Europe could face a wave of credit rating downgrades if tensions with the United States over Greenland fracture NATO, Fitch's chief sovereign ratings analyst, James Longsdon, said on January 15, according to Reuters, as quoted by Ziarul Financiar. Romania is working to maintain its fragile investment-grade rating after narrowly avoiding a downgrade to junk last year through strict austerity measures.

The war in Ukraine has already been factored into rating models following the Russian invasion. But growing tensions within NATO, which in some scenarios could leave the Eastern flank exposed to Russia, are emerging as a new risk, amplified by disputes over Greenland.

Longsdon said Fitch would "need to see how the situation develops first," adding that any rating action would require careful assessment. Still, he noted, proximity to Russia remains a key factor.

"It could be where you feel the vulnerability to a geopolitical event would be most obvious. That's the general rule - the further you are from Russia, the less likely that is to happen," he said.

Danish prime minister Mette Frederiksen, who has warned that a conflict with the US over Greenland could spell the end of NATO, told Reuters that a "fundamental disagreement" with the US remains, after President Donald Trump again insisted that the US "needs" Greenland.

A small French military contingent has arrived in Greenland's capital, Nuuk, officials said, as several European countries deploy small units on a so-called reconnaissance mission, according to the BBC.

The limited deployment, which also involves Germany, Sweden, Norway, Finland, the Netherlands, and the UK, comes as President Trump continues to press his claim to the Arctic island, a semi-autonomous territory of Denmark.

iulian@romania-insider.com

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