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BONUS EPISODE: At Davos, the twist in Trump's Greenland tale. So what does Europe do next?
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- [00:05]
A
The unmistakable figure of Donald Trump loomed large over the World Economic Forum's annual get together at Davos, even before he touched down for his big speech. This gathering of business and political leaders and tech titans in their designer ski jackets was about a lot more than the usual fare of AI developments and climate change concerns and global cooperation. I've been coming to this summit now for a decade, and the agenda this year was more like a decisive G7 geopolitics meeting than Davos. As usual, the question's on all Will a US President irate with Europe ignore its warnings, invade Greenland? Might he embark on a major new tariff war with Europe? And could he even sign the death warrant of NATO? It's been a very high altitude political week up here in the Swiss mountains.
- [01:09]
B
We probably won't get anything unless I decide to use excessive strength and force where we would be frankly unstoppable. But I won't do that. All the United States is asking for is a place called Greenland.
- [01:28]
A
I'm your host Ann McElvoy, and welcome to this special edition of EU Confidential from Davos, where I've been talking to key voices from both sides of the Atlantic, gauging the impact on Europe of the 47th President's threats and daily missives. The slogan for this year's World Economic Forum has been the spirit of dialogue. It hasn't exactly lived up to that calm billing, more like a cacophony from the big beasts.
- [01:57]
B
When we look at the situation, it's clearly a very concerning time because we are killing the structure where we can fix the situation and the common challenges we have. Let me be direct. We are in the midst of a rupture, not a transition. Wake up. Where the hell has everybody been? Stop with this bull diplomacy of sort of niceties and somehow we're all going to figure it out. Stop saying one thing privately and another publicly. Have some spine. Have some goddamn balls.
- [02:25]
A
So we thought we would make this podcast across the week to take stock of what it's meant, not just for those lucky enough to be in a swanky ski resort, but for the rest of Europe and how it's politics, economics and institutions of are bearing up to an era of icy winds blowing from the Trump administration. The threat to take over Greenland, challenging Europe's leaders and securocrats on how to respond was one of the biggest topics. And so too was the prospect of an extra 10% tariffs on EU countries and on the UK who opposed the Greenland lunge. In the days as we waited here for Air Force One to finally land. I caught up with several major European players. Two countries with a lot to lose from any weakening of the Atlantic alliance are Finland and Latvia, both of whom share a border with Russia on NATO's eastern flank. They're worried about the president's increasingly bellicose rhetoric on Greenland and the alliance. So I asked Alina Waltonin, Finland's foreign minister, what she thought the strongest European arguments were that might prevail with Donald Trump.
- [03:38]
C
The current position of the US Is a lose, lose position for the US and we are concerned simply because the US and the American people are, of course, our close friends and allies. And we don't think a future that might unfold after all the talks and all the threats even that we've heard over the course of the past days, that it's especially bright for any one of us. So basically, we want to fend off the, you know, any confrontation within the alliance. And this is basically up to the American people to decide on which side of history they want to be. So on the side of providing freedom to the world and prosperity to their own people, or whether, you know, they want to join the camp of, I might use the word predators, Russia and many autocratic countries are behaving exactly in a way that they are not looking for friends, but are just looking for short term benefit. And I'm so certain this is not the future where America wants to find itself.
- [04:36]
A
So do you think that President Trump is behaving potentially as a predator if he moves toward the annexation of Greenland.
- [04:43]
C
I'm still extremely hopeful. And that he's not moving towards the annexation of Greenland simply because I would expect there's massive opposition against the IDA and in the US but certainly I would not hope for even a trade war to happen. That's the surest way to lose wealth here and today and not just in Europe, but in the US and basically everywhere.
- [05:10]
A
So Finland is one of eight NATO allies being faced with additional tariffs, hefty tariffs from the Trump administration. Do you think the EU should respond with very firm countermeasures? It's something that Britain's Keir Starmer, for instance, seems to be quite cautious about, even to have ruled out for now.
- [05:28]
C
In the European Union, we are closely coordinating and seeing where this all is going. And if need be, of course, we are ready to retaliate. But I would like to emphasize that that's not something we want. We don't want a trade war. I think what we agreed in the summer with Europe imposing zero tariffs on the US and the US imposing some tariffs on Europe. I mean, if the US Needs to do some tariffs, which I don't agree with, but if they think so, then fine. But we are not imposing any. Right. It just shows that, you know, we are still open for trade. We are open for free trade with our friends and allies. And that's the future we would hope for our people and for the American people, because that's the best future also in terms of prosperity and wealth to all of our people. But if need be, then sure we are prepared.
- [06:25]
A
Finland sent two soldiers to Operation Arctic Endurance, the NATO military exercise led by Denmark. Donald Trump has made some jokes, some jibes, talking about about Denmark sending a second dog sled. Does he have a point that this is not a muscular enough show of strength by the Nordic allies when it comes to Greenland?
- [06:48]
C
Well, first of all, the two officers we sent over to Greenland with some other partner and allied countries were not to seek any confrontation with the US but basically to set the ground and prepare for eventual larger presence of NATO troops in Greenland together with the US and this entire exercise was organized and carried out in full transparency with the United States. Any Arctic security or any Arctic deterrence would be designed to deter against outside threats such as Russia and China. I can tell that Finland has quite a lot of expertise in Arctic security. We have been, for instance, training US Soldiers in Arctic circumstances over the course of the past years. We have significant capabilities. But if we look at this moment where we are now, there's a hot war waging in Ukraine by Russia, and Russia is carrying out this war in cooperation with China. Now, if we look at Greenland, we haven't seen any, really any Russian or Chinese presence on the ground or on the maritime side for years now. This is not to say that this would be the case for all of the future. No. Therefore, we need to build our Arctic capabilities, which we have been doing as individual countries, but also within NATO. And basically our message is, you know, there's no threat whatsoever against the United States or any member of the alliance right now, which we could not fend off together.
- [08:47]
A
But we've heard from Ursula von der Leyen here, Davos, president of the European Commission, that Europe needs to speed up the push. She's now saying, for independence, not just to be more muscular, but for more independence from the US from security to economy, from defense to democracy. The world has changed permanently. Is that the way you look at it as well?
- [09:09]
C
I would still refer to my point from the beginning, which is that this is now for the American people to decide and I hope we will see the answer pretty quickly because if they go along with any strong ideas, what comes to Greenland and effectively taking land from an allied country, whatever the reason is, then certainly that will mark a significant change in any relationship and certainly for the entire world, not only for Europe, because the rest of the world is watching this theatre extremely closely now.
- [09:42]
A
In the throng of the Congress Centre, where leaders from the corporate and political world mingle every day and delegations whisk through parting the waves with their security details, I met up with the President of Latvia, Edgar Zrinkovitz. He's also a former Foreign minister who's dealt with the US over the Russia threat many times. The crisis over Greenland, he reckons, has been long in the making and it poses a particular challenge to NATO and to Europe.
- [10:12]
D
Since the end of the Cold War, we have seen that European defense identity was non existent. I think we all were hoping to have completely new world order where military force would not be used or wouldn't be probably the number one solution to all our troubles. But since Russian invasion in Georgia actually back in 2008, then Ukraine, 2014 and now 2022, war, and also the very strong message from the United States that either you do increase your defense budget, you do more on defense, or we are leaving. We have come to the conclusion that we need to mobilize. And from that point of view, I would say that that's the position of my country when it comes to Greenland. We still insist that Greenland is part of Denmark, that we can address all the security challenges there through NATO, through collective defense mechanisms, or we can also do more when it comes also to dialogue between the United States and Denmark. So from that point of view, yes, we do have the situation where the problem we are currently addressing has roots in history.
- [11:39]
A
But one problem with Greenland raising its head as it has done this week here at Davos, let's see how this plays out. But it's another wedge, if you like, between America and European security. It's not going that great in terms of finding a solution to the Ukraine war on terms acceptable to Ukraine and to countries like the Baltic states and like your own country now you have Greenland. I mean, are you worried that we are moving further apart and that Greenland is another wedge?
- [12:09]
D
Frankly, I still believe that we can resolve some of outstanding issues. We have had rhetoric about the brain dead NATO back in 2019. We have had issues of defense spending. 5% seemed to be unreachable even a year ago for many night dwellers. And then we were able to make a decision in the Hague. So I'm rather optimistic that we will be able to resolve that, whether that's a major or not. No, I still believe this is simply the new way how some of the issues are being addressed. And yes, maybe the diplomatic core, maybe politicians are more used to discuss things in private now. Seems that we are having a lot of public diplomacy. Makes great headlines.
- [13:03]
A
We hope.
- [13:04]
D
I know that you really love this, but at the same time, I also see that after some of the very, very harsh exchange comes again, diplomacy.
- [13:15]
A
If Donald Trump were to take over Greenland, this would be a real threat to NATO.
- [13:20]
D
We don't go into the hypothetical issues.
- [13:22]
A
The hypothetical is exactly what is happening.
- [13:24]
D
And that's exactly where I used to. But, yes, that's a serious issue for NATO to discuss. And yes, my country, being a small country, still believes in territorial integrity and international law and all those things, because as a small country, that's a kind of, you know, basis of our existence. At the same time, we have two great allies, the United States and Denmark.
- [13:48]
A
Is the US still an ally in the same sense? We spoke with the Finnish foreign minister who said Americans now have a moment of choice between being on the side of freedom, prosperity and alliances, or on the side, she said, of predators like Russia or China. Do you agree with that framing?
- [14:06]
D
Well, I do see that this is not an easy moment for small countries. And yes, there are security interests of the United States, economic interests of the United States on one hand. And then there is a world that actually operates in the last 80 or so years after the World War II, basically based on the design that was made by then United States, the United Kingdom, other great powers. And the collapsing of that world order was not something that I was dreaming when Latvia regained independence back in 1991. So I do see that world order is transforming. I can't deny that I do hope that we are not going to see the predator world order. I would rather hope to see that we have the new world order that probably addresses some of the shortfalls of what we have had so far. We see that the United nations security.
- [15:02]
A
But you do see the possibility of a predator world order?
- [15:05]
D
I do see the kind of transformation that I don't see where this leads. So I can't exclude any scenario. But I still hope from all what I have been doing with the United States, all the discussions with other European allies, that we will be finding the great balanced way of correcting what was wrong, but also not losing what we cherish.
- [15:30]
A
Is this crisis over Greenland overshadowing Attempts to make peace in Ukraine. Some people think that it Davos, you know, they think there should have been Ukraine, America, Davos, and it's green.
- [15:40]
D
I disagree. I think that what we see in 21st of February, we are going to have 4th anniversary of war, which is unimaginable. The fact that today, yesterday or probably tomorrow, we are going to speak about Greenland a lot does not mean that the peace process that has been initiated by us, by President Trump, by President Zelensky, by European leaders, is somewhere kind of moving apart. No. As we speak, there are many diplomatic contacts and works where we are going to end up. That's a big question because I see a lot of goodwill in the United States, in Ukraine, in Europe, but I don't see that goodwill to end the war in Russia. And so, like it or not, but in about 10 days time, or even weeks time, we're going to discuss this issue again and peace in Ukraine is going to be back in headlines and back into the agenda.
- [16:37]
A
If you bump into President Trump, what are you going to say to him?
- [16:41]
D
I would say that I do hope that we will be able to resolve all the issues and that we need to keep transatlantic link, NATO strong and we can resolve things in the collective defense framework. And I do hope that this understanding is going to govern him, govern us in NATO, govern us in Europe, and he'll be able to find ways. And frankly, I sense that there is a bit kind of mood changing, that we have to find ways how to increase security in the Arctic region. But also we need to take the core interests of the international law and order into account. We'll see whether I'm right or wrong tomorrow and the day after tomorrow.
- [17:24]
A
But what about the US's big neighbour to the north, which also likes to keep warm relations across the Atlantic with Europe? Canada, where Mark Carney, the former central banker, won an expected victory over a populist conservative rival with a campaign helped by Trump's suggestions that Canada might best be annexed to the us, is close to the Arctic standoff geographically, but it also needs to find its own way through the world of tariffs and trade changes and become less reliant on the us. So I was keen to hear what Anita Anand, Canada's Foreign Minister, had to say.
- [18:02]
E
Our Arctic foreign policy, as well as our defence policy, sees the defence and protection of the Arctic, from a Canadian standpoint as a fundamental national priority. And in fact, I would like to stress that this is an effort that is our Arctic foreign policy, as well as our defence policy, sees the defence and protection of the Arctic from a Canadian standpoint as a fundamental national priority. And in fact, I would like to stress that this is an effort that is not only in terms of our national interest, but we're working very closely with all other Arctic allies, excluding Russia, obviously, and we meet frequently to ensure that we're doing our respective parts.
- [19:00]
A
So it sounds like you do take that threat very seriously. The Canadian government, of course, you're representing things most. But do you think European allies are taking it seriously enough? I mean, really, I'm asking whether you think, whether you agree with him, possibly not that Donald Trump has a point when he says this needs to be beefed up and taken more seriously.
- [19:20]
E
I do think that our European friends and allies are taking the defense and protection of the Arctic seriously. I can't tell you the number of phone calls that I have had in recent weeks on this very topic. And let's turn our attention to NATO for a moment. Canada is a founding member of NATO, of course, and NATO is the North Atlantic Treaty Organization. And I have been advocating for months, indeed years, that this alliance needs to look not only eastward towards the eastern flank of NATO and indeed Canada's largest military presence in the world under Operation Reassurances in Latvia in that effort, but also to the west and the north. And indeed, I've had several conversations with the Nordic 5, as well as with Mark Rutte to stress the importance of the Arctic, and we're all very much aligned. The next question is from a capability standpoint, what does that mean?
- [20:26]
A
Well, that was exactly where I was going to push you a bit, because Europe is sending 37 military personnel to bother the Danish presence. Not perhaps surprising on those numbers, that there is perhaps some pressure from Donald Trump on this issue to say, you see, this is not really a serious and credible protection.
- [20:48]
E
Well, let me start by saying that I'm traveling to Denmark in Greenland in the first week of February to officially open the Canadian consulate in Nuuk. And the work that we are doing with our NATO allies and beyond is to participate in multilateral exercises to ensure under our Arctic foreign policy that we do indeed have an international Arctic presence.
- [21:16]
A
Do you think it would be or potentially the indent NATO of the US Were to invade Greenland, as the Danes and other EU states have been warning Europe?
- [21:24]
E
NATO decision making has been collective at all times, and it will continue to be collective decision making in terms of defense and security. At the same time, we do see pragmatic coalitions forming. Let's look at the situation in Ukraine, for example, and the Coalition of the willing, which includes countries who are not NATO members, but which is important coalition for the support of territorial integrity and state sovereignty of Ukraine.
- [21:55]
A
Yuan Mark Haney have just been in China on a major visit. Prime Minister said Canada's relationship with China has become more predictable than its relationship with the US under the Trump administration. But there's a bit of distance from Europe on that, isn't there? We can see France is getting a lot tougher on Chinese imports, particularly EVs. There are more security concerns in Germany and the UK about China, Canada there perhaps a bit of an outlier in buddying up to China right now at this point.
- [22:29]
E
And in this meeting recently in Beijing with President Xi, Prime Minister Carney and he agreed to begin a new era of Canada China relations, one that is focused on growing the strategic partnership. And indeed they struck a trade deal to lower canola tariffs in Canada, tariffs on seafood that is extremely constructive and beneficial for the Canadian economy. And it is an example of the partnership that you will continue to see grow. We are pragmatic and we are growing non US trade, indeed doubling non US trade over the next 10 years. What does that mean? We need to be very forward leaning with a variety of countries. We are the only gallery different from.
- [23:22]
A
The European position, which is perhaps now a bit more sceptical about bigger trade deals.
- [23:28]
E
We have a strategy in place and we were one of the first countries indeed to respond to the realignment of the global trading order. The increased unilateralism and protectionism of the United States meant that our largest trading partner had to also now be a partner, amongst many others.
- [23:51]
A
The factors that power the global economy are a big theme at the World Economic Forum. It was founded in the early 1970s in an attempt to harness the might of early globalization and technology changes in the days when officers were first acquiring computers and when the international crisis was the oil shock. So dealing with the ebbs and flows of globalization is what it does. And a regular senior figure here giving interviews and speeches is Ken Rogoff. He's a leading economist at Harvard University, a former chief economist at the IMF and now author of a book on US financial hegemony and its impacts around the world. Our dollar your problem. We caught up in the hubbub.
- [24:37]
B
I think there's something of an overshoot in beating up on Europe. I'm actually somewhat constructive on Europe. I have this view that Europe, the Europeans will eventually, you know, figure the right thing out after they've tried everything else. To paraphrase Winston Churchill, I think Europe has to recognize that it lives in this world. That's not nice. There's China, the United States, Middle East, Africa coming up. And so I believe they will wake up to this moment, but they haven't yet.
- [25:11]
A
Europe needs to recognize it lives in a world that isn't nice. So how should it then respond to that? You said you believe over time Europeans will, you know, we'll get our act together, we'll dawdle towards some sort of acknowledgement of that. But here we are. Here's a concrete example, Ken. We're facing possibly another bazooka of tariffs. How should Europe respond? Should it also not be nice?
- [25:38]
B
I think the markets aren't taking this seriously. If you look at the markets. And so I think they may be wrong, they may be complacent. Sometimes tempers rise and things blow up. That's how World War I started, in a way.
- [25:53]
A
Well, that's not exactly encouraging.
- [25:56]
B
Not exactly encouraging. I mean, I think they're being a bit complacent. I think Trump keeps taking these risks and sticking his neck out, and one of these times it's going to burn us, all of us. I'll certainly say if he did follow through and Europe followed through with its counter, when of course, Trump will double down and then if Europe has a plan to do more, I mean, that's going to be a disaster. It's going to make Liberation day. That's the April 2 tariffs that make it seem like nothing. But I don't think that's the likely point. I do find it really puzzling that for all the brains in Europe, and Europe being such an important part of the global economy, and it still is, they can't figure out a pain point, some leverage, like President Xi did in China. He took away the rare earths that you need for technology and Trump just folded once it became apparent there was nothing we could do. And there just has to be some mix, perhaps high tech machinery from Switzerland and Germany, something. There has to be some mix. But they don't seem to figure that out because this threat to just go nuclear with the tariffs, it's not credible. Europe's not going to do that.
- [27:14]
A
And how damaging do you think additional tariffs would be of the scale? Around 10% in most cases. To the UK to France, to other countries where exports to the US really matter.
- [27:25]
B
Yeah, I mean, it's clearly damaging. That said, who knows what the 10% means when it's put into practice? I'm guessing the 10% will turn out to be 4% on average. And then on top of that, a thing I think I've learned at these meetings from businesses who won't admit to doing it themselves, but my competitor does. There are lots of ways to get around the tariffs so far, and the Americans have looked the other way. So, for example, you can set up a subsidiary in the United States that's part of your firm. You sell to them at a very low price, it's called transfer pricing. And then they turn around and sell it at a higher price. There are lots of tricks, and that's one of the reasons that the tariff revenues, although they've been impressive, have really been only about a third of what the initial forecasts were. It's not going to be the end of the world. It's not going to last. And this isn't forever. This is a negotiation. Trump escalates to de escalate overall has.
- [28:26]
A
The Trump impact on kind of transatlantic economy, trade being better, worse, or pretty.
- [28:33]
B
Much as you expended the erraticness, the autocratic nearing fascist kind of style of rule. No, I didn't know it would go that far. We can think of lots of reasons for it. What's interesting is that the economies doing okay, AI has been compensating. And to be fair, there was a lot of regulatory overkill with Biden. Some good ideas, but they weren't all good ideas. And by freeing that up, that's made firms want to invest more. You know, on balance, the economy's done decently. And I look at the business people, finance people, they just think it's great, it's going to go well. They think 2026 is going to be great. In every Davos, a forecast I make is whoever is the hero will be the loser. Last year I got it wrong because I said the two big winners that everyone was glorifying was the U.S. everyone wants to be the U.S. and AI so something's going to give. But this year, what is everyone saying? Let's be like the US let's be AI I'm going to make the prediction again that one of those is going to blow up this year.
- [29:51]
A
I'm standing outside Congress hall in the hubbub, people waiting for Donald Trump to finish the lectern and to thread his way through the crowds. He's been laying down the gauntlet. Oh, he's just finished. And here comes the applause. He has spent his time up there on stage laying down a gauntlet to NATO and to European leaders over Greenland. He said it belongs to the U.S. it was just an accident of history that had been given away after the Second World War and that Denmark was not in a position to protect it.
- [30:29]
B
I'm seeking immediate negotiations to once again discuss the acquisition of Greenland by the United States. But this would not be a threat to NATO. This would greatly enhance the security of the entire alliance, the NATO alliance. The United States is treated very unfairly by NATO.
- [30:49]
A
The President's just emerged from one of the side doors out of the Congress hall after that long speech and some questions and answers. He does look like he's been enjoying it. He's straight up to the stairs to go to the upper levels. People following him, Gitas would get their pictures on their phones. Off he goes probably back to his teams and to the USA House. That was it. Donald Trump at Davos, or so we thought, as the crowds headed off for dinner and to digest the mixed messages of the Trump speech. But just a couple of hours later, phones started lighting up with the president posting an announcement on his Truth Social saying that he'd agreed a framework deal on Greenland with NATO Secretary General Mark Rutter and that he was dropping the plan to add a 10% tariff to eight European countries, including the UK who opposed his original Greenland plans. The details sketchy. He insists it's a deal that's complex, but that it will last forever. It's a reminder that a week in Trump world is a very long time indeed. And if it's not clear what it means in the long term, well, it's left Europe's stressed leaders breathing a sigh of relief for now. And there's more from the cauldron of European current events from us in your feed tomorrow on Friday, when we'll have another EU confidential episode, this time from Brussels and a pivotal European Council meeting. To respond to this switchback week. Sarah Wheaton will be hosting. Darwin Asturias is editing. Do give that a listen. And producing this episode with me today and across a full week in Davos on very little sleep was Peter Snowden.
- [32:37]
B
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- [32:52]
D
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B
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- [32:58]
A
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