By Michael Every of Rabobank
Green Stocks Land
The Greenland crisis was logically always likely to end quickly, to market approval, due to European geostrategic weakness, but still herald a new world order that markets don’t understand and won’t like once they do. That’s exactly how it’s now played out.
At Davos, President Trump ruled out the use of force but gave Europe and NATO an ultimatum on Greenland: within hours, a ‘framework deal’ was struck and threatened US tariffs on eight EU countries have been removed. This reportedly echoes the post-imperial arrangement the UK has with Cyprus. The US gains time-unlimited (Trump: “Forever”) access to areas of Greenland around military bases, as well as concessions for critical minerals, and the island will host the US Golden Dome missile defense shield. There will also be a far greater, permanent European NATO focus on its defense and the Northern Passage.
Those who say TACO all the time will cluck here. Those who see NSS). So where to from here?
Logically, leaderships could change. November 2026 looms, as does the French presidential election in April 2027. Yet some genies aren’t so easily put back into bottles.
As such, it’s down to the realpolitik of who has the best cards. Canada’s PM Carney, who didn’t meet Trump at Davos, earlier made a much-publicized speech which stated: “Many countries are drawing the same conclusions - that they must develop greater strategic autonomy: in energy, food, critical minerals, in finance and supply chains. And this impulse is understandable. A country that can’t feed itself, fuel itself or defend itself has few options. When the rules no longer protect you, you must protect yourself.” That sounds exactly like Trump.
Yet as George Magnus points out, Carney citing Czech anti-communist dissident Vaclav Havel’s ‘The Power of the Powerless’ to call out Trump and the polite hypocrisies of the liberal world order doesn’t sit easily with him heading to China to strike trade deals. That’s Trump’s game, played with far weaker cards. Today, the powerless are… powerless.
Indeed, Trump noted from the Davos stage: “Canada lives because of the United States. Remember that, Mark, the next time you make your statements.” As the Canadian press puts it, ‘At Davos, a new great game dawns for the world. Which way, Canada?’ And all of us.
In the short term, green land - because TACO, or because Europe in 2026 is Egypt of 1956. In the long term, it’s unclear – and starkly binary.
Europe and others can try to go their own way. For example, Spain just urged the EU to create a joint army. Yet that’s the same Spain that adamantly refuses to spend 5% of GDP on defence within NATO. Talk is cheap. Preparation for war, or for strategic autonomy, is mind-blowingly expensive, and the US can block these moves every step of the way. Or European disunity can block itself: the European parliament just voted for the new EU-Mercosur deal to be given judicial review, which will delay it for a year. Japan just ran its fifth consecutive annual trade deficit in 2025, and it’s that development --alongside “it’s baaack” inflation-- which is undermining its ability to stabilize its markets without relying on the kindness others.
That structural threat looms ahead for many economies and is another reason why they need to not only be ‘resilient’ but to run trade surpluses --which obviously not everybody can-- or find a bloc they can sit within that will support them. And sometimes that choice is made for them.