After this, a financial model must be built for each deposit, which will reflect the costs of extracting minerals and the revenue from their sale year-on-year throughout the entire period of its development. Then the obtained data should be “reduced” to the current date (that is, the current value of future receipts should be calculated using special financial formulas) and the data for all the deposits on the island should be collected into a common financial model. The resulting present value will be the figure that both parties will take as a starting point when discussing the terms of the deal, Rudoy notes.
In his opinion, it is obvious that the value obtained in such a "financial-mathematical" way can be torn away from real market conditions, reaching sky-high values. Then adjustments will be needed for the reliability of reserves and a correction of the costs of their extraction.
"The final price of the island asset will also be affected by various types of financial instruments that can be used in the structure of the transaction. For example, installments, options, the list of real mobile number database possibility of the seller's participation in receiving profits, etc. Social payments to the population and funds aimed at preserving the environment will also be important conditions of the transaction. Ultimately, both parties will need to bring the price to an acceptable level for themselves," the expert adds.
Former New York Federal Reserve Bank economist David Barker told The New York Times that the cost of buying Greenland would be between $12.5 billion and $77 billion.
"If Greenland is really helping us defend the United States, then its value increases with the size of the U.S. economy," Barker said. "If Greenland's only value was its mineral wealth, then the size of the U.S. economy wouldn't have much of an impact on its price."
The Financial Times previously suggested that Greenland's resources justify a $1.1 trillion valuation, but Barker considers that estimate dubious. "The US government will not reap all the benefits of resource extraction," he said.
How Much Does It Cost to Buy a Piece of Country: Alaska, the Virgin Islands, Kiribati, and Fiji
Signing of the Alaska Purchase Treaty, March 30, 1867. Left to right: Robert S. Chew, William Henry Seward, William Hunter, Vladimir Aleksandrovich Bodisko, Eduard Andreevich Stoeckl, Charles Sumner, Frederick Seward. Artist: Emanuel Leutze, 1868
Photo - © Signing of the Alaska Purchase Treaty, March 30, 1867. Left to right: Robert S. Chew, William Henry Seward, William Hunter, Vladimir Aleksandrovich Bodisko, Eduard Andreevich Stoeckl, Charles Sumner, Frederick Seward. Artist Emanuel Leutze, 1868
Despite such a seemingly unusual subject of the transaction, history knows many cases when one state sold another part of its territory, Rudoy reminds. Of course, the first thing that comes to mind is the sale of Alaska by Russia to the United States in 1867. But later, in the 20th century, other deals were made.
In 1917, the United States bought the Virgin Islands from Denmark for $25 million. At the height of World War I, the United States feared that Germany might seize them and establish a naval base there. Incidentally, it was after this deal that the United States recognized Denmark's right to the entire territory of Greenland.