A framework for a deal or an off-ramp.

President Trump backs down after his aggressive efforts to acquire Greenland enraged and insulted American allies.

What's in the agreement that quieted some international backlash and how much damage to America's most important relationships has already been done tonight on "Compass Points."

♪ Announcer: Support for "Compass Points" has been provided by... the Judy and Peter Blum Kovler Foundation, Camilla and George Smith, the Dorney Koppel Foundation, the Gruber Family Foundation, and Cap and Margaret Ann Eschenroeder.

Additional support is provided by Friends of the News Hour.

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Thank you.

Once again from the David M. Rubenstein studio at WETA in Washington, moderator Nick Schifrin.

Hello and welcome to "Compass Points."

For the last decade, President Trump has purposely created a great disturbance in the force that binds the US and Europe together, and he has realized results.

NATO now pledges to spend more money than any time in its history on defense.

But over the last week, President Trump threatened the Danish territory of Greenland with an implicit military threat, then European allies with explicit economic threats, and then said he might not prioritize peace because he didn't win the Peace Prize.

Now, he and NATO say there's a Greenland deal, but has this week finally proven to Europe that the art of the deal threatens the US's oldest alliances?

To discuss this today, I'm joined by a fantastic panel.

Carla Sands chairs the Foreign Policy Initiative at the America First Policy Institute and was President Trump's ambassador to Denmark in the first term.

Sherri Goodman is a distinguished fellow with the Atlantic Council and former Deputy Undersecretary of Defense for Environmental Security in the Clinton administration.

Eric Edelman was the Ambassador to Finland under President Clinton, Ambassador to Turkey under President George W. Bush, and a former senior official in the State and Defense Departments.

And Professor Matthias Matthijs is the Europe Faculty Lead at the Johns Hopkins School of Advanced International Studies and senior fellow for Europe at the Council on Foreign Relations.

Thank you very much, really appreciate you being here for our second show.

And I want to begin with the question of why Greenland?

It's the world's largest island, remote, rugged, been part of the Kingdom of Denmark since 1721, and it sits right in the middle of the shortest route between the US and Russia for missiles and bombers, which is why for decades it's hosted air defense bases, and today is home to the US's northernmost base and a ballistic missile early warning system.

Sherri Goodman, remind us, why is Greenland so important for national security and why is it perhaps even more important today?

Well, it's long been strategically important, as you said, Nick, because we defend from a base in northwest Greenland Russian or Chinese or North Korean missiles coming over the pole to the US in Canada.

So it's part of our early warning and detection system.

First an Air Force base, today a space base.

Now, in the climate era it's important, because navigation sea routes are opening up and changing the character of the Arctic.

Schifrin: As the ice melts.

- As the ice melts, warming 4 times greater than the rest of the planet, sea ice is retreating, permafrost is thawing and melting, creating new sea lanes across the Arctic, but particularly on the Russian Arctic, where Putin seeks to monetize the northern sea route for transport from ships in Asia to, uh, into Europe.

So Carla Sands, you were ambassador to Denmark during the first Trump administration, when the president first raised this idea, and by the way, he's not the first president to raise this, why has the president been so interested in Greenland and why hasn't he believed that NATO protection and that one US base is enough?

Well, as you know, we occupy Greenland during World War II, so we understand, the US understands, how strategically located Greenland is, but President Trump looks at NATO and sees the United States is still carrying NATO.

Our NATO allies, I don't believe any of them can really prosecute a war without US top cover, without partnering with the United States.

Now he's trying to get them there so that militarily they have might and they can defend their own territory, but Denmark has always been in violation of Article 3 of the NATO Charter, which is that every NATO ally has the ability to defend their own territory.

Denmark has never been able to defend or develop Greenland.

They can't afford to, they don't have the resources.

When I was US ambassador in Greenland, there were about 30 Danish soldiers and two dogsled teams, and that's what they considered Arctic security.

So Eric Edelman, this... what Carla is saying is getting to a much larger point.

This is not only about Greenland.

I mean, it was just a few days ago when I broke the story that President Trump tied his desire for Greenland, which of course is part of Denmark, to his not winning the Nobel Peace Prize, which of course is administered out of Norway.

European officials warned before the deal this week in Davos that any aggression toward NATO could end... any aggression toward Greenland could end NATO, and Canada, of all countries, has come out now and said there's a new global order.

So even if there is a deal, what damage do you think has already been done?

Well Nick, let me just say that I think, uh, our European allies have had concerns about the reliability of the United States that go back before President Trump.

I mean, if you recall, uh, President Obama raised a lot of questions about European free-riding in his famous interview, for instance, with Jeffrey Goldberg in "The Atlantic."

Some of my European colleagues, you know, voiced to me concerns that they weren't hearing enough from the Obama administration during it.

I'm not trying to draw an equivalence here.

I'm just saying that this has been a long-standing issue.

I do think that the tone of the President's speech yesterday, in which he said, "You can either give us Greenland, "or we, you know, will remember if you don't, "we'll have gratitude if you do," I think has been heard in Europe in a way that they will remember.

And I think, if you look at the commentary in European press, you're already seeing that, that this has raised fundamental questions in their mind, despite the walk-back of the military threats and the tariffs, about ultimately US reliability in being part of a collective defense and collective security agreement.

So Matthias Matthijs, how does Europe see this moment?

How fundamental is it?

Yeah, I mean, I think Europe has been pretty clear-eyed about this now much more so than they were a year ago.

I mean, I think for them, they had expected 2026 to be a relatively quiet transatlantic period, right?

Schifrin: Naive assumption during the Trump administration.

They feel like they've given major concessions on the defense front within NATO, the commitments to defense spending, which is a huge amount of money for many countries that are not growing very fast.

And similarly on the trade side, they felt they already gave huge concessions to the United States on a lopsided trade deal, where they had to pay tariffs for stuff they sent to the United States, but they actually were going to lower the tariff down to zero.

So I think there was this sense already that they needed to speed up their own autonomy.

They need to have, you know, rely on other trade partners like in South America, like in India and Indonesia and Asia and so on.

And on defense, I think they're more determined now than ever to speed up this transition.

But at the same time, there are divisions among within member states on this, right?

And clearly on the Eastern Front, they want to keep the Americans involved in Ukraine.

Um, and in other countries, the French want to be much more confrontational, while I think the Germans that rely more on their trade to the United States are much more cautious.

Yeah, absolutely.

Let's just talk for a minute about the details of this framework.

So just to be clear, this is a deal for the US, Denmark and Greenland to negotiate in the future.

So Mark Rutte, the NATO Secretary General, has just gotten us to that point.

European officials tell me it's going to be more US bases for Greenland, guaranteed mineral rights for US companies, increasing NATO presence in the Arctic, excluding Chinese and Russian military and investments.

And again, this is a framework for a future negotiation.

- So, Carla... Goodman: Can I talk about that?

Sure.

Yeah, yeah.

Goodman: Under the 1951 Mutual Defense Agreement, the US... between the US and Denmark, we have the right to have as many military bases as we want.

In fact, we once had as many as 17 bases.

We reduced that to one at the end of the Cold War.

So we could reestablish bases.

The real threat in many ways to Arctic and transatlantic security is the US unreliability at the moment.

And we could have more presence.

The Europeans are pleased that we want to increase our focus on Arctic security.

And we should.

In fact, Arctic investments in the US defense budget have historically not competed well because they are expensive.

Although we do need to improve our communications capabilities in the high north and across the Arctic.

But we also have to keep our eyes on where the real threats are, which is in Ukraine.

And that is, you know, so we have to watch the eastern flank as well as close to our own.

Schifrin: So, Carla, take that on.

Is the real US threat...?

Sands: So, you know, Ukraine war is not our war.

That's Europe's war.

It's really their problem.

They caused it with their consumption of Russian oil and then having a weak US president.

Then we ended up with the invasion by Putin.

They're still buying Russian oil today.

Europe is still buying Russian oil.

And they're actually paying Russia more for the energy than they... by far, than they've given to Ukraine for that war.

But I want to pivot to Greenland.

Greenland is our issue.

It's part of the Golden Dome that President Trump is building.

He needs Greenland.

He needs Alaska.

That's right.

And, you know, Greenland is still, it's... if Denmark is the owner of Greenland, it's their problem.

In other words, they need to do the investments.

They need to do the defense.

I object to American taxpayers paying for defense in another country that when we don't have ownership.

Schifrin: But take on this argument that others have made, and Sherri just made, that right now the biggest threat to transatlantic unity, to everything that the West is trying to do is, in fact, the US threatening a member of NATO.

I disagree.

So the NATO alliance has largely relied on the US.

It's like we have been the sugar daddy to European, rich European countries who would rather invest their funds into very generous social welfare plans, free college, free health care, free child care.

Most of those countries have that, and a lower retirement age, oftentimes, than the US, fewer work days during the week or work hours.

So these countries have been living off the US basically since World War II.

We helped to rebuild them after World War II.

We helped to put the EU framework in place so they would have energy.

But now they've gone to basically a Net Zero agenda, which is just destroying most of the economies.

They're not growing as fast as the US.

Edelman: Nick, with respect to Ambassador Sands, we have a globe-girdling set of bases around the world that we have defended at the cost of trillions of dollars since 1945 that don't involve US ownership.

So the idea that we have to own every base in order to defend it and somehow US taxpayer dollars are being wasted in defending bases that we don't own, I think is contradicted by our entire experience during the Cold War and the post-Cold War.

Sands: This is the world's largest island, though.

This is not just a base that we're defending.

This is the world's largest island, and they're asking us to take it on.

Matthijs: I think the problem with Denmark, of course, and taking on Denmark, is that it's probably one of America's best allies.

I mean, it fought side by side with the Americans in Afghanistan, lost more people, soldiers per capita, than the United States did.

This is not a country that's not spending its fair share agreed with NATO on defense.

They've been very active in Ukraine as well.

So I think we should take it seriously when the Danish prime minister and foreign minister says, like, "This could mean the end of NATO."

Also, I want to point out this framework of a deal.

This still needs to be negotiated between Denmark and the United States, and I don't think this is going to happen in the next few days.

And so they actually need to get to an agreement.

And right now, I think there's a lot of skepticism in Europe that there is, you, that they can be trust and that there's good faith on the American side.

So I think there's some diplomatic work here that will need to be done.

Goodman: But let's also remember, under NATO Article 5... - Yeah.

Goodman: Where an attack on one is an attack on all, the only time Article 5 has been invoked was when there was an attack on the United States in 9-11, and the Danes and the Europeans and the Canadians and others came to our defense.

Sands: That's right.

They always remind us, but they never... when I got to Denmark, they had not in many years contributed their fair share to NATO.

They were in arrears.

And, you know, Mette Frederiksen, the prime minister, never picked up the phone for a whole year to talk to Donald Trump and sit down and have a conversation.

She neglected her diplomacy with him.

Matthijs: Yeah.

And yet, I think that Ukraine will change that quite dramatically.

They fail every NATO report card.

Denmark fails.

They do not contribute what NATO asked for.

But Eric, is it the principle here, right?

I mean, you know, I'm trying to stick to the substance of what we're talking about, but a lot of this is about just the style of the president, and the style of the president, as I listed, you know, not taking military threats off the table, threatening European allies with tariffs.

What is the longer-term impact?

What's the impact on the trust between Europe and the United States?

Well, all of the things that Ambassador Sands has talked about could have been discussed and negotiated with Denmark and with other NATO allies without recourse to threats of either military action or tariffs, which seem particularly inappropriate.

I mean, when Secretary Bessent was asked under what authority these tariffs were going to be levied, it was under an emergency, the IEEPA emergency tariff, uh, which is before the Supreme Court right now.

But when asked what emergency this was, you know, meant to prevent, he said, "It's an emergency to prevent an emergency," which is double talk and nonsense.

So, um, you know, all of this could have been done in a way that didn't arouse all of the concerns that Matthias just, you know... Schifrin: Let me bring up some of these concerns, because let's just talk about how, if you will, freaked out Europe has been, especially Western Europe.

Let me just bring up some of the highlights from the last week.

This is Emmanuel Macron saying, quote, "We are shifting toward a world without rules."

The Belgian prime minister, "Being a happy vassal is one thing.

"Being a miserable slave is something else."

Ursula von der Leyen, "This is a dangerous downward spiral between allies."

And then Mark Carney, the prime minister of Canada, Canada here, right, said this at Davos.

Let me be direct.

We are in the midst of a rupture, not a transition.

The middle powers must act together, because if we're not at the table, we're on the menu.

We know the old order is not coming back.

We shouldn't mourn it.

Nostalgia is not a strategy.

But we believe that from the fracture, we can build something bigger, better, stronger, more just.

This is the task of the middle powers, the countries that have the most to lose from a world of fortresses and a most to gain from genuine cooperation.

Schifrin: Matthias, is this a sign that we've crossed the Rubicon somewhere?

Yeah, but I think we've known this for a while.

And I think Carney was directly addressing the European countries, especially the big ones, UK, France, Germany, Italy, also Japan, Korea, where it's like, what can we take from this moment and build some sort of new system where we don't get eaten up, where we're not simply on the menu, right?

And so I think the last week has been yet another reminder for many Europeans that, you know, that talk is enough.

They need to actually move forward um, with their goals of strategic autonomy and being less reliant on the United States, which is something, of course, the United States wants.

Schifrin: Exactly.

Carla, the president points out that he achieved this moment in The Hague last summer of getting everyone to hit 5%.

So that is a success that the president can point to.

Yeah, but let's go back to Carney for just a second.

So he just talked about hugging up to China, doing more trade to China, bringing in 50,000 BYD vehicles, which is going to be very bad, right?

Very bad for their car industry.

Schifrin: I mean, he went to Beijing and said that Beijing is more predictable than the United States.

Sands: And then there's this.

He has a $60 billion trade deficit with China today.

He has a $35 billion trade surplus with the US, but he wants more of that from China.

So that's Mark Carney, the leader of Canada.

But look at what President Trump's trying to do by rebalancing trade, having more reciprocal trade.

Scott Bessent, the secretary of Treasury, just said this week he's afraid that our deficit with the EU may be bigger than our deficit with China.

That's a really big deal.

So they have so many trade barriers and non-tariff barriers, tariff barriers, non-tariff barriers to our goods.

They're still not treating us fairly in trade.

President Trump and his team are working on it.

But the trade is part of his diplomacy and statecraft.

He's got to take care of American workers and reindustrialize the US, so this is all a piece of it.

You can't pull one piece and it stands alone.

It's all connected.

So when Europeans are talking big like this, first of all, most of them have Trump derangement syndrome.

They like it when we take care of them and don't ask much of them, don't ask many questions.

And this is like when daddy comes home and everybody has to behave and kind of, you know, be on their best behavior.

This is that moment, I think.

Edelman: I would just point out that we had a US-EU trade agreement that was sitting in front of the EU parliament waiting to be ratified.

That ratification has been at least put on hold.

Hopefully now it will go forward.

But again, none of this had to happen absent the president's threats and bluster.

And I would also add that as the Europeans do increase their defense spending, they may spend less on American defense companies.

They may build up their own industry and look to other partners around the world to provide their security needs.

Is that going to leave us better off?

Schifrin: Is this Trump derangement syndrome, as Carla just said?

I mean, I think they realize, as Mark Carney said, that they can no longer rely on the US as a reliable partner.

And I think that's become very clear.

So now they're looking at how they better provide for their own defense.

Schifrin: And then that is the shift that the US wants as well.

Edelman: One of the things that's been quite striking in the second Trump term, as opposed to the first term, is that European leaders have gone out of their way to court President Trump.

Mark Rutte, the secretary general of NATO, is the one who called him daddy.

Um, you know, it's hard for me to understand how they could be suffering from Trump derangement syndrome when they have been courting him as assiduously as they have.

Schifrin: Exactly.

Matthias, you made a point earlier, right?

That the trade deal that Ursula von der Leyen agreed to with President Trump was seen as wildly lopsided.

And yet von der Leyen and her aides said, "No, this is what we have to do."

So is this a different moment?

Does Europe learn that appeasing Trump last year didn't work?

And did it draw a line in the sand?

And is that perhaps what worked this time?

And that's what... to Eric's point about this trade deal, the European side of the deal that still needs to be implemented because it has to go through the European Parliament's procedures and so on, is on hold because that's the part where Europe actually will lower its tariffs for American... for American goods.

So the hope was a deal is a deal.

We can now build on this.

And again, I want to point out again, because I teach this stuff at Johns Hopkins, I mean, trade deficits or trade surpluses are not a sign of strength or weakness or anything, right?

I mean, there's a whole macro side to this that is about savings and investment.

And we all know that the US running these enormous deficits on the government side, that by definition means that money has to come in from abroad.

And so these deficits on the trade side are representing on huge capital inflows in the United States.

You can't just solve this by fixing non -tariff barriers to trade.

Goodman: But also the real winner of what's happened this week is China.

They get the benefit of seeming like the reliable, predictable partner on the world stage.

Schifrin: Which is exactly what Xi Jinping has wanted the world to see.

Goodman: Exactly.

Matthijs: Trump is driving the allies into Chinese arms, both Europe and Canada.

Sands: I disagree.

China is a predatory nation.

Everybody knows it.

Carney has hugged up against China before, even though he said the opposite when he was running for office.

But Denmark has bought arms from us, I think 3 big orders recently.

And there is something called the European Defense Initiative.

And they are trying to make arms in the EU and block, basically block US arms makers or producers from participating when the US, our arms makers, make a lot of pieces, parts to these arms, in all the different NATO nations.

So they participate and they build up their small businesses the same way US states do, cooperating with big American arms manufacturers.

Let's talk for a second about how the president sees NATO right now.

And he said something very interesting to Davos that we noticed.

And here it is.

All we're asking for is to get Greenland, including right title and ownership, because you need the ownership to defend it.

You can't defend it on a lease.

That is, again, 77 years of US anchoring the idea of NATO, that NATO collectively defends all territory.

Carla, why does he say something like that?

He says it because we actually occupied it during World War II, we had... one quarter of the population were US servicemen and their families.

We occupied, built almost all the infrastructure on Greenland, the bases, the ports, the airports.

There are two airports now that have been built since we left, but everything else was built by us.

And, you know, as a matter of fact, that Article 3 of NATO that Denmark cannot afford and will never be able to defend this territory.

It's too big for them to take down.

It's like owning a house you can't afford to take care of, or a building, and it's disintegrating.

You can't afford to develop it.

Eventually, you have to sell it.

Goodman: Well, what's the threat there, Carla?

There is the real threat of Russia and China in the Arctic, is either close to Russian territory or close to American territory in the Bering Strait.

That's where we see active Chinese and Russian military exercises that have disrupted US fishermen.

That's over in the Bering Strait.

That's not around Greenland.

Schifrin: Eric, last word.

Edelman: Well, I would just say this, which is, you know, after World War II, in 1946, Secretary of State James Byrnes sat down with his then Danish counterpart to discuss these very issues.

I just recently read the MEMCON.

One of the things he was concerned about was particularly early warning.

And in those days, it was long-range bombers that were the issue.

We worked out the treaty in 1951.

We were able to defend Greenland throughout the Cold War without ownership.

And I would just point out that the issue appears to be one of Donald Trump's personal psychology, not national interest.

He was asked by David Sanger in the "New York Times" in the "New York Times" interview, "Why is ownership so important?

"Is it important to you or to us as a nation?"

And Trump said, "It's important to me."

Schifrin: Well, there's a lot more to talk about here, but we're going to have to leave it.

OK, sorry, Carla.

One last thing.

Sands: We bought the Virgin Islands from Denmark.

We forced the sale shortly after World War I. We forced them to do it.

We bought it for $25 million.

So there's a precedent to US buying property from Denmark.

Matthijs: And yet, Nick, on the speech he gave where he talked about allies, you need to have the territory to be able to defend it.

I think that was carefully listened to in Japan, in Korea, and definitely in Taiwan as well.

Schifrin: The whole world is absolutely watching.

So this was a fantastic conversation.

Thank you guys so much for joining us here on "Compass Points."

Sherri Goodman, Matthias Matthijs, Eric Edelman, and Carla Sands, thank you very much.

And thank you for watching us.

I'm Nick Schifrin.

Hope to see you every week here on "Compass Points."

Announcer: Support for "Compass Points" has been provided by... the Judy and Peter Blum Kovler Foundation, Camilla and George Smith, the Dorney Koppel Foundation, the Gruber Family Foundation, and Cap and Margaret Ann Eschenroeder.

Additional support is provided by Friends of the News Hour.

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