As a land thaws, so do Greenland's aspirations for independence

Judging by flags alone, you'd never guess that Nuuk is part of the Kingdom of Denmark.

All around this humble capital – population 15,000 – one sees the fluttering Greenlandic flag. The Danish one, by contrast, is rarely seen at all. But if some in this largely autonomous Danish territory have their way, it will one day fly in front of a future Danish embassy here.

For 30 years, Greenland's 56,000 people have been pushing for greater control over their own affairs. Despite their best efforts, it was assumed that poor, remote Greenland would remain tied to Denmark indefinitely.

But with the recent surge in global oil and mineral prices – and melting ice on land and sea improving access to potential reserves of both – the prospects for Greenland's independence have never looked better.

"If Greenland becomes economically self-sufficient, then independence becomes a practical possibility," says Aleqa Hammond, minister for finance and foreign affairs in Greenland's home-rule government, which already controls most of the island's affairs. "We know that we have gold and diamonds and oil and great masses of the cleanest water in the world … It may be closer than we think."

Greenland is in the midst of renegotiating its relationship with Denmark, which has ruled the island since 1721. Talks were supposed to conclude last month, but have stalled on questions over ownership of the island's oil and mineral wealth. Denmark wants to maintain the current arrangement, by which they will receive half of any royalties; Greenland wants a greater share.

"We always had this idea that we had closets of resources of every kind, but with the rise in prices, it has affected the negotiations," says Kuupik Kleist, one of two Greenlandic representatives to the Danish parliament, who is heading the resource negotiations. "On the Danish side, they have gone from being almost indifferent about the future of Greenland to being very, very much focused on not giving up Danish rights on mineral resources."

In Denmark, which provides half of Greenland's domestic budget and cradle-to-grave social guarantees, many argue that it would be unreasonable for Danish taxpayers to continue forking over a grant of 3.2 billion Danish krones ($600 million) each year if the island struck it rich. "Greenland can't both earn a bundle on oil and keep its block grant," Danish negotiator Frank Jensen told journalists recently.

Greenland has been granting exploration permits, and Chevron, Exxon Mobil, and other energy giants are looking for oil off the western coast. Although there are no proven sources, the US Geological Survey estimates there are 31.4 billion barrels of oil off the northeast coast alone. In summer, the island's helicopters were all booked by diamond prospectors.

"It's inconceivable that a country as large as Greenland wouldn't be rich in natural resources," says Minik Rosing, a Greenland-born geologist at the University of Copenhagen, who doesn't share the belief that finding oil will serve the cause of independence.

"As everyone else gets more and more desperate for this commodity, you don't want to have it and be a very, very small, very, very independent country, very, very far from anything else," he says. "My personal view is if Greenland finds oil, that is the end of the idea of independence."

Aqqaluk Lynge, head of the Inuit Circumpolar Council's Greenland chapter, agrees. "We are afraid that the United States will take over Greenland if the Danes get out," he says. "If Americans can take Iraq, then why not Greenland?"

Indeed, sources say that even if Greenland becomes independent – an event supporters see as at least a decade away – it will keep very close ties to Denmark, in large part out of fears of US hegemony.

The US military has been active in Greenland since World War II, when it occupied the island to prevent it from falling under Nazi control and to provide mid-Atlantic refueling bases for ships and aircraft. During the cold war, radar stations were added to detect incoming missiles, and Thule Air Force Base in northernmost Greenland is expected to play a central role in plans for a national missile-defense system.

Svend Auken, a veteran Danish politician and former energy minister, says the Greenlanders are right to be concerned. "In the long run, the ideal would be for them to be recognized as an independent state in the United Nations, but in close contact with Denmark," retaining the Danish queen, currency, and defense cooperation, he says. Otherwise, "they will be very dependent on the Americans and they know the welfare society and wages wouldn't be on the same Scandinavian level."

Meanwhile, Greenland is exploring a major expansion in hydropower, a potentially lucrative industry that Copenhagen has no claims over. In May, the government here signed an agreement with Pittsburgh-based aluminum production company Alcoa to investigate the feasibility of building a new hydroelectric plant to power a large smelter. Alcoa would get cheap electricity – the biggest expense in producing the metal – from a renewable source.

"The future lies in hydropower," Ms. Hammond says, noting that the proposed smelter would likely employ 3,500 people, equivalent to a tenth of Greenland's workforce. "The waterways will soon be clear year-round for transportation," she says. Other dams and energy-intensive industries may follow.

This plan is not without its critics, who worry about the impacts of pollution and – especially – the guest workers heavy industry will inevitably bring. Greenland's indigenous people, the Inuit, make up 90 percent of the population. "Right now we enjoy being a majority in our own lands," says Mr. Lynge, "but in one or two generations we could see the population develop in a direction that is not in our favor."

For this reason, Mr. Rosing thinks it would be far better to deliver electricity to distant consumers than to have them move their industry here. "It would be much better to wait until there are transatlantic transmission lines so you could export the power," he says, noting that neighboring Iceland is considering an undersea line to Britain.

However it's underwritten, Hammond is sure Greenland will one day stand on its own. "It's a natural thing for a population to run their own country," she says, especially after nearly 300 years of dependence.