The administration of US President Donald Trump is working on a draft deal for Greenland, which could be offered to the island's authorities, The Economist reports.

US officials are discussing the possibility of offering Greenland a so-called Compact of Free Association (COFA), which would lead to an increase in the living standards of the island's population. The US currently has similar agreements with the small Pacific countries of Micronesia, the Marshall Islands, and Palau. According to these COFAs, the US guarantees financial support to these countries, and the latter, in turn, transfer the resolution of their defense issues to Washington, while maintaining internal self-government.

As per The Economist, the Trump administration's policy towards Greenland currently pursues two objectives. First, Washington wants to deepen the differences between the Danish and Greenlandic authorities and provoke a rise in separatist sentiments on the island. Second, the US is trying to reach a deal with the Greenland authorities, bypassing the Danish government.

According to The Economist, the prospect of outright annexation of the island unlikely, and these US ambitions have caused panic among European leaders.

There is already a US military base in Greenland. The terms of the respective agreement with Denmark do not provide for restrictions on the number of US troops on the island, but a significant increase in the number of US troops in Greenland would likely require Copenhagen’s consent. The US attempted to negotiate directly with the Greenland authorities, but was rejected, The Economist recalls.