  Inverse nematic emulsions in which surfactant-coated water droplets are
dispersed in a nematic host fluid have distinctive properties that set them
apart from dispersions of two isotropic fluids or of nematic droplets in an
isotropic fluid. We present a comprehensive theoretical study of the
distortions produced in the nematic host by the dispersed droplets and of
solvent mediated dipolar interactions between droplets that lead to their
experimentally observed chaining. A single droplet in a nematic host acts like
a macroscopic hedgehog defect. Global boundary conditions force the nucleation
of compensating topological defects in the nematic host. Using variational
techniques, we show that in the lowest energy configuration, a single water
droplet draws a single hedgehog out of the nematic host to form a tightly bound
dipole. Configurations in which the water droplet is encircled by a
disclination ring have higher energy. The droplet-dipole induces distortions in
the nematic host that lead to an effective dipole-dipole interaction between
droplets and hence to chaining.
