Greenland votes with mineral riches in the balance

Greenland’s general election on Tuesday (12 March) is effectively a referendum on how far the country wants to embrace international mining companies, energy giants, and foreign workers.

Kuupik Kleist's earliest memories are hunting whales with hand-thrown harpoons. Now, as Greenland's prime minister, he is feted by Chinese and European leaders as he opens up its untapped mineral resources.

A verdict on this country's transformation comes on Tuesday, when this island – a quarter the size of the United States and with only 57,000 mostly Inuit inhabitants – holds a general election.

There is only one polling station in the capital Nuuk, which has just two traffic lights and where hunting is still the most popular pastime.

But the vote may pack a global punch.

After four years of Kleist – a quiet-spoken musician known as Greenland's Leonard Cohen for his gravelly voice – the vote is effectively a referendum on how far it embraces international mining companies, energy giants, and foreign workers.

At stake may be Greenland's growing geopolitical role as global warming and the thawing of sea ice open up new sea lanes, minerals and oil fields – drawing the interest of world powers from China to the United States.

"There is a growing nationalist backlash. It's not a nice thing to see," Kleist said, sitting in his ninth floor office overlooking the snow-capped hills surrounding Nuuk Bay.

"The fear of being overrun by foreigners is exaggerated," the 54-year-old said. "We are becoming a global player. We need to avoid ethnicity, nationalistic feelings."

With Greenland having self-rule from Denmark aside from defence and security, the vote has seen a split between Kleist and an opposition linked to traditional Greenlanders like fishermen and hunters who feel he has gone too far in welcoming foreign companies.

There are calls for more taxes on foreign firms, growing suspicions about Chinese mining investments, demands for more environmental safeguards and even anti-colonial rhetoric to limit the use the Danish language being spoken.

"The main issue is that people feel that they are not part of the decision-making process of big scale projects and mining," opposition leader Aleqa Hammond said at her small campaign offices in Nuuk. "Where is the voice of the people?"

Hammond also grew up in a remote village. Her father died when she was young after he fell through ice while hunting. She says her family tried to make her marry a hunter. She refused. Instead, she has a good chance of being next prime minister.

Since Greenland won self-government in 2009, most politicians have aimed for growing autonomy and eventual independence. The more revenues from mining or oil, the more Greenland weans itself of Denmark's annual grant that accounts for more than half the island's budget.

In Kleist's gleaming new offices in Nuuk, many Danish civil servants sip cappuccinos, huddle over computer screens and plot policies from finance to mining regulations. Greenlanders mention the symbolism of an executive and its staff whose offices sit over Nuuk's one shopping mall.

The civil servants stand out in Nuuk, where sushi bars and cozy, heated cafes with sofas and internet contrast with barren, concrete housing estates of fishing industry workers.

Hope or hype?

Not one mining or oil project has got off the ground yet.

But more than 100 exploration licenses have been awarded. There are large deposits of rare earths, used in products from wind turbines to hybrid-powered cars. China accounts for the majority of world supply. There are hopes for gold and zinc.

Government officials says reserves may be equivalent to as much half of the entire North Sea.

Central to the debate in Greenland is a $2.3 billion (€1.76 bn) project for an iron ore mine by the British-based London Mining Plc near a fiord in Nuuk. It may involve diesel power plants, a road and port and would supply China with iron to fuel its economy.

Some 2,000 Chinese workers – the equivalent of around four percent of Greenland's population – could fly in for its construction, touching nerves where unemployment is rising.

"People feel that I am unemployed but the Chinese are coming in by mass," said Hammond.

Seal hunting

At Nuuk's windswept port, fishermen drag in fish and seals from a catch. The floor on a small warehouse is awash with blood. There is a gagging stench of dead flesh.

Johannes Heilmann, 64, grew up hunting for whales. He still fishes with a 19-feet long boat encrusted in ice in the harbour, shooting occasional seal with a rifle to sell for meat in Nuuk.

Fishing accounts for 90% of Greenland's exports.

Heilmann is the Greenlander that is suspicious of mining. He campaigns against Kleist. He complains about fishing quotas, and how cheaper foreign produce is pushing out local food.

"No matter how much mining comes here, fisheries will be our main industry," Heilmann said. "Politicians should pay more attention to us."

Heilmann worries about London Mining. He fears any spill from the iron ore ships could destroy fishing.

"I don't mind if Chinese come here," he said. "But if there is an accident?"

Others are more nationalistic. One new party, Partii Inuit, has caused controversy by calling for more prominence for Greenlandic language over Danish, still widely used here.

Four hours north of Nuuk by boat lies Maniitsoq, one of many villages dotted on the western coast, relying on state subsidies for heating and communications. Unemployment is high.

U.S. giant Alcoa Inc has considered building an aluminium smelter there, strategically sited between European and North American markets. It could entail the import of thousands of workers, possibly from China.

Many here are desperate for Alcoa after much of fisheries has vanished. The town is huddled on an outcrop of windswept rocks with rusty housing blocks.

"The younger people, they all want Alcoa," said Jens Moller, head of a community training project in Maniitsoq. "The older generation want better fishing. They are the ones likely to vote for the opposition."

In Nuuk, Karsten Peter Jensen is a 27-year-old post graduate student. He enjoys hunting in fiords for grouse or reindeer. But he also enjoys sushi bars and chic shops.

"The last four years have been very positive, we have looked to the outside world," Jensen said. "But for other people, they think change has come too fast. There is a perception Greenlanders have been put aside a bit."

Chinese ghosts?

Worries that China wants an Arctic foothold have risen in a territory that for years was a Cold War ally of the West.

It was little surprise when President Hu Jintao, China's outgoing leader, paid a three-day visit last year to Denmark, home to just six million people. Many assumed Greenland's riches were on his mind despite official denials.

Hammond says she would introduce royalties for mining companies and revise a law passed last year that effectively allowed big mining companies to employ thousands of foreign workers for construction of projects.

"For the greedy ones that want 100% of everything, Greenland is not for them," Hammond said.

That has some investors worried. Several mining executives, who asked to remain anonymous as they did not want to talk about politics, said investment decisions were on hold.

Few believe Greenland would turn against mining. The concern is more that politicians could hurt a fragile and emerging industry through demanding too many royalties and taxes.

"We are a small country that is in competition with the rest of the world," said Maliina Abelsen, finance minister. "When you build up expectations, you get people saying that we have so much in the ground, so we are fine."

"But we cannot eat that for breakfast. It is still in the ground."

An annual grant from Denmark has been effectively frozen at around 3.5 billion Danish crowns (€469 million) and will shrink in real value over time.

Kleist pointed to his view over Nuuk. Icebergs floated by. He worried that if he lost power he would lose the view.

"There's always been a tendency to isolate Greenland from the rest of the world," Kleist said. "It's been my personal ambition to open us up. There is no alternative."

EU Commission

But Greenland's prime minister warned the European Union he could scrap a preliminary deal intended to safeguard the bloc's access to his country's huge mineral resources, saying Brussels has failed to follow through.

"I don't understand the behavior of the (European) Commission," Kleist said.

EU Vice President Antonio Tajani flew to Greenland last year to sign a memorandum of understanding (MOU) over its raw materials. Greenland has large deposits of 6 of the 14 raw materials seen as crucial to European industry.

The document was aimed at improving European access to Greenland's minerals. Some diplomats said it was effectively about ensuring Greenland did not lock in mining contracts with just one country, such as China.

Kleist said it was time for Europe's executive Commission to follow up with action, including a firm deal on resources.

"I signed a letter (to the EU) last month (saying) if we were not to take further steps to negotiating a real agreement we would rather put aside the MOU. I have not got any answer on that still."

"I have been to Brussels many times," Kleist added. "I don't have a thorough explanation why the big interest in Greenland and the Arctic area does not play out in really concrete activities from the European side."

He said European companies would always be welcome to invest in Greenland, 

There was little surprise the memorandum with the EU was signed in the same month as Chinese President Hu Jintao - leader of the world's most populous nation - paid a three-day visit to Denmark , with just over 5 million inhabitants. It was a visit that many observers said was chiefly about a stake in Greenland.

"The Commission was really eager to negotiate this (the MOU)," Kleist said. "We initially told the Commission we are really busy handling big issues in that field. But they kept pressing, visiting us."

Kleist said he had broadly agreed with Brussels that Greenland would receive around €25 million a year to help mutual research and development in the mining sector.