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Do international political tensions chase away foreign investment? Do governments avoid tensions in order to preserve foreign investment? In this paper, we will investigate the first question with a large-N study of the relationship between the level of political tensions and foreign direct investment inflows into the country (lagged one year). In addition we will conduct a detailed qualitative case study of a country that experienced both periods of heightened conflict and conflict resolution to see if a) foreign investment into the country decreased during heightened tensions and increased during periods of conflict resolution; and b) whether investment levels affected national security decisions during the period (i.e., whether it motivated conflict resolution). To this end, we will conduct a multi-year case study of Israeli national security policy from 1992 until 2002. This is an appropriate test-case because this period witnessed both significant periods of conflict resolution, especially the 1993 Oslo Agreement and the 1994 peace treaty with Jordan, as well as intense periods of conflict, most notably the al-Aksa intifada that began in September 2000. Moreover, Israel?s economy is closely integrated into the global economy and heavily dependent on foreign investment, which leads us to believe that if a reciprocal conflict-investment relationship does exist, it would be apparent in this case. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]