After weeks of dangling tariff and military threats over our European Allies to force the seizure of Greenland, Trump has chickened out, once again. However, the constant uncertainty and instability coming from the states is causing our allies to view us as a threat. Will this lead to the dissolution of NATO?
Matthias Matthijs, Senior Fellow for Europe at the Council on Foreign Relations, juggles the world of diplomatic possibilities with Jen as the Davos conference continues in the background. The two dissect impacts of Trump’s antics on our allies and weigh the risk of China and Russia overtaking America’s global influence. What is the goal here? Is Trump vying for a Louisiana Purchase 2.0? Listen to Matthijs and Jen’s interview to find out.
Matthias Matthijs is the Dean Acheson Chair at the Johns Hopkins School of Advanced International Studies and associate professor of international political economy. He simultaneously serves as the Senior Fellow for Europe at the Council on Foreign Relations.
Jen Rubin
Hi, this is Jen Rubin, Editor-in-Chief of The Contrarian. We’re delighted to have a new guest, Matthias Mathias. He is an expert on all things Europe and NATO from the Council on Foreign Relations. Welcome!
Matthias Matthijs
Thanks for having me, Jen.
Jen Rubin
So… Just a few minutes ago, the President was in Davos, speaking to the Europeans. Where do things stand now with his plan to forcibly, if necessary, seize Greenland?
Matthias Matthijs
Well, I think there was a bit of a sigh of relief, actually, both in Europe and in the markets. financial markets, where he explicitly took using force, military force, to acquire Greenland off the table. But I think a few hours after the speech, it dawned onto many people in Europe that, well, the problem isn’t gone. he still wants to acquire title and all, as he said it, the sovereign territory of Greenland, which is, you know, under the control of Denmark, which is a NATO ally, a European Union member. And the question now is, I mean, how do we… how do we get to some sort of an agreement on this, right? Because there’s clear red lines for, I think, Europe and for Denmark, meaning that Sure, if the people of Greenland wanted to become independent, that’s part of their arrangement with Denmark. And then, whether they wanted to then vote to become the 51st state, or any sort of arrange… formal arrangement of the United States, that… that is conceivable, all of this, but it’s not something, clearly, the people of Greenland want right now, and it’s not something that Denmark is able to give the Trump administration right now either, right? And so… That also said the threat hanging over all of this is still the newly announced tariffs on the 8 European countries, Norway and the UK, who are out of the European Union, and 6 EU members, France, Germany. Denmark, Finland, Sweden, and, That, that, you know, these tariffs will come online on February 1, and how do you stop that in the next few days? That’s still a big question.
Jen Rubin
Is there any reason why… logical reason, I’m not going to go into the psychology of Donald Trump, but any logical reason why we need to have sovereignty over Greenland? My understanding is that we have an extremely generous, lenient, cooperative relationship. We have our military there, we have Access to precious minerals. What more could sovereignty give us?
Matthias Matthijs
Yeah, and I think most security experts, would agree on this with your assessment, right? The treaty that was signed in 1951 by the Truman administration with the Kingdom of Denmark was very clear, right? That the United States had all kinds of rights to put bases there. There is indeed a space base, a small space base there. in northern, Greenland, even when it comes to cooperation on mineral rights and… on rare earths, even though the president seemed to have taken this over the table in his speech in Davos. But these are things that Danes would be more than happy to discuss. So I think you have to go into the psychology of Donald Trump to understand, and maybe the real estate man in him that doesn’t want to rent, doesn’t want to lease, doesn’t want to have a license, or anything. he made it very clear in his Davos speech that you can only really defend something if you own it, which, of course. questions all kinds of alliances the United States have, from Japan and South Korea, Australia to, of course, NATO. So, I think he wants to acquire more territory for the United States, like the Louisiana Purchase with Thomas Jefferson, like the purchase of Alaska with Russia, I think it’s not uncommon for second-term presidents to kind of think of their legacy and things like that, wanting to be added to Mount Rushmore, right? A lot of people have suggested this. So I think that’s what it’s part of, but it’s clearly… I think this is a clear red line for Europe.
Jen Rubin
Yes.
Matthias Matthijs
that they cannot indulge the president’s hopes and dreams on.
Jen Rubin
Exactly. And of course, the best defense of Greenland is that Denmark is a NATO country, and the most successful alliance has been through NATO and through Article 5. So, of course, the logical inconsistency is glaring there. Donald Trump, even in Trump 1, was at odds with our European allies, and seemingly determined to pick fights. But this seems to have taken the relationship to a new low. Do you think NATO, even if we don’t go to war over, Greenland, has fundamentally changed because of this incident?
Matthias Matthijs
Oh, absolutely. I think it started to change already last year, right? I mean, the idea was for every NATO member to spend a lot more on defense, not 2% of GDP, but 3.5%, plus another 1.5%, a bit more flexible on defense-related infrastructure. But so that’s a… I mean, for Germany, that is a transformational thing, I mean, for many countries. And there was always a discussion as well, hopefully in an orderly fashion, that the Europeans could, over time, take on more of the defense burden of their own continent, right? And so the question is, is this still part of an orderly plan, or will this have to be speeded up even more And so, what’s changed, I think, is that… Clearly for Europeans, they feel now that this alliance has become more transactional. less based on values, and like democracy, rule of law, and so on. And I think for many allies as well, I mean, the shift of the United States when it comes to the defense of Ukraine against Russian aggression is striking, right? I mean, the last meeting of the Coalition of the Willing. Where, Americans were present, Steve Witkoff, Jared Kushner. the Americans made it very clear that they weren’t there to take sides, that they were there to make a deal, right? And that they weren’t going to take the Russian side or the Ukrainian side, which for most European NATO allies was like, wait, hang on a minute. We are on one side here, right? And they want to make that very, very clear. the question is, can NATO continue, and can Europe take on more of its own burden, or will NATO fall apart, because there’s simply no more trust among European allies in the intentions of the United States?
Jen Rubin
There, of course, are benefits, to NATO. We’ve had 70-plus years since the end of World War II with no major war. We cooper… cooperate on a whole variety of, military-accent issues. They did, invoke Section 5 when we were attacked on 9-11. If NATO crumbles, we will miss it. And we probably have no idea what it is like to engage in a world without NATO. What are some of the downsides that you see, short-term, long-term, if this incredibly successful alliance crumbles?
Matthias Matthijs
Yeah, so I… I mean, in many ways, this has been the Russian dream since NATO…
Jen Rubin
Yes.
Matthias Matthijs
to being, right? And when it was signed in 1949, After World War II, and, I mean, it’s always been their goal, and I think it’s the goal of the Chinese today, to drive a wedge within the Western alliance, and they’ve been watching this with, you know, a fair dose of glee. in the last few weeks, this is kind of coming apart. I think from the US point of view, I think especially the people who take a purely transactional view about European allies, I think they forget just how it’s the first call. when there’s an international crisis, goes to the Europeans, goes to the British, the Germans, the French, and they’ve been there. I think in the case of Denmark, I mean, it’s been well reported that they fought shoulder by shoulder with the United States and Afghanistan after 9-11. had per capita an actual higher casualty rate than the United States. This has also been an ally that’s spent a lot on defense, has been very active. in Ukraine. So all the things that the free-riding insults, or the free-riding complaints, I think some of it is, of course, justified by the United States, doesn’t apply to Denmark at all. I think in the short term, the real risk is that, you know, Ukraine will have to settle for a very unjust peace. And, and, and… and that this will leave Europe vulnerable to further Russian aggression. In the short run, that’s a real risk. In the longer term, it does mean a much more dangerous world, no doubt about it, because a lot of threats or wars in that part of the world, in Europe, in the North Atlantic, don’t happen simply because of the deterrent effort, or the deterrent effect that the United States has, where, you know, Russia, China, others may think twice before trying something.
Jen Rubin
We usually think of NATO as protecting, from outside threats, but one can imagine a scenario in which, I don’t know, the AFD comes to power in Germany, or the far right comes to power in France, and there are internal fissures and conflicts within Europe, a la World War I, and, other, periods of warfare. Can you talk to us a little bit about whether you think Europe internally has really forged a common European identity now, or whether that too could fall away if NATO crumbles?
Matthias Matthijs
Yeah, so I think NATO is less important for this than is the European Union. Yes. Because, I mean, let’s be honest, Turkey is a NATO member, Hungary is a NATO member, of course, Hungary is also an EU member, but I think Turkey is the most obvious one. And obviously, NATO has done very little to stop the democratic backsliding that we’ve seen in the United States, right? Especially in the last year, where to some extent. the Trump administration has been very comfortable to follow the Orban or the Erdogan playbook. The striking thing is that they’ve done it at record speed, right? I mean, it’s taken Orban a lot longer, as it has Erdogan to control the judiciary, to kind of limit the independent media, and so on. So the European Union has more leverage there, even though it hasn’t been entirely successful. Either, because it has the power of the purse, It has, to some extent, you need the EU economically a lot more than you need NATO, right? I mean, think of… an example is Switzerland. Switzerland is not… in NATO, it’s not in the EU, but it’s perfectly protected by NATO, just by the gift of its geography in the middle of the Alps. in between Germany and Italy, right? That are members. So, but you’re right. It’s been very effective at stopping external threats, but it has no real… way of dealing with internal threats. That’s still seen as a sovereign, as a kind of national domain for countries to respond to. And of course, they respond to these things very, very differently, depending on the member state you’re talking about.
Jen Rubin
Donald Trump has this view of the world of spheres of influence, which is a kind of 19th century concept, which kind of does away with national sovereignty, posits that the great powers are gonna boss the little powers along, and of course, that doesn’t usually work out very well. If other countries read this, if China reads this, are we potentially headed for a major conflict with Taiwan? In other words, will he read this as a view that, well, the U.S. doesn’t really care about Europe, doesn’t seem to care about anything outside of its alleged sphere of influence, therefore we can go grab Taiwan. Is that something that you think is now more likely than not, now that Donald Trump is, backing away from these traditional alliances?
Matthias Matthijs
Yeah, I’d say there’s two views on this, right? I mean, the obvious takeaway for Russia and China, is that, well, for the same reason the United States claims Greenland for its own security. Russia claims Ukraine and China potentially claims Taiwan, right? That… and if it’s the case that all this administration, the Trump administration, cares about is the Western Hemisphere. Does that, by definition, then mean… you can leave Eastern Europe, or all of Europe, to the Russians, and much of Asia to the Chinese. I mean, I think it’s more complicated than this. So there’s another view that, Trump, with his intervention in Venezuela. has shown that if the United States declares something, a vital national interest, that they’re willing to intervene, and that you better not mess with that idea. There’s economic interests, of course, at stake with China and Taiwan that are way more important than the way they perceive the Ukrainian conflict right now. But yeah, there is a side to Donald Trump that still wants to get the Nobel Peace Prize, right, and doesn’t want to encourage… you know, wars anywhere else, and his whole idea of peace through strength, even though it’s unequally and unevenly and inconsistently applied, but I think I think stands. That said, I think in Beijing and Moscow, they will take heart from the kind of weakness of their enemies and the division that they… Greenland, the big loser of the Greenland issue right now, is not Denmark or the US, it’s Ukraine, right? Because it means a dramatic distraction of the foreign policy apparatus in the United States from getting a ceasefire and getting some sort of road towards peace in that conflict.
Jen Rubin
The markets, maybe for the first time, really reacted to something crazy that Donald Trump did yesterday. In the past, even tariffs have not shaking the markets because they sort of believe in the taco theory that he’s gonna back off. And although he has backed off for now, as you noted, this threat looms. What are the consequences if, NATO breaks apart and there is just a loss of confidence more broadly in the United States economy? In terms of investment here, in terms of capital, that might leave the United States? How serious an economic concern would that be?
Matthias Matthijs
Yeah, so the… there’s a risk that the traditional flight to safety that used to be into dollar securities, dollar products. that no longer will work. So what we saw in the stock market on Tuesday, this week, January 20th. 2026, is that it’s not just that the stock market went down by about 2% across the board, but that yields on U.S. Treasuries went up. And if yields go up in the bond market, that means the prices of bonds go down as well, right? So, this means that The flight to safety now is into things like gold, silver, right, precious metals. But also. European bonds were fine yesterday, right? So, the German Bund strengthened, the British guilt strengthened a bit, French bonds even. So there is this sense that for somebody who’s looking to go towards safety. that this is no longer going to be in dollar assets, right? And that was very different after Lehman Brothers collapsed in September 2008. It was a U.S. financial crisis, it was the U.S. housing market, but the dollar strengthened, right? People… the flight to safety was in $2. That said, I mean, I don’t think we’re quite in sell-America territory, right? Things would have to get a lot worse and a lot less predictable than they’re now. I think financial markets took heart that, I mean, Donald Trump tends to be a maximalist when it comes to negotiations. I think they had expected him to threaten military action, he wasn’t going to take it off the table, he did. And that then usually means you can settle at, well, we’ll buy Greenland from you, which is also a red line for Europe, but that Europe would have to cave, and that then… you would see this kind of tit-for-tat, a potential trade war, and then I think markets would have panicked. The fact that in Davos, he very clearly said, you know, when I talk to the Danes, they probably won’t give me anything, and, you know, we ask you nicely, and we’d appreciate if you’d give it to us, but if not, we will remember, or we will not forget it. I mean, what does that mean? It was kind of an implicit threat to the future of NATO, an implicit threat to support for Ukraine, so… But markets are much more comfortable with this, because they’ve seen a year now.
Jen Rubin
Yeah, sure.
Matthias Matthijs
Donald Trump 2.0, and yeah, he is sensitive to movements in the stock market, or especially in the bond market, where, you know, in the end, big deficit in the US still needs to be financed, and a lot of it is financed abroad. And so, they’re already anticipating, maybe not a big taco, but a mini taco, right? Where he’s already opening up the space for a deal. And in the end, we all know he’ll get something out of this, right? It might be a largely symbolic victory, but again, he will have reminded the Europeans on how divided they are, and how easy it is to divide them, and how weak they still are. Yes.
Jen Rubin
So, last question. One day Donald Trump will not be there, and whether it’s a Democratic president or, frankly, a normal Republican president who has interest in strong alliances, as both Bushes did, as Reagan did, What would be a path back, or is there no path back? Has the… toothpaste out of the tube, we’re not going back to the kind of very close collaborative alliance that we have enjoyed. Is it recoverable?
Matthias Matthijs
Yeah, I don’t think it is. I mean, I also don’t think even a Democratic president can roll back that much of the Trump 2.0 agenda, right? And I think that’s true to some extent, even domestically. I have a hard time seeing this becoming a country of open immigration again, I have a hard time seeing this being a country of free trade again, right? I mean. Democrats were always more protectionist than Republicans, of course. Republicans were the party of free trade. It’s thanks to them that NAFTA passed in the 1990s, not because of Democrats. And also, you have to replace this kind of vast tariff revenue. I mean, it’s uncertain because of a Supreme Court ruling pending. But nobody doubts that there’s a Plan B and even a Plan C on keeping these tariffs somehow… going, and so you’re talking about a few hundred billion dollars in revenue every year. Good luck finding that by a new tax somewhere else, right? And so, I think when it comes to alliances, sure, I think the tone will shift. I mean, even… The former Vice President of Donald Trump, Mike Pence, is a big believer in alliances, right, in protecting freedom in the West, and things like that. But I can’t see a new president, a post-Trump president. making a priority of building new bases to protect Eastern Europe, or strengthening the bases in Korea and Japan. I think it’s going to be much more, okay, how much are you paying for this? And if you want this protection, how much can you pay for that, and what can you do for us? the what-have-you-done-for-me-lately question, I think it’s one that every president is going to be forced to ask, because again, every time you spend time and resources abroad, the question is, it’s seemingly that you’re not spending it at home. So I do think, I mean, Mark Carney’s speech has been widely praised or remarked upon by many observers for kind of having a very clear eye on this is the end of the U.S.-led international order, and I think he’s right. Sometimes you just need somebody to say it out loud, somebody who is a… you could say a paid member of the liberal global international establishment, like Mark Carney, who’s a product of it, to say that so clearly, but I don’t think there is a going back. We’re not going back to this sort of… 80-year period post-World War II, where, in many extent, especially in the West, we’ve had a bit of a holiday from history. And we’ve now, you know, there’s a kind of rude awakening from it. Not for much of the Global South and the rest of the world, but I think especially in Western Europe. That I’ve gotten very comfortable. over the last 8 years. Less so, I think, in Eastern Europe, where, of course, they lived under Soviet rule. Not that long ago, but they… for them, it’s kind of a rude awakening that this is a much more unpredictable, much more dangerous, much more politicized geopolitical world.
Jen Rubin
Well, enlightened self-interest has served us very well for about 80 years, and we’ll have to see what replaces it, if it does fall by the wayside. But thank you so much, and I think your initial observation that in order to understand all this, you do have to understand Donald Trump’s psychology, is probably worth remembering. so much. We really enjoy the, interpretation, shall we say, of what Donald Trump is up to. So, we’ll look forward to having you back soon.
Matthias Matthijs
You’re very welcome. Thanks, Jen.
