristics of the Greenlandic economy are a
very low level of production of goods and services for the domestic market and therefore the import
of products and services exceeds the export (Jónsson, 1999). However, there is a lot of optimism
regarding future endeavours since oil and gas exploration is taking place around the shores of
Greenland. Some estimates done by the USA show that there are vast amounts of oil assets in the
sea, but the problem might be how to exploit this very sensitive environment of the Arctic.
1
Associate Professor in Political Science, Ilisimatusarfik/University of Greenland, Nuuk
Master Student in Social Sciences, Ilisimatusarfik/University of Greenland, Nuuk
3
Assistant Professor in Economics, Ilisimatusarfik/University of Greenland, Nuuk
2
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In this paper we focus on the economical development to the current situation of Greenland, with
some future perspectives. We wish to shed some light over the challenges and vulnerabilities
through the approach of social impact assessment and how Greenland is meeting the obstacles of
being a small market. The international role Greenland plays towards the EU and other states will
also be scrutinized.
A short historical background
In the past, the Greenlandic economy has been featured by the colonial rule. The colonialism started
in 1721 with a Norwegian trading company. The company was functioning as a monopoly, which
had total control over all trading to and from Greenland. In 1734, this company was taken over by a
Danish businessman, Jacob Severin, and in 1774 the Danish state took over and established
Kongelige Grønlandske Handel (KGH) (Augustesen & Hansen, 2011; Karlsson, 2008). KGH was
continuing the monopoly of trading to and from Greenland and the company also had control over
the administration until 1912 (Augustesen & Hansen, 2011). During the colonial era, all important
decisions were taken in Copenhagen. The price system in Greenland was a permanent “one-price
system”, which meant that all products were sold to the same price all over Greenland (Skydsbjerg,
1999). In the beginning of the 1900s, some changes took place, while the municipal and county
councils became under the rule of Greenlanders. Only Greenlanders born in Greenland were eligible
to vote and stand as candidates in the elections. This was changed in 1925, when a new rule was
passed, so that all men over 25 years of age could vote and stand as candidates in these elections
(Augustusen & Hansen, 2011; Karlsson, 2008).
The fishing industry had a boom in the early years of the 1900s. One reason was the decline of
whale blubber and seal blubber, which had been used as fuel for lamps, but now petroleum was
used instead. The world market and the climate had changed, so now fishing became the new source
of income (Augustesen & Hansen, 2011; Skydsbjerg, 1999).
During the Second World War, all connections to Denmark became severed, while Denmark
became under German occupation. Greenland still functioned as a colony, but now American
interests came into play. The two Danish superintendents, Eske Brun and Aksel Svane, took over
the administration in Greenland. In Washington, Henrik Kauffmann, was outlining an agreement
where Greenland became under the protection of the USA (Lyck, 1986). In 1941, four US military
bases were established in Greenland: Narsarssuaq, Marraq, Kangerlussuaq and Ikkatseq
(Augustesen & Hansen, 2011). The cryolite production, which was taken place in a mine in Ivittut,
was of great importance for the military, since cryolite was used for the air-craft industry (Lyck,
1986; Karlsson, 2008). The Greenlandic economy had its heydays during this time, while new
products from the USA entered the Greenlandic market.
After the Second World War a phase of modernising in Greenland took place. The connections with
Denmark was re-established and Denmark wished to introduce a mixed economy model according
to Danish principles, but this was never realized (Karlsson, 2008). During the 1950s, the economy
and administration became more integrated with Denmark. One result of this was that Greenland
became a county in 1953 as a totally integrated part of Denmark. The Danish state was enforcing
Greenland to keep a balanced budget. The Danish state‟s expenses regarding Greenland was not
able to exceed the incomes coming from Greenland (Lyck, 1986). All infrastructure and industrial
development were in the hands of Danes. During the 1960s a new era in the modernising process
took place, where urbanisation and better housing conditions were the leading changes in the
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society. This had, of course, not merely positive effects, but also some negative effects, while the
Inuit population suffered to be forced to move into the larger towns and villages along the coast,
and leave their homes in the more peripheral areas with all the hunting grounds and familiar
surroundings behind them (Augusten & Hansen, 2011). During this time the fishery industry
became in focus and Danish was also becoming one of the official languages. The salary system
was still uneven with higher salaries for Danes and lower salaries for the Greenlanders (Lyck,
1986).
The Introduction of the Home Rule
In the 1970s, voices for greater independence from Denmark became an issue on the political
agenda. Already, in 1971, Greenland gained the rights over its own 12 nautical miles in order to
enhance its fishing industry. However, a fishing crisis occurred due to the disappearance of cod and
this led to that shrimp-fishing became the new source of income. But at the same time there was an
increase in the block grant coming from Denmark (Paldam, 1994). The economical growth,
between the years of 1955-72, was lying at over 12 per cent each year, but during the period of
1972-90 the growth had dropped to four per cent per year (Paldam, 1994).
Another event, which mirrored the situation during the 1970s, was the integration towards EEC
(European Economic Community). While Denmark was engaged in a political debate to join the
EEC, Greenlanders showed their reluctance to join through a referendum. However, since a
majority in Denmark had voted in favour, Greenland was forced to join together with Denmark
(Chaturvedi, 1996). In 1974, one year after becoming a member of EEC concessions were granted
to multinational oil companies to explore for oil in the fishing grounds off the west coast of
Greenland. This was a factor of dissatisfaction amongst the Greenlanders towards the Danish
administration (Chaturvedi, 1996). A Home Rule Commission was set up by the Danish
government in 1975, and the Home Rule Act was passed three years later. A referendum was held
in 1979 with an overwhelming 70 per cent in favour of Home Rule (Karlsson, 2008).
The issue of natural resources became a cumbersome matter to solve between Greenland and
Denmark and, in January 1982, a new referendum regarding the EEC membership took place in
Greenland. The Home Rule government felt that Greenland‟s fish resources, particularly cod,
redfish and shrimp, were being abused by the EEC, threatening the sustainability of the stocks, so
the result of the referendum was a withdrawal from EEC (Chaturvedi, 1996). Greenland is the only
territory in the history of EEC/EU that has been able to withdraw from this Union. Other
developments during the 1980s can be seen through the development of the Home Rule system.
Greenland is achieving its own taxation in 1980 and KGH:s production and sale become
Greenlandic in 1985, followed by the rest of KGH in 1986. The company is later renamed to KNI
(Karlsson, 2008).
A mine in Maarmorilik, which had opened in 1973, was operating until 1990/91. The mine was
used for zinc and lead production. The closing of the mine was another drawback for the
Greenlandic economy (Paldam, 1994). However, between 1986-97 Greenland was the world
leading nation in shrimp fishing, but in 1998 Canada took the spot as number one (Karlsson, 2008).
The fishing industry is strictly relegated through so called TAC:s (Total Allowance Catches),
quotas, which are yearly decided upon by the Greenlandic government together with the fisheries‟
associations. The industry stands for about 30 per cent of the employment and is contributing to
more than 90 per cent of the export (Karlsson, 2008). The main actor in this sector is Royal
3
Greenland, which is acting as a multinational company with factories in Denmark, Norway,
Germany and Poland. Added to this there are sales companies in 12 other countries in Europe, the
USA and Japan (Paldam, 1994; Karlsson, 2008).
Current Situation
The economic structure of Greenland is dominated by a very large public sector that is built by the
same principles as the Scandinavian countries. Public expenditure amounts to 60 per cent of GNI
and 80 per cent of GDP. Furthermore, most large private enterprises are publicly owned entities so
that in total 2/3 of the economy is publicly owned (Skatte- og Velfærdskommissionens Betænkning,
marts 2011).
The economic structure of Greenland is characterized by a high degree of concentration in certain
economic activities and, consequently, the absence of many other economic activities. Main areas
of production include fishing industries, construction, extraction of raw materials, and transport.
Table 1 shows the key figures regarding Greenland‟s economy.
Table 1: Key Figures of Greenland’s Economy
Area
Ice-free area
Population
Population, growth rate
Capital
Population in the capital
GDP
GDP – real growth rate
GNI
Disposable GNI
Disposable GNI per
capita
Gross
income
per
household
Inflation rate
Labour force
Unemployment rate
Budget
Exports
Exports - commodities
Exports – partners
Imports
Imports - commodities
Imports – partners
The world‟s largest non-continental island, 2,166,086 km2
410,449 km2
56,615 (January 2011)
0.29 percent (2010)
Nuuk
15,862
11,063 DDK million (2007)
4,0 percent in annual prices (2006)
10,821 DDK million (2007)
14,687 DDK million (2007)
249,000 DKK (2006)
1st decile: DKK 48,076. 10th decile: DKK 1,117,569.
Average: DKK 376,624 (2008)
1.4 percent (Jan 2009 – Jan 2010)
34,041 persons of 15-64 years of age (January 2011)
1,350 persons on average or 4.0 percent
2,429 persons affected by unemployment on average per month (2010)
Income 9.1 million DKK. Expenditures 9.3 million DKK including
capital expenditures of 0.6 DKK billion (2009)
1,923 DKK million f.o.b. (2009)
Fish and fish products 88 percent (prawns 54 percent)
Denmark 86.8 percent, Canada 3.9 percent (2009)
3,669 DKK million c.i.f. (2009)
Machinery and transport equipment, manufactured goods, food,
petroleum products
EU (mainly Denmark and Sweden) 90 percent, Canada and USA 2
percent (2009)
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Balance of trade
-1,745 DKK million (2009)
Block grant
3,495 DKK million in subsidies from Denmark (2010)
Currency
Danish Kroner (DKK)
Exchange rates
100 US $ = 518 DKK, 100 EUR = 745.7 DKK (May 2011)
Source: Greenland in Figures, 2011: Statistics Greenland, 2011.
As can be seen in the table the labour force is small with about 34,000 persons and the average
unemployment rate lies at four per cent. There is a negative trade balance at DKK -1,745 million.
The trading partners are mainly Denmark and Sweden at 90 per cent and Canada and the USA are
lying at only two per cent. This visualizes the fact that all products are going through Denmark
before reaching the international market. Greenland would benefit more by trading with the North
American countries directly, but this is not done. One way to deal with this would be to have
agreements with NAFTA (the North American Free Trade Association), but as long as Greenland is
not a country of its own this might be a future scenario. The integration with the Danish market is
very high, since the block grant received from Denmark is keeping the economical wheel running at
the same time as Denmark is the major trading partner. In a sense, Denmark is trading with itself.
On the other hand Denmark and Greenland is in a dependency relationship, because of the block
grant and it may seem as an obligation to have trade merely between these two nations.
As for Greenland‟s main economic challenges and vulnerabilities, the concentration of industries
obviously entails dependencies on surrounding markets for imports. This concerns in particular
manufactured products, machinery and livestock.
In accordance, the balance of trade shows a yearly deficit of between DKK 1½ - 2 billion (DKK
1,745 million in 2009). Exports derive from two areas: the fishing industry, which accounts for
about 85 per cent of all exports and the upcoming/growing mining and petrol industries accounting
for the residual about 15 per cent. While looking at the recent developments (in table 2), we can see
that the real growth in GDP has been declining as a result of the recession taking place worldwide.
The average unemployment level has been staying roughly at the same level through 2007-2011.
The inflation was unusually high in 2008, but has otherwise been at a modest level. The budget
deficit has been somewhat under control after the problematic year of 2009.
Table 2: Recent Developments
2007 2008 2009 2010 2011
Real growth in GDP, percent 1,5
2,5
-2,0
0,0
1,0
Average unemployment
1.497 1.133 1.210 1.340 1.400
Inflation
2,8
6,8
1,7
1,9
2,0
Budget deficit, million DKK 267
218
950
227
212
Source: Skatte- og Velfærdskommissionens Betænkning, marts 2011.
The real challenge for Greenland‟s economy in coming years will be to control a continuing and
possibly rising budget deficit as efforts are needed to improve education, the health sector, and the
labour market. Another challenge is to reduce the dependency on imported labour force, which will
happen through enhanced education, but as new industries are promoted this will probably lead to
some imported labour force anyhow, since the labour force is so small. Greenland will still need
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workers from abroad. There has been a governmental discussion concerning an increased
privatisation through improvement of entrepreneurship and innovation. There is, for instance, an
“innovation school” in Nuuk, but at the same time the government is afraid of too much
privatisation. These challenges are very hard to overcome due to different political views.
Economic advances are said to occur in societies where innovation and creativity are encouraged.
People must feel free to express their ideas and have the ability to participate in politics in a broad
manner (Srebrnik, 2000). Small entities often have a high degree of trade, which allows them to use
their resources to sell certain goods and buy those commodities they cannot produce by themselves
(Srebrnik, 2000). Another tool for improving the economical situation is by introducing legislation,
where innovation and entrepreneurship are promoted (McKercher, 2000).
Advantages of Being Small
Being small makes a flexible and easy administration possible. Small jurisdictions facilitate
economical development through own programmes for economical change. The change from being
a weak economy to a strong economy might be easier to maintain in smaller entities, while the
administration can directly meet the challenges and make decisions more rapidly than in a larger
more bureaucratic environment (Milne, 2000). There are, of course, different ways to come to terms
with the challenges. One way, might be to use external consultants and experts, as the tax havens of
Isle of Man and the British Channel Islands have done. Another factor is a psychological process
where people become aware that they can make a difference by acting collectively to reach
common goals (Milne, 2000).
A main advantage for Greenland being a very small economy is profitable unilateral and bilateral
agreements that have been made particularly with Denmark, yet also with the EU. This is also a
means by which small entities usually manage to become important trading partners in the
international market by using agreements with larger entities to reach the global market or become
members of regional trading blocks (Milne, 2000). The geographical location between certain
markets is also an advantage. Greenland has a real potential here, since the island is lying between
the North American and European market.
Relation to Denmark
For Greenland the main advantage of being a small economy is the yearly transfer of a block grant
from Denmark. In 2010 this grant amounted to about DKK 3.5 billion or 1/3 of GDP. With the
implementation of self-government in Greenland 21 June 2009 this yearly block grant is frozen at
the 2009 level without possibility of extension. In the new Self-Government Act from 2009, there is
a statement that the block grant will be reduced to half the amount if the incomes from natural
resources exceed DKK 75 million (Lov om Grønlands Selvstyre, juni 2009).
While the block grant obviously is a strong support for the economy as a whole it also functions as
a security resort as it shields the economy from external shocks such as, for example, financial
crises. Hence, in the face of the financial crisis of 2008 and the whole world suffering from a deep
recession, Greenland, in 2008, saw a rise in GDP and a very modest fall in unemployment. A year
after the unfolding of the worldwide crisis Greenland was also hit by the recession (see table 2).
Mitigating the Negative Impacts and Maximising the Positive Impacts
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This section deals with the plans by the government to ensure a more diversified economy in
Greenland; the focus is on the mineral resource area, and in particular, social impact assessments. In
this connection the experiences of large scale resource development in other countries have been the
basis for adopting the method of mitigation of negative impacts and maximisation of the positive
impacts. The following will present a short history of the development of social impact assessment
(SIA) followed by a description of current international principles and lastly the Greenlandic
guidelines for social impact assessment.
In the 1970s the National Environmental Policy Act of 1969 (NEPA) was signed by the USA. This
law introduced the first steps towards what is now called social impact assessment. The core point
of the law is that, before actions are allowed “a balanced, interdisciplinary, and publicly available
assessment of the action’s likely impacts” (Freudenburg, 1986, p. 453) must be prepared if the
action is likely to have an effect “significantly affecting the quality of the human environment”
(ibid.). This is the first step of a legislated resembling social impact assessment, and the subsequent
development has been significant in the USA and in other countries as well.
In 2003, Frank Vanclay prepared a document for the International Association for Impact
Assessment (IAIA), called “Social Impact Assessment – International Principles”, which lists a
number of bullet points of what is important regarding this particular approach. Examples of these
bullet points are: “assist in the development of legislation and policy at the national level;” …
“establish minimum standards for SIA practice;” … and “promote the integration of SIA in all
impact assessments (especially environmental impact assessment and strategic environmental
assessment” (Vanclay, 2003). Vanclay also mentions that every country has its own social and
economic priorities in regulatory context and “that guidelines need to be deduced from principles,
and principles need to be derived from core values” (ibid.). Hence the people, to whom the
guidelines are directed need to „develop ownership‟ if they are to be adopted and utilized (ibid.),
and the document can serve as a basis for development of national guidelines with consultation of
stakeholders in their own countries.
In Greenland the Act on Greenland Self-Government entered into force June 21, 2009, with Kuupik
Kleist4 as the Premier. The coalition agreement 2009-20135 that entered into force June 10, 2009,
states that the competence area of extraction of minerals and non-living resources is to be
transferred from the Danish state as soon as possible. This means that the responsibility of mineral
resources is in the hands of the Greenlandic Government administered by the Bureau of Mineral
and Petrol (BMP), and the new Mineral Resources Act (MRA) from January 1, 2010. The coalition
agreement also states a set of values of Self-Government:
First the shared values are:
Self-Government characterized by solidarity, cooperation and strength shall be created
through an open and democratic dialogue. This demands that people are active
participants and take their share of responsibility for a societal development that is
based on the fundamental belief that all people are equal in dignity and worth. The
4
Elected in June the 2nd 2009 with an impressive 19,2 % of the 28.510 voters, an increase by 16,3 % since the last
election in 2005 <http://www.valg.gl/V40.aspx?Election=53394fe3-f2b9-45bc-9dd4d93dc86cc815&District=&Board=&Tally=&Location=&SortedBy=CandidateNTopVotes&SetLanguage=da-DK>
5
Coalition Agreement of June 2009 by the parties: Inuit Ataqatigiit (IA), Demokraatit (D) and Kattusseqatigiit Partiiat
(K) <http://uk.nanoq.gl/Emner/Government/~/media/9EOC6F8EBEFE42758CB5D9FC29FC2358.ashx>
7
communal bonds between people shall be strengthened and contribute to a societal
development which is based on the Greenlandic culture. Changes must be created by
paying due respect to the principles of collective and sustainable management and
utilization of all living and non-living resources (Coalition Agreement, 2009).
The fundamental values of Self-Government should be:
Respect, credibility, valorisation of diversity, determination as well as the courage to
think innovatively and holistically are our core values. As a self governed people –
our language and culture enjoy international recognition. The awareness of this
recognition should be strengthened as it reinforces our self-respect as well as it
promotes respect from the world at large. Our country is an open society which
appreciates diversity. We will create enabling conditions so that people have the
opportunity to be integrated into the Greenlandic society (Coalition Agreement, 2009).
And the principle values that implementation of planning and policies should be about:
“… democratic principles as well as the existing international instruments and treaties on
human rights”.
“… utilization of resources rests on principles of equality and solidarity as well as on the
principles of sustainable development.”
“… friendly to people from abroad.”
“… assumes its share of the global responsibilities and which defends and cooperates with
other indigenous peoples as well as with all other peoples of the world.”
“… assume and respect all existing international obligations and responsibilities.”
“… governance should be instated which is adapted to the experiences and conditions of the
country and its people” (Coalition Agreement, 2009).
And the quote from the section about mining, large-scale industries and oil:
We accept exploitation of the non-living resources as an important potential – though not at the
expense of our environment. When Self-Government is a reality and Greenland takes over
responsibility for the non-living resources, it will be important to have legislation that ensures
people direct influence and involvement in the decision-making processes (Coalition Agreement,
2009).
With these statements in mind, the crucial lines from the legislation with economic significance is
that in the Act of Greenland Self-Government, section 6 states that the responsibility assumed by
the Greenland Self-Government shall be financed by the Self-Government, which is the big
difference from the Act of Home-Rule, where block grant comes with the assuming responsibilities.
Also in article 8 it is clarified that the revenues from the mineral resource activities (refers to
section 7) in Greenland shall be reduced by half the revenues that exceeds DKK 75 million, which
corresponds to the ambition of becoming economically self-sufficient from the Danish
Government‟s block grant (which was DKK 3,439.6 million in 2009) (The Greenland-Danish SelfGovernment Commisssion’s Report, 2008).
The MRA section 16, subsection 3 state that a permit for exploitation can only be given to limited
company and section 18, subsections 1-4 state that the licence-holder can be required to hire
Greenlandic labour to a certain extent and also that the licence-holder must use Greenlandic
enterprises. This is in order to determine the extent of processing and exploitation of mineral
resources on Greenlandic soil. However, the processing may lie outside Greenland if the costs are
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very high or greater inconvenience while conducting the survey for the license is occurring. The
important thing is to reassure that preparation and implementation of the plans for exploration and
exploitation are undertaken by social sustainable means (MRA, section 18, subsection 4).
The limits of the SIA process, as the MRA section 1, subsection 2, outlines is that the resource
activities are performed in a sound manner as regards to social sustainability and appropriation,
including the acknowledge of the best international practices under similar conditions. In section
76-78, we find that if an activity can be assumed to have an impact to a high degree on the
community, it will only be accepted if there is a social impact assessment prior to this activity and if
an ensuing report is accepted by the Government. The Government decides if there is a need for
SIA and a written report. The licence applicant is responsible for conducting the SIA and delivering
the report, as well as a non-technical summary. The report should be done in an appropriate manner
and show, describe, and assess the direct and indirect impact by the activities on social relationships
and interactions between conditions, interactions between conditions and cumulative effects of
impacts on conditions. The Government decides further about SIA conduct, report and approve of
report. The information will be publicly available through a web site or in another suitable way.
The Guidelines for SIA in Greenland states five main bullet points as major objectives:
1) to engage all relevant stakeholders in consultation,
2) to provide a baseline study before the project,
3) to provide an assessment from the baseline study to identify positive and negative social
impacts at both local and national level,
4) to optimize the positive and mitigate the negative impact from resource activities throughout
the projects lifetime,
5) to develop a Benefit and Impact Plan for implementation of the Impact Benefit Agreement
(Guidelines for Social Impact Assessment, 2009).
The main issues in the Greenlandic context are the recruitment of Greenlandic workers and to
engage Greenlandic enterprises and at the same time ensuring the knowledge transfer and
preserving the socio-cultural values and traditions by the Greenlandic people (Guidelines for Social
Impact Assessment, 2009).
Prior to any SIA it is emphasized that some characteristics need to be acknowledged, which might
influence the process: a) the language in use is Greenlandic, but people do have commonly bilingual
skills so they do also understand and speak Danish, b) the small population is scattered around a
large area, c) the Greenlandic communities are relatively small, d) the one-way economy, e) there is
little experience in the mining sector, even though some mining has taken place in the past, and
finally f) there are certain local and national characteristics that might be considered before
considering conducting a SIA.
The following figure describes the formal process of establishing a SIA report:
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Figure 1: Overview of the process of preparing a Social Impact Assessment
Source: Guidelines for Social Impact Assessment – for mining project in Greenland, p. 6.
Figure 1 shows the process of preparing a Social Impact Assessment. On the left it is seen that the
stakeholders are in a two-way participatory interaction throughout the whole SIA process. In the
middle there are two main „process blocks‟; the first consists of four boxes from the top, including
scoping, relevant material as background, draft of the SIA report and the final revised SIA report of
submission. This procedure will take one to two years to conduct. When the revised final SIA report
has been submitted, the Impact Benefit Agreement (IBA) negotiations are taken place between the
Bureau of Mineral and Petrol (BMP), the municipality in question and the licence-holder. The last
procedure with the last boxes is referred to the signing of the IBA and implementation, monitoring
and evaluation of the IBA. On the right side we see the involvement of the BMP and the formal
hearing process (Guidelines for Social Impact Assessment, 2009).
In the scoping process there will be a presentation of resource development projects and there will
be some pinpointing to the relevant stakeholders and issues at hand before the project starts, and
scoping ends with a detailed plan for the SIA, the Terms of Reference (SIA-Guidelines, 2009, pp.
6). Selected components of the SIA is starting with a baseline study which consists of clear
description of existing social conditions and this will be the basis for monitoring future
development. The potential impact and development opportunities expected need to be analyzed
and qualified approximations are based on the scoping and baseline studies, where analysis of other
alternative project design should be implemented. These analyses shall take all development plans
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into consideration and direct and indirect impacts should be included. “SIA aims at maximizing
development opportunities and mitigate negative impacts” (SIA-Guidelines, 2009; 10) and the
residual impact analysis after mitigation included in SIA is part of the mitigation discussion, as well
as, development opportunities that are not maximized as part of the development discussion.
Mitigation and development initiatives work as the foundation for the Benefit and Impact Plan, a
draft version of managing the impacts, and this will be the basis for negotiations of IBA. IBA will
consist of a Monitoring Plan, to observe changes over time, and an Evaluation Plan, to assess if
there is a need for adjustments in the Benefit and Impact Plan. So, by scoping issues and relevant
stakeholders, and to make a baseline study, and by that making an assessment of social impacts, and
with this a Benefit and Impact Plan, and the signing of an Impact Benefit Agreement, that also
consists of a Monitoring Plan and Evaluation Plan, which are dynamic and interact in relation to the
observed and measured development, this will mitigate the negative impacts and maximize the
positive impacts favourable to Greenland.
The problem with the whole idea of an SIA in Greenland is that the same authority that is outlining
the regulations is also deciding which companies receive the license for what activity. The BMP is
also acting as a control mechanism for the whole procedure, which could pose a problem. However,
this discussion has not been in focus, since the Government seems to be in charge whatever
happens. Other countries have been using a different model, where there is a more neutral
supervisory body that has been established (e.g. the Norwegian model). Norway has become a role
model for Greenland in the area of oil and gas exploration and possible exploitation, so the same
standards and rules as Norway uses are also used by Greenland in that particular sector. The mining
industry might have to look for similar models in order to provide the best standards as possible.
Sweden and Finland could act as possible models in this area, since mining are taking place in
Arctic conditions also in those countries.
Greenland’s Role in International Relations
The relation to the EU consists of partnership and trade agreements as well as Greenland‟s access to
three EU programmes, the ERDF (European Regional Development Fund) programme, the OCTA
(Overseas Countries and Territories of the European Union Association) programme and the
Northern Periphery programme (NPP). In total the agreements amount to a yearly transfer from the
EU to Greenland of 42 million euro of which 39 million euro are actualized. There is a
representative in Brussels, who is acting as the Greenlandic representative in OCTA. Most of the
agreements between Greenland and the EU consist of trading agreements, fishery protocol and
through the NPP programme Greenland takes an active part in the work regarding the climate
change. The NPP is focused on the Arctic and the North Atlantic area. As to the Partnership
Agreement, the main elements are a budget support of some 3.3 million euro and a transfer of
fishing rights of 11 million euro. Currently, Greenland is negotiating for a higher budget support.
Regarding the Trade Agreement a preferential treatment values up to 5 million euro. However, this
agreement has become completely eroded by liberalization. The two programmes of ERDF and
OCTA access amount to a little more than 1 million euro, though their importance derives not the
least from their opening up for network and shared learning opportunities.
Greenland‟s role in international relations has increased during the years. Greenland is also taking
part in the Arctic Council, the Nordic Council, the International Postal Union, the Inuit Circumpolar
11
Council, NORA (North Atlantic Cooperation), NAFO, IWC and so on. Greenland is also acting on
behalf of Denmark in UN organizations related to indigenous peoples.
Conclusion
By way of conclusion we can say that Greenland has had a rapid development from the colonial
past to present day. The development may have been too fast in some areas and that might be an
explanation why the economical conditions suffer somewhat from the optimal conditions. However,
as we can see from the above mentioned example with the mineral resources, there seem to be a
political will in the current Government to improve the economy by taking an active stand
concerning the treasures of natural resources that Greenland has in store. This, of course, is not
without problems since people living in the municipalities along the coast where mines are to be
placed may not support the same ideas as the Government or the political elite. Another part of the
problem is to encourage people to perhaps re-educate themselves in the new sectors. To convince
fishermen and hunters to re-educate is not an easy matter. There are a lot of problems in the above
mentioned coalition agreement that is now in place for the years to come. The political visions
might not correspond with the true reality. Greenland is a young nation and the nation-building
process taken place face challenges to overcome the heavy economical burden that a future
sovereign country might entail.
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