The US and Denmark have agreed to upgrade a radar base in Greenland that could eventually be used in America's controversial anti-missile project.
The radar deal was agreed by Denmark, Greenland, and the US
US Secretary of State Colin Powell and Danish Foreign Minister Per Stig Moeller signed the deal at the US base in Thule in north-west Greenland.
The deal does not allow for installing interceptors there, but provides for talks on the US anti-missile project.
Critics of the planned missile shield have questioned its cost and viability.
Local residents from the tiny Greenland fjord village of Igaliku, many in traditional Inuit costume, spilled out of their homes to watch as US Secretary of State Colin Powell arrived.
Greenland, an autonomous Danish territory, had originally opposed the agreement, which only covers the modernisation of Thule's radar installations.
A deal was reached this May, but further negotiations would be needed for the US to use the radar in their missile defence system, Greenland's Deputy Premier Josef Motzfeldt told the AFP news agency.
"Greenland's clear position is that we are opposed to a development that can threaten world peace and relaunch a new arms race," he said.
After Friday's signing Per Stig Moeller said Denmark was not fundamentally opposed to missile defence.
But, he added, "we have said yes to that (Friday's modernisation agreement) and nothing
Mr Powell said that talk of missile interceptors at Thule were premature.
"There is no plan right now for anything other than what we have already made known," he said.
'Son of Star Wars'
The Thule airbase is located about 1,500km (930 miles) south of the North Pole.
It was built in the 1950s and served as a listening post during the Cold War.
The US missile defence programme - which President George W Bush made a priority after the 11 September attacks - is in its early stages.
Eventually, the so-called Son of Star Wars programme is meant to have the ability to track and destroy incoming ballistic missiles through advanced radar systems.
The Pentagon plans to develop sea-based interceptors, fit lasers to planes and to explore the use of firing rockets from space.
Australia, South Korea, Japan, Britain and Israel are also working with the US on the project.