Investing geoeconomically starts with two questions: How does power shape an investment? And how does the investment change power?
These questions belong inside the investment case from the beginning. They concern the conditions under which an investment can succeed and how making or accepting it changes the choices available to those involved.
We have become accustomed to treating much of the legal and economic setting as dependable background. Law organises power, constrains its exercise and makes its effects more predictable. But when ownership requires public approval, access to technology depends on permission, or an investor’s identity changes what a company may do, that setting becomes part of the investment itself.
Here, power means bargaining power: who needs whom, what alternatives each party can actually use, and who can bear the cost of refusal or delay. Geography structures these relationships. Assets have locations, rights operate within jurisdictions, and access to capital and technology depends on particular institutions and infrastructure.
The contract is one place to examine these relationships. It allocates rights and obligations and thereby helps structure bargaining power. The practical value of those rights also depends on the alternatives available. A right to terminate does not produce a replacement supplier. A right to sell does not produce an eligible and willing buyer.
The investment itself changes those alternatives. It may finance a new capability that reduces dependence. It may commit resources in ways that make withdrawal costly. It may give an investor influence over the company while making the investor dependent on the company’s continued success.
The right–might nexus is the interaction between legal rights and obligations and bargaining power. Rights help constitute that power; power, in turn, shapes the practical effect of rights.
The geolegal contract is the contractual relationship understood through that nexus. It gives concrete expression, at the level of the relationship, to the two-way inquiry at the heart of investment geoeconomics.
It extends our understanding of the legal contract in five respects:
- Rights and obligations assessed through might. The geolegal contract considers what each party can reasonably expect to obtain or be required to give, taking account of the time, resources and commercial sacrifices involved in securing performance or resisting a claim. The question is: What might can you bring to bear to give effect to your right—and what might can your counterparty bring to bear in response?
- Optionality beyond contractual entitlements. The geolegal contract encompasses the alternatives each party can realistically exercise, including choices the agreement leaves open. It examines the ability to continue, withdraw, substitute, withhold cooperation or seek another counterparty—and how those possibilities are enabled or constrained by the bargaining power of others. An option matters to the extent that it is usable, at an acceptable cost and within a relevant timeframe.
- A dynamic right–might nexus. The parties’ bargaining positions evolve as dependencies deepen or diminish, alternatives appear or disappear, and their capacity to bear costs or delay changes. The contractual wording may remain unchanged while the effective conditions of the bargain shift substantially. The geolegal contract therefore requires continuing assessment throughout the life of the relationship.
- A relationship extending beyond privity. The geolegal contract’s analytical reach extends beyond the contracting parties. Each party’s might may depend on public authorities, suppliers, customers, funders and other actors whose cooperation, decisions or control over essential resources affect the relationship. Those actors need not be parties to the legal contract to shape its practical operation.
- Operative conditions beyond the signed agreement. The geolegal contract includes conditions arising from investment screening, sanctions, industrial policy and other measures that materially affect performance, value and the parties’ alternatives. These need not be contractual terms to alter the effective bargain. Their effects depend on where assets, counterparties and infrastructure are situated, which authorities can reach them, and who controls access to them.
The geo thus concerns the spatial and jurisdictional organisation of the relationship: where rights can be exercised, where alternatives can be found, and where dependence gives others influence.
Consider a hypothetical investment. An industrial investor puts €10 million into a manufacturing company in exchange for a minority shareholding. The agreement gives it consent rights over new share issues and permits it to sell its holding to eligible buyers. It imposes no obligation to provide further capital. At signing, both parties have credible alternatives.
The company builds a specialised production facility. Eighteen months later, it needs fresh capital and has three months of cash remaining. The investor’s consent right has not changed, but the company’s dependence on obtaining consent has increased. That can give the investor influence over choices beyond its express contractual vetoes. Its position still depends on what it stands to lose: the existing investment is also at risk.
Suppose an investment-screening restriction then makes two prospective foreign investors unavailable and narrows the pool of potential purchasers of the existing holding. The company loses financing alternatives; the investor loses exit alternatives. The same measure can strengthen the investor’s position in one negotiation while weakening it in another.
Finally, a public guarantee makes bank financing available on workable terms. Assume that borrowing is permitted under the existing agreement. The company can now fund the next stage without issuing shares. The investor’s consent right remains intact, but the immediate need for that consent diminishes. A new relationship with the lender brings conditions and dependencies of its own.
Throughout these changes, the written investment agreement remains the same. The geolegal contract changes as the right–might nexus evolves. The original investment helped create the dependence; subsequent public measures and financing arrangements changed the alternatives available to both parties.
These questions have roots in relational contract theory and the study of power and dependence. The geolegal-contract prism brings them into a focused inquiry about investment relationships, their spatial and jurisdictional organisation, and the changing conditions under which value can be created, protected and realised.
At Helsinki Geoeconomics, we are developing this inquiry through the New Helsinki Process and the Helsinki Manual: mapping the instruments, initially those associated with economic security, and investigating their effects on the choices, risks and opportunities of the people affected.
The central inquiry is: How does the right–might nexus determine what each party can obtain, withhold, resist or change—and how does the investment itself reshape that nexus?
