Is this the future we want for Greenland?
I'm on some ridiculous mailing lists. I frequently get flyers for round-the-world trips at obscene prices, in your own private jet, etc.
Recently I've been getting more and more, starting at $50k per couple, to go up to the Arctic on an icebreaker and see global warming for yourself! Okay, ignoring the carbon footprint of the trip... Apparently, in the past few years Greenland has become a fantastically popular destination for the same reason. Because the effects of warming can be seen clearly in the Arctic, where temperatures have been rising twice as fast as in the rest of the world, Greenland is now a hot spot (ouch!).
But there's also a different kind of capitalism going on. Oil and mining prospectors have hit the country hard, as new areas are available for digging for the first time, after being buried beneath a sheet of ice forever. No one's sure that there's anything there, but hey! Let's find out! The Independent noted that the entire flying capacity of Air Greenland has been booked by prospectors.
Diplomats from the United States, Russia, Canada, Denmark and Norway get together not to talk about how to prevent this issue, but to work out competing oil and gas rights in the polar seabed.
Alcoa, the U.S. aluminum giant, is on track to build an enormous aluminum smelter in southwest Greenland. The Greenland plant is being touted as "green" because it will be hydroelectric — powered by glacial meltwater — though Alcoa's smelters emit 6.1 million pounds of air pollution annually. Alcoa is reaping the benefits of the warmer climate its own emissions helped to create.
Hudson Resources recently had a mining find -- a 2.4-carat diamond. In Rolling Stone, Mark Binelli talks to Hudson president James Tuer. "I think the marketing of a diamond coming out of Greenland would be fantastic," he told me excitedly. "Would you rather have a diamond coming from Greenland — with its connotation of ice and cold and pristine environment — or, say, Angola, an area of war and strife?"
Putting aside for a moment whether global warming diamonds are better or worse than conflict diamonds, the reality is much darker -- Greenland may be a short time away from having both!
I've been reading Thomas Friedman's new book, Flat, Hot and Crowded. Yes, I know he's practically rewritten How to Lie with Statistics but he does tell a good story.
Friedman gives a name to something I've been noticing for a while: Dutch disease. This term describes how when a country has a windfall in natural resources, the entire country de-industrifies. Let me explain.
1. The value of currency rises, due to the sudden influx of cash from oil, mineral deposits, etc.
2. The strong currency raises the price of the country's goods to foreign buyers, making all (non-oil) exports noncompetitive and imports very cheap.
3. Citizens buy cheap imports with abandon!
4. The domestic manufacturing sector gets wiped out
So you don't just have an economy helped by natural gas reserves -- you have an economy that's now 100% dependent on those reserves. The country has no need to invest in a good education, rule of law, innovation or entrepreneurship. UCLA political scientist Michael Ross goes beyond the definition of Dutch disease to observe that oil and mineral-backed regimes do not have to tax their people, as they only need to dig a new well, or open a new mine, to get the funds they need. When they don't need the money of their citizens, they also don't have to listen to their citizens. No taxation AND no representation!
Finally, of course, wealth leads to more patronage spending, which continues to dampen calls for industrialization and democracy. Money also allows governments to spend inordinate amounts on suppressing the will of the people. So you buy them off, or you keep them down. Either way, it leads to corrupt regimes.
Is that the future we want for Greenland?

