Trump Takes Europe to the Brink on Greenland

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break So whether it's geopolitics, energy, tech or markets you're hearing it while it happens It's smart, calm and to the point And it fits into your morning You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris On Apple, Spotify, YouTube or wherever you get your podcasts

1:02Bloomberg Audio Studios. Podcasts. Radio. News. Now what I'm asking for is a piece of ice, cold and poorly located, that can play a vital role in world peace and world protection. Today, at the annual meeting of the World Economic Forum in Davos, Switzerland, President Trump laid out his most detailed case yet for why the United States should take over Greenland. Trump said the U.S. needs it for national security reasons, and the U.S. is owed it because of how much the country has given its allies. It's a very small ask compared to what we have given them for many, many decades. In the run-up to the president's speech, the leaders of Canada, France, and the United Kingdom responded to what Trump has said and posted about Greenland, including threats to tariff European trading partners over the issue, and signaled it could lead to the end of a global order that's been in place since World War II.

2:04The rules-based order is fading, that the strong can do what they can and the weak must suffer what they must. When we look at the situation, it's clearly a very concerning time. The use of tariffs against allies is completely wrong. It is not the right way to resolve differences within an alliance. So by the time Trump took the podium, so many friends, few enemies, many of the prime ministers and presidents and senior executives in the audience were on edge. He really turned the volume up, amped up the pressure by just, you know, leaving everyone guessing, you know, is he going to invade Greenland?

2:46What is he going to do? That's Flavia Krauss-Jackson, who oversees our economic and political coverage in Europe. She watched the speech in Davos. So he made two big items of news. One, he said, I'm not going to invade Greenland. We never asked for anything and we never got anything. 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. And then he said, but I'm going to put an offer on the table. So they have a choice. You can say yes and we will be very appreciative or you can say no and we will remember.

3:30The offer that he put on the table was almost like I offer not to invade you. So you sell me the island. I'll make you an offer you can't refuse. It's like something out of The Godfather. As world leaders and the rest of us processed what Trump said, the president began a series of meetings. After he sat down with NATO Secretary General Mark Rutte, Trump posted an update on social media. The president said he decided not to impose the new tariffs he'd threatened on European allies. And he and Rutte had, quote, formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic region.

4:12I'm David Gurra, and this is The Big Take from Bloomberg News. Today on the show, President Trump's collision with longstanding U.S. allies over Greenland and how Canada and Europe will respond.

4:30By the time President Trump arrived in Davos, he'd upended the agenda at the World Economic Forum's annual meeting. His speech became the marquee event, but many other world leaders decided to skip it. In an address that was about an hour long, the president made his case for the U.S. taking over Greenland over and over again. I asked Bloomberg's Flavia Krauss-Jackson what we learned about how he plans to proceed. What did we hear from President Trump in terms of what his motivations are for doing this, the rationales he sees it for the U.S. taking or acquiring this large island? Right. I mean, Trump has rattled off a series of reasons of why he feels Finland should belong to the U.S.

5:12He usually uses this argument of rare earths, which is very vague and generic. And it's a sort of catchall for many things in his understanding of the world. But there's so much rare earth. And this to get to this rare earth, you got to go through hundreds of feet of ice. That's not the reason we need it. We need it for strategic national security. Then there is a national security aspect, which is very much the sort of the great game of, you know, the big powers that be, spheres of influence, which is very much how Trump sees the world, right? The Western hemisphere is mine. So Canada, 51st state.

5:53Greenland, massive slab of ice, as he calls it. Huge island, belongs to me. Venezuela, in the backyard. All we want from Denmark for national and international security and to keep our very energetic and dangerous potential enemies at bay is this land on which we're going to build the greatest golden dome ever built. So if you put it in terms of, you know, what he calls the Donro, Dark Chain, which is a sort of homage to Monroe, it's much easier to understand where all of this fits in. Something else that's helpful, Flavia suggests, is to think about President Trump's background. He's a real estate guy, and it seeps into his language.

6:37I mean, because they're saying, well, you already have a base here. If you want to send more people, you can. And he was like, yeah, but I want to own it. Because you need the ownership to defend it. You can't defend it on a lease. Number one, legally, it's not defensible that way, totally. and number two, psychologically. Who the hell wants to defend a license agreement or a lease? And I think it's also worth remembering, look, he held the summit with Putin in Alaska. You know, Alaska was sold by the Russians to the Americans. He's like, great, this is done before. Why can't we do it again? Oh, you know, he probably read somewhere that, you know, the US had a crack at buying Greenland back then.

7:24And he's like, well, they didn't close the deal, but I can. So I think through that lens, you start to understand. You know, and he says he loves maps. Look at the map. It's massive. But he's also very dismissive of it. And he doesn't understand why they won't give it to him. He's like, oh, it's just a slab of ice uninhabited, right? So I think to hear the stream of consciousness on stage was probably the clearest sense of, like, where he's coming at. What did we learn in that speech about how far he's willing to go to acquire this territory? I think he's willing to go pretty damn far. And I think it's also, I mean, one thing that you also notice about Trump's approach is that no deal is there that can't be broken, ripped up, renegotiated.

8:06So just because he said today, I won't invade, doesn't mean that in two weeks time he decides, you know what, I've reconsidered. I felt like the U.S. and NATO were in this new good place that President Trump had wielded his influence to get member states to to pay more money to the alliance. And yet the rhetoric toward NATO in the president's comments dispelled that sense. He was highly critical of NATO. The NATO alliance, the United States is treated very unfairly by NATO. I want to tell you that. And when you think about it, nobody can dispute it. we give so much and we get so little in return.

8:45And just to dovetail these two things, made it almost seem as though NATO owes him Greenland because of what the U.S. has done over these last many decades. Right. I mean, I think there was a great deal of revisionism of history, which is something, for example, that Trump has in common with. Putin also has his own alternative view of the history of Ukraine. What I would say is that NATO is on its knees. And I would say that you're probably looking at a world where Mark Rothen might well be the last secretary general of NATO, because the whole way was conceived is in a world where the US's largesse and generosity and policemen of the world and looking out for it.

9:32It's all, it underpins the entire way that Europe came to see itself after the end of World War II. And it wasn't based on transactionalism. It was based on the Marshall Plan. And it was based on, yes, the US wants to have a physical presence of troops in Germany. And we will allow this to happen because it's a deterrent. Once you start questioning, well, why do I have soldiers there? And you must pay me to have this presence. You're essentially turning the whole argument on its head. Flavia, there was a sell-off in the run-up to this speech, but markets seemed, dare I say, pretty complacent as President Trump spoke.

10:10How do you interpret the way investors are looking at, yes, the president's comments, but more broadly, the position he's taken on Greenland and on these multilateral alliances? Yeah, I mean, I think there's a really interesting piece that we wrote about the taco trade that, you know, it's all good and well to sort of trade off the fact that, you know, how seriously can you take Trump? And, you know, will he always take you to the brink and then walk back? But then at that point, you no longer have those natural defenses that help keep a leader in check. And I think at this particular moment in time, the fact that sort of the markets are playing along and not sort of responding to this greater volatility and the stakes are getting higher, but the bar to actually move markets gets higher, turns the world into a much more dangerous place, right?

11:03because in the first iteration of the Trump presidency, the entourage was essentially trying to sort of keep him in check. That's gone. But now no longer, you know, the markets are doing that. And, you know, even speaking to investors here and CEOs and big people from Wall Street, there's a sense of like, well, how do you manage Trump? Because you don't want to anger him. We're also making money, but some of the stuff that's happening is not OK. After the break, how the rest of the West reacted to President Trump's speech at Davos and how his designs on Greenland could reshape the world order.

11:41That's next.

11:51Ahead of the annual meeting of the World Economic Forum in Davos, Bloomberg's Flavia Krauss-Jackson says many world leaders were weighing the limits and risks of trying to make nice with the U.S. president. I think it's important to remember that when the Europeans were thinking about how to handle, how to manage Trump, they were really looking at Trump 1.0 and thinking, OK, flatter him, you know, don't speak out of term, throw him a couple of jollies, invite him to meet a king, fluff up the pillows at the royal palace. And it's become very clear that Trump in this situation is completely different.

12:26And they have come to realize that that just doesn't work because Trump only respects strong, not weak. And Europe has very much been put in the latter category. So what you've seen in the sort of here in Davos, but in the sort of run up is very much a sort of soul searching of like, are we are we in the area of appeasement? You know, we've seen where this has gone with Neville Chamberlain in the 30s. You know, no one is obviously comparing Trump to Hitler. But, you know, the sort of the historic parallels are sort of really reemerging and being reimagined and thinking, well, when was the last time that we sort of gave in thinking that this would work?

13:03On retaliation, how much unanimity is there among European leaders in terms of how they might respond to what we've heard from the president? There isn't. And I think that's the great tragedy of the European Union and also what sort of makes it great. Right. I mean, it is 27 countries. They don't always agree. And trying to come to an agreement, reach a consensus when there's such a divergence of views makes it very complicated. So you've got, for example, you know, the spoiler in the midst, you've got someone like Victor Orban. And then on the other side of the spectrum, you have, you know, someone like Emmanuel Macron, who was, you know, belittled and berated in Trump's speech, as an example of someone who, you know, says one thing in public, but in private kind of accuses, who will say, listen, it's time for us to use all the tools that we have to fight back.

13:57And I think what we're sort of seeing is Europe willing and able to stop trying to thread the needle and do something definitive. And really, because Europe has kind of flip-flopped between acquiescing and then trying to do something strong, it risks actually doing neither. Peer into that toolbox, if you would. And we've seen, yes, these European nations send military personnel to Greenland. And we've heard talk of this anti-coercion mechanism. We've seen a Danish pension fund offload a bunch of U.S. treasuries. What's in that toolbox? What could Europe use to respond here? Well, I mean, this anti-coercion instrument is essentially something that's never been used before.

14:43And, you know, it's been dubbed the trade bazooka. But it would allow for the curbing of inputs of goods and services. and it's unclear how it would work and whether it would even potentially be detrimental for Europe to do it. So part of the sort of, will Europe use it? It's like, is it just using it as a bluff tactic? And at what point is Trump going to call the bluff, which he has essentially done? Canada's Prime Minister, Mark Carney, gave a big speech at Davos that's gotten a lot of play, effectively calling the end of the world order that's been in place for 80 years. Let me be direct. We are in the midst of a rupture not a transition.

15:23Over the past two decades, a series of crises in finance, health, energy, and geopolitics have laid bare the risks of extreme global integration. Give us the alternative worldview here, as articulated by Prime Minister Carney, but I think embraced by a lot of these European leaders as well. What is their sense of this new kind of world order that's come out of this really deep disagreement they're having with the United States? Well, what he's speaking to really is the dilemma that many of these so-called middle countries have, which is they can't really strike alone. So what do they do? And they sort of rely on a sort of architecture of cooperation.

16:00And what that involves is essentially a kind of decoupling. It doesn't mean that in response, you erect barriers, rather that you sort of start developing the relationships amongst yourselves. And so what that sort of essentially means is a more gradual distancing from what once once an ironclad relationship, but now has become an unreliable partner. So it doesn't mean that from one day to the other, you suddenly like cut yourself off. But I think, and there's a very good quote that he puts, which was middle powers must act together because if you're not at the table, you are on the menu. The middle powers must act together because if we're not at the table, we're on the menu.

16:49But I'd also say that great powers can afford for now to go it alone. They have the market size, the military capacity and the leverage to dictate terms. Middle powers do not. So very much the idea there is, and I think what Connie is saying is, you know, that is the equivalent, for example, of putting the wall even higher, erecting the barriers. And that's a lose-lose situation for middle countries, because they're not going to be able to survive short term. I asked Flavia to contrast that with President Trump's vision. Compared to sort of former administration, those idea of, you know, democracy, and we want to, you know, take away the bad guys and bring the good guys.

17:34That's not how Trump sees the world. In fact, it's extremely interesting to see that even when he removed Maduro, who I think few people would argue was not a particularly pleasant person, certainly ran the country to the ground, he didn't install the leader of the opposition, which is, well, a natural step that one would have thought. No, he was perfectly willing to work with one of Maduro's people, who is very much part of the old regime, because what we're seeing in the Trump world is vassal states, puppet states. So I think what we're starting to see certainly from Jan 3rd is where his aspirations, where his leadership is going to take him.

18:17And I think that's what's been truly terrifying for the Europeans because Greenland would not be hard to take. And then it just becomes a question of like, who would he install? Flavia, lastly, the theme of this year's gathering in Davos is a spirit of dialogue. How do you see this playing out? How do you see the conversation evolving from what we've seen over the course of this week in Davos? We're not really seeing a dialogue, right? We're seeing the trading of barbs, insults, its escalation. And I think to the extent that we're going to see more of that, I think that's something that we just have to assume will happen.

18:55But now the question is having thrown down the gauntlet on Greenland, watch out for other spaces, right? Because Trump might hold back a little bit from Greenland. But don't forget that there's also Iran just around the corner. And he's also said that he's lots of options are being considered there. And in all this, don't forget that there's a rather sizable Chinese delegation here. And whilst everyone's eyes and ears have been elsewhere, they have been quietly meeting everyone and having probably some very interesting, conversations. I'd be keeping a very close eye on what China does next.

19:55We'll be back tomorrow.