Unlicensed Tourism: The Red-Sailed Controversy in Greenland
For years, a Russian tourist operator has been quietly making waves in Ilulissat, offering breathtaking tours aboard their distinctive red-sailed boats. Yet, beneath the surface lies a troubling reality: this company has been operating without a valid license and has sidestepped tax obligations.
With millions of kroner flowing through their coffers from eager Russian visitors, many locals are voicing their concerns about the potential erosion of Greenland’s tourism revenue. Mayor Lars Erik Gabrielsen of Avannaata Municipality has sounded the alarm, revealing that one such company is reportedly raking in around DKK 40 million in just ten weeks—a claim that hasn’t yet been independently verified.
Yet, as Gabrielsen points out, the economic benefits to the local community are minimal. This operator has made scant contributions in terms of supplies, transportation, accommodations, and dining.
Under the Radar
In the wake of Russia’s invasion of Ukraine, the operator has taken steps to cloak its identity, stripping its vessels of logos and flags. Many of these boats are registered under foreign flags from Malta, Palau, and Malaysia. What presents itself as a fleet of private passenger boats is, in reality, a flourishing tourist business, exploiting loopholes in legislation.
“What we’re witnessing is clear: customers are boarding their boats as tourists, not just casual visitors,” says Gabrielsen. He adds that while the operators have expressed a desire to collaborate with local businesses—offering to ferry guests to and from the docks—they’re merely skimming the surface of legality.
Conflicts on the Water
Tensions have simmered as some local residents have encountered confrontations with these foreign operators. The mayor reports instances where boaters were instructed to vacate their spots for photo ops, highlighting an unsettling dynamic on the waters.
As the municipality explores avenues for intervention, Gabrielsen has called on the Self-Government to tighten existing regulations. Currently, these foreign operators have found ways to operate without directly violating any laws.
“We need equitable contributions from everyone involved,” he insists. “When you utilize our beautiful landscapes to generate profit, you have a responsibility to pay taxes and give back to the community. We’re missing out on millions.”
New Regulations on the Horizon
However, changes may be on the way. The new Tourism Act set to take effect by 2025 will require companies to secure a license before operating in Greenland. This law allows existing businesses to continue without a permit until January 2027. After that, prospective operators must establish a significant connection to Greenland, meaning at least two-thirds of ownership must reside locally, along with mandated safety protocols and insurance.
This new licensing structure could spell the end for unsanctioned companies like Rusarc, identified as the operator behind the eye-catching red sails. Unless they obtain the necessary permits, they will not be able to conduct business in Greenland come next year.
Equal Standards for All
Local tour operator Ivik Knudsen-Ostermann, owner of Greenland Cruises, welcomes the impending regulations. He argues that foreign operators have enjoyed significant advantages, operating with fewer restraints while local businesses adhere to stringent rules.
“If you carry paying passengers, you need proper certifications, passenger-approved vessels, insurance, rescue equipment, and boats fortified against ice,” he emphasizes. “And most importantly, you should be contributing taxes to the local economy.”
Knudsen-Ostermann shares his own challenging encounters with the foreign charter boats. “We once found ourselves drifting next to an iceberg for photos when an operator sent an inflatable boat over, demanding we move so they could capture the shot.”
Rusarc Responds
In response to the criticism, Rusarc communicated through WhatsApp, insisting they possess all necessary permits to operate in Greenland. They claim not to be a Russian company but rather a foreign legal entity, with management based outside the country. The company maintains that it collaborates closely with local partners and pays all requisite port fees and taxes.
Rusarc further stated that their guests contribute significantly to local businesses, spending thousands on services and souvenirs. They assert their role in promoting Greenland as a travel destination over the last decade, which has reportedly inspired many visitors.
Nevertheless, in a nod to the changing regulatory landscape, the company acknowledged that this season could be their last. “As legislation evolves next year, our operations in Greenland may cease, depriving future guests of experiencing this magnificent country,” they conveyed to KNR.
KNR reached out to the Department for Trade and Raw Materials for comment on the matter but received no response before the publication of this article.