Policymakers in two small and weak states, Qatar and Guyana, leveraged foreign direct investment by oil and gas producers to enhance their strategic security and protect against threats from neighboring hegemons. The case of Qatar reveals a major improvement in security relations with the United States that coincides with Mobil’s participation in the Qatari natural gas sector. The case of Guyana reveals a similar process, with Guyanese officials choosing ExxonMobil over rival firms interested in its offshore oil concessions. Guyana willingly accepted inferior contractual terms in exchange for the prospect of bolstered security ties with the United States. This paper explores the phenomenon of host country governments leveraging American FDI to militarily balance against a regional hegemon. The two cases depict host countries using investment to seek security, rather than following the more documented path of using preexisting security ties to attract investment.
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The article came out of The Role of Foreign Direct Investment in Resource Rich Regions, a workshop from the Center for Energy Studies. Peer-reviewed papers from the workshop are being published in this special issue of Resources Policy.