Recent statements by U.S. President Donald Trump regarding the possible takeover of Greenland have sent shockwaves far beyond diplomatic circles, rattling financial markets, NATO, and Arctic investment projects. While in 2025 Trump’s claims over Greenland appeared eccentric and were not taken seriously, perceptions among the public, the media, and policymakers shifted after the operation in Venezuela. The U.S. president has acquired a reputation as a politician willing to disregard established norms and international law. Now, the Arctic has become the next arena.
Why has an autonomous Danish territory with a population of just 56,000—80% of which is covered by ice—generated such excitement? The answer lies beneath the ice. Greenland is believed to hold natural resources valued at up to USD 5 trillion. In addition to an estimated 13% of the world’s oil reserves and 30% of its gas reserves, the island is thought to contain around 36 million tonnes of rare earth elements (including neodymium and praseodymium), metals essential for magnets used in wind turbines and electric vehicles. Greenland also hosts lithium, fluorine, tantalum, niobium, phosphorus, molybdenum, titanium, and more.
Given the strategic dependence on China, which controls most global production, the prospect of a U.S. takeover of this Arctic “El Dorado” could disrupt the geoeconomic balance. However, the prospects for large-scale extraction on the island remain largely theoretical: the lack of infrastructure, exorbitant operating costs, and extreme climate conditions severely constrain development, while the local economy continues to depend heavily on fishing and subsidies from Copenhagen.
Market Reaction
Financial markets, for their part, reacted with characteristic aggression to this escalation. Shares of companies linked to Greenland, such as Grønlandsbanken (+33%) and the mining firm Critical Metals (+108%), surged, turning into “mega-stocks” and becoming the subject of intense speculation over a potential U.S. acquisition.
At the same time, S&P 500 futures fell by 0.9% (around 400 points on the Dow), while the Nasdaq dropped by 1%. Futures on the European STOXX 600 index declined by 0.27%, and the index itself fell by 1.2%. Asian markets also weakened: the Nikkei fell by 0.5%, while Shanghai rose by 0.2%. U.S. Treasury bonds, the dollar, and Bitcoin also declined sharply. The VIX index—often referred to by traders as the “fear index,” as it measures expected market volatility—rose above 20 for the first time since November, signalling heightened anxiety.
The scale of the sell-off shows that investors can no longer ignore the shocks of recent weeks—the takeover of Venezuela, Trump’s attacks on the central bank, and now threats involving Greenland. This volatility has frozen investment decisions across the Arctic region, as companies hesitate to commit massive amounts of capital in such an unstable geopolitical environment. Market participants fear worst-case scenarios, ranging from the collapse of NATO to a full-scale trade war.
The European Context
Beyond economics, the Western security architecture has been seriously undermined. By threatening a historic ally and NATO founding member, and by implying that the Alliance itself could become a sacrificial “choice,” Donald Trump has triggered an unprecedented crisis of trust. For Washington, Greenland is a crucial strategic asset, hosting the Pituffik Space Base, a key component of missile defense systems. For Europeans, however, the idea of one ally annexing another amounts to an unacceptable “Arctic Munich,” in the words of the Delors Institute. NATO—whose Article 5 is designed to respond to external aggression—finds itself paralyzed by an internal threat, reduced to background noise and eroding confidence in the Alliance.
For Europe, the Greenland situation adds another layer of uncertainty. Questions of sovereignty, security, and the role of the United States intensify pressure on an already fragile European economy. The recent introduction of reciprocal import tariffs between the U.S. and the EU is unlikely to be the sole driver of escalation. The EU is also considering, for the first time, activating its “anti-coercion instrument,” which provides for measures to protect the Union and its member states from all forms of economic coercion. These measures could include restricting U.S. capital’s access to certain EU industrial sectors, imposing new taxes on American tech companies, and more. An even more radical step could involve EU authorities compelling companies to reduce investments in the United States.
The Military-Strategic Dimension
This renewed tension is part of a broader “return of the Great Games”—the 19th-century rivalry between empires for control over Central Asia, now transposed to the Arctic. Russia, already controlling half the region, is strengthening its military presence by deploying 30 bases and modernizing its fleet of nuclear-powered submarines. China, a self-proclaimed “near-Arctic state,” is developing its “Polar Silk Road” in cooperation with Moscow, seeking new maritime routes and access to resources. Faced with this increasingly assertive Sino-Russian axis, the United States—long focused on other theaters—has moved aggressively to catch up, even at the risk of alienating its own allies.
As a result, the situation in Greenland is destabilizing markets and alliances alike, crystallizing a brutal clash of vast geoeconomic interests, intensifying strategic rivalries, and raising doubts about the international order. In our view, the most likely outcome is a coordinated reset that expands U.S. influence without formally violating sovereignty. The path to such an outcome, however, will be arduous and fraught with real geopolitical and market risks. Miscalculations are possible, and the growing use of financial markets as a lever of influence suggests that the next steps will have consequences far beyond the Arctic.
