COPENHAGEN (Reuters) - Greenland on Monday picked Denmark as partner in a planned upgrade of two airports as it sought to defuse a diplomatic row over how the infrastructure projects, of strategic interest to both Washington and Beijing, should be financed.
The Arctic island is a self-ruling part of Denmark, which is concerned that Chinese investment - on the agenda since Greenland’s Prime Minister Kim Kielsen visited Beijing last year - could upset the United States.
Kielsen on Monday agreed to let Denmark pay 700 million Danish crowns ($109 million) for a 33 percent stake in Kalaallit Airports, a state-owned company set up to build, own and operate the airports in the capital Nuuk and the tourist hub in Ilulissat.
At a meeting with Danish Prime Minister Lars Loekke Rasmussen in Nuuk on Monday, Kielsen also agreed to let Denmark provide credit worth 450 million crowns for the projects and provide state guarantee for another 450 million crowns loan from the Nordic Investment Bank.
In January, Beijing laid out ambitions to form a “Polar Silk Road” by developing shipping lanes opened up by global warming and encouraging enterprises to build infrastructure in the Arctic.
A Chinese construction company later appeared on a list of six firms that have shown interest in the projects, whose costs are estimated at 3.6 billion Danish crowns.
Greenland, itself also eager to benefit from growing activity in the Arctic, plans to expand the airports to cater for direct flights from Europe and North America.
Rasmussen said in June that it was the assessment of the Danish government, which still handles the island’s foreign and security policy, that the project was of a magnitude to impinge on those areas.
Greenland is strategically important for the U.S. military and its ballistic missile early warning system, as the shortest route from Europe to North America goes via the Arctic island.
Kielsen suffered a political blow after Partii Naleraq, a pro-independence party, said it was quitting the coalition over Danish involvement in the project.
Kielsen’s Siumut party and the two other parties in the coalition, Atassut and Nunatta Qitornai, all back the proposed Danish contribution to the airports.
Reporting by Jacob Gronholt-Pedersen; Editing by Angus MacSwan