WASHINGTON — With less than 60,000 people spread across more than 830,000 square miles, Greenland relies heavily on air transport to move supplies and people up and down its coast.

So when the local government issued a solicitation to build three new airports, the move made sense from a business perspective. The project would be expensive, but would improve commerce and make life on the island easier for its residents.

Then a Chinese company — owned by the government in Beijing, and once blacklisted by the World Bank — put forth a bid, and a simple request for proposals transformed into a project with international diplomatic ramifications.

Denmark, which has final say on national security issues involving Greenland, objected. The government in Greenland then insisted China Communications Construction Company (CCCC), which has succesfully worked on large infrastructure projects around the world, would remain one of its finalists for the projects, setting up intense negotiations between two governments.

All this comes as officials across Europe are raising alarm over whether Chinese economic influence on the continent is becoming a national security problem — with Danish officials specifically worried that the partly-government owned company’s interest in Greenland could have a lasting impact on a key American military base located there.

The Chinese “are players in the world economy, as are others, and should be treated equally. But we are on our guard,” Danish Defence Minister Claus Hjort Fredericksen said in a June 4 interview in his Copenhagen office.

“Of course, we welcome cooperation with China in the commercial field. As long as it has commercial purpose, we are not opposed to that. That is a normal way to expand world trade,” Fredericksen added. He spoke with reporters during a visit to Denmark arranged by the Atlantic Council. Defense News accepted travel and accommodations for the trip.

“But we are very careful looking at the issues if these installations may have other purposes, and that is what is causing trouble.”

Without a comprehensive strategy to regulate foreign investment, China wins In order to protect America’s vital supply chains from foreign interference, regulations and laws governing the primary watchdog for foreign investment must be updated.

Economic influence

To better understand the Greenland situation, consider a broad view of Chinese investments in Europe.

During the height of the economic crisis in Europe, Chinese firms swooped in and picked up businesses and infrastructure at below-market prices. Since gaining that foothold, China has begun investing in everything from mines to scientific expeditions in the high north, said Magnus Nordenman, a regional analyst with the Atlantic Council, and the country has used its economic leverage to drive public policies.

China “scooped up a bunch of stuff for cheap, and later, when there was time for votes in the U.N. about human rights, all of a sudden these countries started backing off,” Nordenman notes.

Transport hubs, such as the Greek port of Piraeus and the Belgian port of Zeebrugge, appear to be a preferred target for Chinese acquisition. Chinese firms now control roughly 10 percent of cargo port space in Europe, according to data from the International Transport Forum.

An American LC-130 Skibird takes off from Kangerlussuaq, Greenland, on June 29, 2014, for Summit Camp. (Staff Sgt. Benjamin German/U.S. Air National Guard)

That makes sense, Nordenman said, when considering the melting ice to the north is opening new transportation routes that China hopes to exploit.

“It is intimately connected to what the [North] Sea can mean for them,” Nordenman said, adding that being able to move material from Europe through northern bodies of water would mean China can no longer be choked off in the South China Sea or Indian Ocean.

In recent years, Chinese firms have invested in several Greenland-based projects, including a mine for rare earth elements and uranium in southern Greenland and an iron mine near the capital, Nuuk. That kind of economic investment has been welcomed as a boost to the local economy.

But in 2016, a Chinese company attempted to buy a former U.S. military base, and the government in Denmark stepped in, vetoing the deal. At the time, Danish officials were quoted anonymously in the press, saying they had resisted the deal as a favor to its longtime American ally.

The CCCC bid for the airport contract would represent another major investment. The airport has an estimated cost of 3.6 billion Danish krone (U.S. $560 million). Such a massive infrastructure project for whatever company wins could potentially set Beijing up as a major economic driver for Greenland.

Like elsewhere in Europe, “the big fear is that even a small Chinese investment will amount to a large part of Greenland’s GDP, giving China an outsized influence that can be used for other purposes,” said Jon Rahbek-Clemmensen, an associate professor at the Royal Danish Defence College’s Institute for Strategy.

This white golf ball-like structure houses one of several radars that scan the skies for foreign military rockets and missiles at Thule Air Base, Greenland. (JoAnne Castagna/U.S. Army)

Pentagon impact

With a broader reach, experts fear China could gain enough influence to push a key U.S. military base off the island.

The U.S. Air Force’s Thule Air Base, located on the western side of Greenland, is home to several strategic assets vital to America’s homeland defense. The Air Force’s 21st Space Wing operates systems related to missile warning, space surveillance and space control from the base; forces also operate the Upgraded Early Warning Radar, used to track incoming ballistic missiles.

In addition, the base is home to a 10,000-foot runway and what the Pentagon claims is “the northernmost deep water port in the world,” which would become incredibly important for any military operation that runs through the Arctic.

“A Chinese presence in Greenland would complicate the U.S. position on the island — ultimately it is not impossible to imagine that China could pressure the Greenlandic government to ask the Americans to leave or demand permission to get a Chinese military or dual-use presence there,” Rahbek-Clemmensen noted.

"We continue to notice significant interest in Greenland by the Chinese,” a U.S. defense official told Defense News when asked about the issue this summer.

“China has made no secret of their efforts to have a presence in the Arctic region, specifically Greenland. The Chinese government is attempting to leverage overseas investments to ensure China’s economic growth and geopolitical influence, but lack legitimate concern for the long-term prosperity of Greenland and her people," the official said.

While Copenhagen has avoided saying much publicly on the issue, Danish officials behind the scenes were asking Greenland not to consider the bid. However, in late May, the government in Nuuk went ahead and announced CCCC as one of five finalists for the contract, setting up a potential conflict between two governments that frequently struggle with their quasi-independent relationship.

Under a self-rule act passed in 2009, Greenland has control over its domestic infrastructure or economic policy issues, but Denmark maintains veto power on security issues. But where does an investment from China stop being a domestic issue and become one of security?

That line is blurry, and Danish officials are tentative to push too heavily so as not to disturb good relations with Nuuk. Pushing too hard could set off a minor constitutional crisis between the two governments over that gray zone between economic and security issues — one that Danish officials would very much like to avoid.

To that end, Danish Prime Minister Lars Løkke Rasmussen met in early June with Greenlandic Prime Minister Kim Kielsen to hash out potential solutions — which could reportedly include Denmark helping fund the project in exchange for Nuuk selecting a different company.

No final decisions have been made on the airport deal, but a deadline is approaching.

“The Parliament of Greenland has been presented with a bill that it will consider during its Fall Session on the framework conditions for the construction, operation and financing of the airports in Nuuk, Ilulissat and Qaqortoq,” said Greenland’s head of representation in the U.S., Inuuteq Holm Olsen. “The Second and Third reading of the bill is scheduled to take place on October 15 and October 22, 2018.”

Holm Olsen noted that in addition to CCCC, two Danish companies, a Canadian firm and a Dutch firm are all finalists. He added that a Danish bank, Den Danske Bank, is serving as a “financial adviser” on the project. Attempts to contact CCCC for comment were unsuccessful by press time.

A massive advertisement for Chinese giant Huawei guarding the entrance to Copenhagen's popular Nyhavn district is a testament to China's investment in Denmark. But officials there worry about national security implications in the future. (Aaron Mehta/Staff)

American tensions

Individuals speaking to Defense News under Chatham House rules during a June trip to Copenhagen are worried that Chinese disinformation campaigns could be launched inside of Greenland to stir up anti-Danish sentiment as part of a push to force Copenhagen’s hand on the issue.

But even without Chinese influence, sentiment among the Danish and Greenlandic public may swing against the U.S. due to ongoing tension between Europe and American President Donald Trump, who has imposed tariffs against European nations for what he has deemed “unfair” trade practices.

Asked about that potential conflict, Fredericksen, the Danish defense minister, said it is important for residents to split the security concerns from the economic ones.

“There is a much more profound interest in having a strong cooperation and a trustful cooperation with the U.S. than other issues,” he said. “I’m not trying to minimize the trade, the implications we have, but we have to be very firm of the shared responsibility; we have to help each other in the NATO alliance and especially with the U.S.”

Said the U.S. defense official: “The U.S. continues to have a strong relationship with our allies Denmark and Greenland and are grateful to them for hosting U.S. forces at Thule Air Base."

That’s where a web of relationships become evermore tangled. If Copenhagen’s main reason for denying Chinese investment is loyalty to its longtime alliance partner, and that partner is engaged in a trade war with fierce rhetoric toward Europe, the situation could become “increasingly complicated,” Nordenman warned.

“Danish public opinion can certainly swing to: ‘Why do we keep backing up the United States, or paying a price to help the United States when the U.S. is imposing tariffs?’ I think that’s a legitimate worry, and in a democracy, ultimately decision-makers have to answer to people,” he said.

The factor Denmark — and all of Europe — may need consider is what China is truly buying, both in the short term and long term, with its investments.

“China may be driven by benign reasons right now, but its actions still have geopolitical consequences that Washington, Copenhagen and Nuuk should be aware of," Rahbek-Clemmensen said.