(PDF) The Business of Anti-Globalization Politics: Lessons from Venezuela's 1998 Presidential Elections

Why might prominent Venezuelan businessmen have supported Hugo Cha ´vez, a presidential candidate widely viewed as a threat to private sector interests, in the 1998 election? A Qualitative Comparative Analysis links the 28 business owners and managers identiﬁed by those close to the Cha ´vez campaign as likely contributors to two paths: a structural predisposition to assist the front runner in order to secure access to the state and direct network ties to Cha ´vez which reenforced a structural predisposition to assist a protectionist candidate. These distinct political interests reﬂect divergent structural incentives for business within an oil-dependent semiperipheral economy

PART II: BUSINESS POLITICS AND GLOBALIZATION THE BUSINESS OF ANTI-GLOBALIZATION POLITICS: LESSONS FROM VENEZUELA’S 1998 PRESIDENTIAL ELECTIONS Leslie C. Gates ABSTRACT Why might prominent Venezuelan businessmen have supported Hugo Chávez, a presidential candidate widely viewed as a threat to private sector interests, in the 1998 election? A Qualitative Comparative Analysis links the 28 business owners and managers identified by those close to the Chávez campaign as likely contributors to two paths: a structural predisposition to assist the front runner in order to secure access to the state and direct network ties to Chávez which reenforced a structural predisposition to assist a protectionist candidate. These distinct political interests reflect divergent structural incentives for business within an oil-dependent semiperipheral economy. On December 6, 1998, Venezuelans overwhelmingly elected Hugo Rafael Chávez Frı́as, a vocal critic of neoliberal economic reforms and Venezuela’s political establishment.1 His election marked the beginning of a new political landscape in Venezuela; one in which Chávez maintains substantial Politics and Globalization Research in Political Sociology, Volume 15, 101–137 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0895-9935/doi:10.1016/S0895-9935(06)15004-4 101 102 LESLIE C. GATES electoral majorities – demonstrated in ﬁve votes since 1998 – even as Venezuela becomes increasingly polarized politically – as evidenced by a failed coup attempt in 2002 and over 3 million signatures on a petition which sought to recall Chávez from the presidency. The 1998 election also marked the beginning of a leftward political drift in Latin America. Presidents who distance themselves from the neoliberal reforms favored by the U.S. and which have facilitated the recent mode of world economic integration often called globalization have recently won major elections throughout South America. Understanding how globalization affects politics demands a clearer understanding of the origins of this trend within a region that has historically maintained a deferential relationship with the U.S.. To understand this pivotal election, this study focuses on a factor that has been largely ignored, but which played a key role in electing Chávez: ﬁnancial assistance from business.2 This assistance is particularly intriguing given the private sector’s prominent role, after the 1998 election, in a debilitating economy-wide strike, mass demonstrations against Chávez and the coup attempt. This study, thus, sheds new light on the rare conditions under which business assists left-leaning politicians as well as the growing political dominance of anti-globalization politics in the region. Most accounts of Chávez’ victory focus on explaining widespread contempt for Venezuela’s political establishment (Kelly & Palma, 2004, p. 203): the two multi-class parties (Acción Democrática-AD and Comité de Organización Polı́tica Electoral Independiente-COPEI) that had long stabilized Venezuela’s democracy (Collier & Collier, 1991) but which rapidly lost popularity as they introduced neoliberal economic reforms.3 Scholars attribute eroding public conﬁdence in Venezuela’s political establishment to several factors: (1) the structural limitations of Venezuela’s oil-based rentier economy (Ellner, 2003; McCoy, 1999; McCoy & Smith, 1995) and concomitant social polarization aggravated by neoliberal reforms (Ellner, 2003; Roberts, 2003, p. 2) rigid political institutions which made it difﬁcult to effectively integrate new and critical political actors (Coppedge, 1994; Crisp, 2000; Crisp & Levine, 1998; Crisp, Levine, & Rey, 1995), including the urban poor (Buxton, 2001, p. 222, 2003; Canache, 2004), intellectuals (Hillman, 2004), an emergent civil society (Salamanca, 2004) and junior military ofﬁcers (Aguero, 1995; Norden, 1996; Tinkunas, 2004); and (3) a series of unfortunate policies, such as social policies in the early 1990s that inadequately addressed the negative effects of neoliberal reforms (McCoy, 2004; McCoy & Smith, 1995; Naı́m, 1993). This study, however, leaves aside the task of adjudicating the origins of declining conﬁdence in Venezuela’s political establishment. The Business of Anti-Globalization Politics 103 While scholars mention that Chávez received ﬁnancial assistance from business in passing (Hellinger, 2003, p. 47; Ortiz, 2004, p. 85), there are no scholarly studies of business assistance for Chávez. Yet without business assistance, it may be hard to explain how Chávez, a former military leader who led a failed coup attempt in February 1992, prevailed. Like all of the popular candidates in the 1998 presidential race, Chávez appealed to the electorate’s desire, particularly that of the expanding and increasingly politicized urban poor (Canache, 2004; Roberts, 2003), for a political outsider: someone they believed would curb corruption without compromising democracy and improve living standards by rejecting neoliberal reforms and reviving some form of state-led development policy (Gil Yepes, 2004; Kelly & Palma, 2004). Some argue that what distinguished Chávez – and therefore what made him appear most likely to adopt radical political reform (McCoy, 2004, pp. 279, 284; Molina, 2004, p. 170) and to break from neoliberal economic policies (Ellner, 2003) – was that he never accepted endorsement from either of the establishment parties. Nevertheless, business support may have made it feasible for Chávez to eschew establishment party endorsements. Certainly, Venezuela’s politicians depended on business support to fund their campaigns throughout the democratic era (Alvarez, 1995); a condition which generally gives business disproportionate political inﬂuence (Domhoff, 1967, 1990; Ferguson, 1995; Lewis & Center for Public Integrity, 2004; Mills, 1956). Unlike other candidates, however, Chávez took business support without compromising his reputation as a radical reformer. Indeed, several prominent Venezuelan business leaders appeared to have supported Chávez (Hellinger, 2003, p. 47; Ortiz, 2004, p. 85; Santodomingo, 1999; Zapata, 2000), despite the fact that Chávez denounced ‘‘savage capitalism’’ and was widely viewed as a threat to the private sector.4 With a focus on how Chávez ﬁnanced his campaign, this study responds to the need for more systematic analysis of campaign ﬁnancing in Latin America (Njaim, 2004; Samuels, 2001a, 2001b) brought on by the greater prevalence of expensive mass-media dominated campaigning in an ever more democratized Latin America (Weyland, 1998). In doing so, it examines a central but less studied mechanism whereby business inﬂuences politics not just in Venezuela (Coppedge, 2000; Gómez, 1989; Keller, 1997; Naı́m, 1984), but in Latin America more generally (Haggard, Maxﬁeld, & Schneider, 1997): informal individual level modes of business representation. Moreover, business assistance for Chávez represents a puzzle. Recent research in Latin America (Samuels, 2001b) conﬁrms conventional wisdom that leftleaning politicians have difﬁculty obtaining business assistance. Typically we expect business to assist right-leaning politicians that favor fewer 104 LESLIE C. GATES regulations on the private sector, more restrictions on unions, lower taxes, constrained wages and reduced government spending on social services. Indeed, business is rarely noted as an important contributor to the recent success of anti-neoliberal presidential candidates throughout Latin America. Rather, this trend is widely interpreted as evidence of the growing inﬂuence of social movements representing social sectors disadvantaged by neoliberal reforms.5 This study employs journalistic accounts and interviews with those close to the 1998 Chávez campaign to identify and analyze the motivations of 28 business managers and owners likely to have made campaign contributions. It focuses on individual business managers and owners in part because business associations, including Venezuela’s umbrella business association the Federation of Chambers and Associations of Commerce and Production (Federación de Cámaras y Asociaciones de Comercio y Producción De Venezuela – FEDECAMARAS), were largely unwilling to publicly support let alone ﬁnancially assist Chávez. A Qualitative Comparative Analysis (QCA) of the conditions which may have led these 28 business owners and managers to assist Chávez reveals two paths: one in which a structural predisposition to assist any contender with promising chances in order to secure access to the state may have led them to assist Chávez and one in which direct network ties to Chávez reenforced a predisposition to assist a protectionist candidate. These distinct political interests of business reﬂect the various structural incentives for business within an oil-dependent semiperipheral economy. As such, they reveal how an economy’s insertion into the global economy shapes domestic politics, sometimes in unexpected ways. EXPLAINING BUSINESS ASSISTANCE TO AN ANTI-NEOLIBERAL CANDIDATE An earlier generation of left-leaning Latin American presidents who supported unionization, regulations on business and major social welfare initiatives (Collier & Collier, 1991) received support from business. Research on these populists indicates that some business owners and managers may have a structural predisposition to favor protectionist policies – policies that protect domestic producers from global market pressures. Just as certain businesses – oligopolistic ﬁrms (Domhoff, 1972; Ferguson & Rogers, 1986; Kolko, 1963; Lindblom, 1977) and/or bankers (Mintz & Schwartz, 1985; Mizruchi, 1982), who tended to be well-connected (Useem, 1984) – appeared to have a structural predisposition to favor the liberal policies of Roosevelt’s The Business of Anti-Globalization Politics 105 New Deal in the U.S., business in certain sectors – weak industrialists who depended on protection from international competitors – appeared to have a structural predisposition to favor the protectionist policies of Latin America’s populists. Observers of contemporary Latin American politics conﬁrm this proposition. Many recent studies of successful neoliberal politicians, for example, implicitly acknowledge that some sectors of business have a structural predisposition to oppose neoliberal reforms by emphasizing the importance of forging and sustaining a pro-neoliberal business coalitions (Conaghan & Malloy, 1994; Pastor & Wise, 1994; Schamis, 2002; Silva, 1996; Thacker, 2000). Indeed, Mexican neoliberal reforms had to neutralize anti-neoliberal businesses (Shadlen, 2004) and construct proreform business coalitions (Thacker, 2000) in order to carry out one of the region’s most aggressive and enduring neoliberal reform agendas. Building on a long research tradition linking policy preferences to sector interests (Gourevitch, 1986; Rogowski, 1989), Frieden (1991) formalizes concrete predictions about which business sectors we might expect to be predisposed to favor protectionist policies and therefore more likely to assist leftist politicians. He posits that business owners and managers with predominantly ﬁxed assets (those with investments in factories and heavy machinery) have a structural predisposition to favor protectionist trade policies and oppose facile capital ﬂows in and out of the country. They have difﬁculty in ‘‘cashing out’’ of their investments during crises. In contrast, those with predominantly liquid assets, such as bankers, or those with assets that can be easily converted into cash, like merchants, have a structural predisposition to favor eliminating restrictions on international ﬂows of capital because they have much to gain from a more open market and can more easily protect themselves from the market volatility that accompanies liberalized markets than those with predominantly ﬁxed assets. Silva (1996) further reﬁnes Frieden, arguing that ﬁxed asset sectors vary in the degree to which they favor neoliberal reforms depending on their target markets. Those ﬁxed asset sectors that traditionally produce for export (sectors such as mining and oil extraction) or manufacturing sectors with the potential to compete internationally (such as food processing), he argues, do tend to favor reforms. The latter include a select group of manufacturers which have not developed their export potential as a result of trade protections, but which are well situated to do so due to their high level of economic concentration and attractiveness to foreign lenders. This suggests that being in a fixed-asset non-internationally competitive sector is a condition that should make businesspeople structurally predisposed to favor protectionist policies and therefore to contribute to the Chávez’ campaign. 106 LESLIE C. GATES Evidence that business assistance to Chávez stems from business owners and managers that are structurally predisposed to favor protectionist policies would conﬁrm world systems expectations of private sector political interests in semiperipheral states. Setting aside the rich debate about how best to deﬁne semiperipheral states (Arrighi, 1985; Martin, 1990; Nemeth & Smith, 1985; Schwartzman, 1989; Snyder & Kick, 1979; Wallerstein, 1976), I adopt Arrighi and Drangel’s (1986) relatively straight forward deﬁnition of all states that fall near the middle of the world’s distribution of GNP per capita. World systems theory posits that the private sector in semiperipheral or middle-income states not only has competing political interests but also has greater incentives to affect state policy (Wallerstein, 1985, pp. 34–35). It posits that semiperipheral states have a mix of economic activities (Wallerstein, 1974, 1985, p. 34) typical of both core states – those states where ‘‘high-proﬁt, high-technology, high-wage diversiﬁed production’’ are concentrated – and peripheral states – those states where ‘‘low-proﬁt, low-technology, low-wage, less-diversiﬁed production’’ are concentrated (Wallerstein, 1976, p. 462).6 This mix of economic activities generates strong competing policy preferences linked to differing modes of insertion into the global economy (Schwartzman, 1989). Furthermore, whereas business in the core may enhance proﬁtability by making changes within the ﬁrm, such as restructuring production process, it posits that business in middle-income states is more likely to conclude that changes to state policy are their most expedient means of enhancing proﬁtability. As Wallerstein puts it: semiperipheral domestic property owners ‘‘look upon the state as their negotiating instrument with the rest of the capitalist world economy’’ (Wallerstein, 1976, p. 469). Yet, studies on campaign ﬁnancing suggest that some businesses may also be structurally predisposed to support left-leaning politicians not because they favor protectionism but because they prioritize access to the state. Research on corporate giving through Political Action Committees (PACs) in the U.S., for example, reveals that corporations which depend on government contracts or good working relationships with government regulatory agencies tend to be more likely to support incumbents even if the incumbent favors increased taxes, wages and welfare spending (Gopian, Smith, & Smith, 1984; Grier, Munger, & Roberts, 1994; Handler & Mulkern, 1982). Similarly, Brazilian businesses in sectors that depend on government contracts, namely the construction industry, gave more generously to governors because they awarded the biggest government contracts in Brazil (Samuels, 2001b). This suggests that business managers and owners in sectors that are dependent on the state, may be structurally predisposed to prioritize access to The Business of Anti-Globalization Politics 107 the state and therefore to support all candidates to some extent, but the candidate most likely to win in particular. Furthermore, if businessmen in sectors that are dependent on the state are more likely to make contributions to left-leaning politicians because they prioritize state access, then we might also expect business in countries where the private sector as a whole is more dependent on the state to be generally more preoccupied with access to the state and therefore more likely to assist left-leaning politicians. Dependence on oil exports creates peculiarly strong incentives for the private sector to depend on the state (Karl, 1997). Federal governments in oil-exporting economies derive immense resources either by taxing foreign oil companies or by directly controlling the entity producing and exporting oil (i.e. a state-owned oil company). The ﬂood of foreign currency into government coffers allows the government to maintain a favorable exchange rate for domestic consumers. The overvalued domestic currency facilitates imports to satisfy growing consumer appetites and eventually erodes domestic productive capacity in agriculture and industry. The private sector, in this context, struggles to survive in the face of cheap imports. Meanwhile, the cash ﬂush federal government distributes ‘‘incentives’’ to private enterprises in its zealous rush to ‘‘sow the oil’’. In this context, the private sector becomes increasingly dependent on the state to both protect it from exports and to support it through contracts or other forms of direct cash transfers. This phenomenon, ﬁrst experienced by the Dutch, is often referred to as ‘‘Dutch disease’’. Thus, states that depend on oil exports (petro-states) may represent a special case of semiperipheral states: a case where inter-sector conﬂict over various modes of inserting into the global economy may not deﬁne the main contours of individual-level political behavior of business. In petro-states, intra-sector competition over access to state resources may overshadow inter-sector conﬂict over policy agendas and further fragment the political interests of business. Indeed, the high rate of civil war (Collier, 2000; Fearon, 2005; Ross, 2004) and failed democracies (Karl, 1987; Ross, 2001; Smith, 2004) in petro-states appear to stem in part from heightened elite conﬂict in these countries over access to the state’s immense oil-derived resources. In such economies, we might therefore expect business owners and managers to be particularly attuned to both the potential beneﬁts of direct network ties to candidates and the potential risks of candidates who are likely to favor their economic competition in granting contracts and other privileges. Thus, I predict that having a direct network tie to Chávez and distrusting Chávez’ political competition would be a condition that led business owners and managers to assist Chávez. 108 LESLIE C. GATES DATA AND ANALYTIC STRATEGY Although laws regulating elections in Venezuela require campaigns to submit records to the National Electoral Commission ((CNE) Comisión Nacional Electoral), they do not require that they report the names of donors (Alvarez, 1995). The records submitted to the CNE from organizations which backed Chávez contain a dated list of amounts deposited in campaign accounts but only one individual name (Sánchez Molina, 2000). Thus, I interviewed those close to the campaign and scoured reports by journalists who have researched the campaign (Santodomingo, 1999; Zapata, 2000) to construct a list of prominent business owners and managers that more than likely assisted Chávez. I will refer to these individuals hereafter as pro-Chávez business owners and managers. Likely assistance included (1) ﬁnancial contributions, (2) logistical support, such as loaning Chávez a plane, or (3) media support, such as granting Chávez free or heavily discounted access to primetime coverage during the campaign. The study includes those business managers and owners conﬁrmed by at least one of the sources close to the campaign as probable supporters (see Appendix A).7 Usually my sources were able to conﬁrm a high probability that an individual business manager or owner ﬁnancially assisted the campaign. Only in a few rare instances, were they actually present when a ﬁnancial transaction occurred, as this process was shrouded in secrecy. While I may have overlooked some smaller backers, this method yields a list that includes some of Venezuela’s wealthiest and arguably most inﬂuential business owners and managers in 1998. For example, it includes one of Venezuela’s two billionaires, who was rumored to have met with Chávez, arranged for positive media coverage through his marketdominant television network (Santodomingo, 1999, p. 36; Zapata, 2000, p. 69), and donated money to his campaign by mid-1998.8 To code each business manager and owner according to their structural predisposition to favor protectionist policies or to prioritize access to the state, I used interviews with sources close to the campaign, secondary accounts of the campaign (Hellinger, 2003, p. 47; Ortiz, 2004, p. 85; Santodomingo, 1999; Zapata, 2000) and an exhaustive search for articles citing each probable supporter in (1) several news ﬁles of the LexisNexis News Library (News File, North/South American Sources; Non-English News File, Spanish Sources; and the Business and Finance Sources as well as the Industry News Sources of the Business News File), (2) the Biography File of the Reference Library on LexisNexis, and (3) the only Caracas daily with an electronic database which started as early as 1996 (El Universal). The number of articles with information relevant for my coding categories The Business of Anti-Globalization Politics 109 in any of the above electronic sources ranged from 0 for six individuals to 118. I found an average of 11.2 articles with relevant information (although often there were many more without relevant information) for each pro-Chávez business owner and manager. To assess the conditions associated with pro-Chávez business owners and managers, I used QCA. QCA employs Boolean algebra to establish the various combinations of conditions that lead to a particular event or outcome of interest (Ragin, 1987). It allows researchers to consider how various factors might interact with each other to produce different outcomes, rather than considering each variable’s effect independent of others. QCA allows researchers to discern different paths, or conﬁgurations of factors, that produce a similar outcome. For example, Cress and Snow (2000) use QCA to identify several combinations of organizational, tactical, framing and political variables that enable organizations mobilizing in the interest of the homeless to attain either organizational resources or beneﬁts for the homeless. I used QCA to derive the combinations of conditions associated with likely contributors to Chávez’ 1998 campaign. OPERATIONALIZATION I coded pro-Chávez business owners and managers as structurally predisposed to favor Chávez’ protectionist policies (PROTECT ¼ 1), if they were in primarily ﬁxed asset sectors oriented toward domestic markets with little potential to compete internationally. Venezuela’s agro-industrialists and most manufacturers fell into this category. Since oil was discovered in 1913, Venezuela’s oil exports infused Venezuela’s economy with ample foreign currency (Cupolo, 1996; Karl, 1987). Easy access to foreign currency tended to make it cheaper to import both raw materials used in food products as well as already processed food, rather than to produce either domestically (Naı́m & Francés, 1995). This had made it difﬁcult for producers in agriculture to survive (Karl, 1987; Thorp & Durand, 1997) unless they were protected from cheap grain, cotton and livestock imports. As a result, agriculture declined throughout much of the 20th century (Cupolo, 1996; Jongkind, 1993; Karl, 1987) and suffered even greater losses when the Venezuelan government introduced neoliberal reforms in the 1990s. Thus, agro-industrialists tended to favor protecting their endeavors with high tariffs on imports in conjunction with technical and ﬁnancial development aid from the state.9 Indeed, an anonymous source who worked at the association representing agro-industrialists, FEDEAGRO, believes that FEDEAGRO 110 LESLIE C. GATES diverted about $2 million of public funds to the Chávez campaign (Sánchez Molina, 2000, p. 105). Similarly, Venezuela’s oil exports dampened demand for domestically produced manufacturing goods (Bitar & Troncoso, 1990; Cupolo, 1996; Jongkind, 1993, p. 66; Naı́m & Francés, 1995). As a result, the manufacturing sector in general had been anemic until government protected and invested in it historically (Bitar & Troncoso, 1990; Jongkind, 1993; Naı́m & Francés, 1995; Thorp & Durand, 1997) and it had suffered considerable losses during the 1990s.10 Indeed, the association representing manufacturers, CONINDUSTRIA, historically opposed trade liberalization.11 I coded pro-Chávez business owners and managers as structurally predisposed to favor neoliberalism or non-protectionist (PROTECT ¼ 0) if they had predominantly liquid assets or had predominantly ﬁxed assets but were in traditional export sectors or had potential to compete internationally. The latter included a few manufacturing industries which had managed to thrive after neoliberal economic reforms were introduced (Jongkind, 1993, pp. 81–82; Keller, 1997, p. 348). For example, the food processing and paper industries were able to compete domestically with international products (Bitar & Troncoso, 1990) and grew during the 1990s (Jongkind, 1993) after having attracted signiﬁcant foreign investments (Bitar & Troncoso, 1990). Post-privatization, the cement industry also proﬁted from exports to Florida and other South American countries in the 1990s.12 The variation in policy preferences across the manufacturing sector may also help explain how Pérez neutralized CONINDUSTRIA’s opposition to neoliberal reforms in the early 1990s (Corrales & Cisneros, 1999) and therefore why it did not advocate for or assist Chávez in 1998.13 I then coded pro-Chávez business managers and owners according to three possible conditions that might have led them to assist Chávez in order to help ensure that they would have access to the state after the election. First, I coded pro-Chávez business managers and owners as likely to prioritize securing access to the state if they had primary business interests in economic sectors that traditionally relied on large cash transfers to their business from the state and therefore depended on the state (DEPEND ¼ 1). Following Samuel’s research on Brazil, I coded those in the construction industry or in related industries, such as cement manufacturing, as dependent on the state. However, because Venezuela’s oil dependence made a much greater portion of the private sector in Venezuela dependent on the state (Baptista & Mommer, 1989; Briceño-León, 1990, p. 127; Karl, 1997), I also coded bankers and business owners and managers in various telecommunications sector industries as dependent on the state. Venezuelan banks depend on The Business of Anti-Globalization Politics 111 securing contracts as the primary intermediary for government deposits. All of the state’s oil revenue is ﬁrst deposited in Venezuela’s central bank after which it is distributed to the different government agencies via private banks, accounting for approximately 60% of bank deposits.14 Indeed, a banker confessed to a leading expert on elections in 1993 that they needed to know whether a close contender for the presidency that they had not yet ﬁnanced might have a reasonable chance. If so, they intended to make a contribution in order to help ensure access to the next administration.15 Newspaper publishers and radio and TV station owners depended on lucrative advertisement contracts with various government agencies and privileged access to high-level government ofﬁcials in order to boost circulation.16 Furthermore, those individuals with signiﬁcant investments in the telecommunications industry had a keen interest in the outcome of a planned reform of Venezuela’s telecommunications law.17 Industry giants were eager to stream line the process whereby the state regulated the various industries (radio, television, telephone services) within the telecommunications sector in order to better reﬂect the emerging integration of all forms of media. Those already invested in one part of the sector wanted to have an easier time diversifying into other areas of the sector. A series of reforms to this effect were, indeed, implemented in 2000.18 I also considered a second and third condition that might have led any business owner or manager, regardless of their sector interests, to believe that they might have had a good chance of securing access to the state through Chávez. The dependence of much of Venezuela’s private sector on the state may have created incentives for all businesses managers and owners to assist those candidates with whom they had network ties or who could defeat those candidates they distrusted. I coded pro-Chávez business managers and owners as having network ties to Chávez (NETWORK ¼ 1) if at least one of my sources close to the 1998 campaign conﬁrmed that the individual had a direct relationship to Chávez. I coded pro-Chávez business managers and owners as having incentives to distrust Chávez’ leading contender (DISTRUST ¼ 1) – and therefore as believing that they had a better chance of securing access to the state if Chávez was president – for two different reasons: for being a business competitor or for being closely associated with the prior government’s policies that negatively affected them or their close associates. As of July 1998, Chávez’ leading competition was the businessman and former governor of the state of Carabobo, Salas Römer. With 20% of the projected vote, Salas Römer became the candidate in a crowded ﬁeld of presidential hopefuls with the best chance of defeating Chávez and known as 112 LESLIE C. GATES the ‘‘darling of the business sector’’.19 Yet, the individuals rumored to be associated with a prospective Salas Römer administration were individuals that a number of prominent business owners and managers deeply distrusted due to growing division in the private sector (Santodomingo, 1999; Zapata, 2000, p. 22).20 Some of those mentioned were individuals who had strong allegiances to particular private enterprises. Ironically, the government had unwittingly unleashed a ﬁerce competition among prominent business owners and managers for market dominance when the state unraveled decades of state mediated market allocation mechanisms with neoliberal economic reforms in the early 1990s (Naı́m, 1993). The vigorous quest for market dominance among Venezuela’s major conglomerates created lasting enmities among the elite, generating strong incentives for some elite to distrust the leading pro-business candidate. Thus, I coded individuals as having incentives to distrust Salas Römer’s associates (DISTRUST ¼ 1) for being a competitor if that pro-Chávez business owner or manager were one of the main business competitors of a Salas Römer associate or if that pro-Chávez business owner or manager had been involved in a struggle for power over the same company with one of Salas Römer’s associates. Some of those rumored to be close associates of Salas Römer had also been closely associated with the state’s selective and retribution oriented handling of Venezuela’s devastating bank crisis in 1994.21 While other countries facing similar bank crises in the 1980s and 1990s adopted a universal strategy such as nationalizing all banks, the Venezuelan government created many enemies. The government selectively distributed emergency aid and rescue packages to some banks while closing and liquidating others.22 For example, within days of Banco Latino’s declaration on January 13, 1994 that it could not pay client checks, the government froze $1.4 billion in Banco Latino savings accounts, affecting 1.3 million depositors throughout Venezuela.23 The government also sought retribution against Banco Latino, by issuing warrants for 83 Banco Latino executives on February 28, 1994 (see note 23). Meanwhile, the government merely instigated audits of eight other ﬁnancial institutions to which it distributed emergency aid.24 The government continued to selectively aid and close banks through January 1995. By mid-June it had become apparent that much of the ﬁnancial aid was being used to pay off loans held by shareholders or was being ‘‘recycled to other weak banks’’.25 The government temporarily closed these eight ﬁnancial institutions on June 14, only to reopen them a few days later to depositors, and liquidate them in August (the second phase of the bank intervention).26 In August, the government also The Business of Anti-Globalization Politics 113 tried to create incentives for eight more commercial banks to become solvent on their own rather than with the help of government ﬁnancial assistance.27 But this strategy also failed. During September and December, the government intervened in yet another round of failing banks, including one of the top three banks in Venezuela (third phase).28 Finally, the state reluctantly bailed out three of the ﬁve banks that faced imminent collapse in January 1995 (fourth phase).29 All told the state acquired 17 of Venezuela’s 50 commercial banks, representing about 70% of the banking sector, and spent an estimated $7 billion, equal to about 75% of government revenue or 11% of Venezuela’s 1994 GDP.30 Thus, those who implemented and who supported this selective and retribution-oriented intervention were suspected of being willing to cut certain business owners and managers off from access to the state. Close observers of the election argue that some prominent business owners and managers were suspicious of those who had implemented or had publicly supported the government’s handling of the bank crisis. They suspected that the government had targeted prominent business owners and managers for ‘‘moral cleansing’’. President Rafael Caldera (1994–1998) had declared that the moral corruption of Venezuela’s political system had produced the bank crisis.31 Some believed that Caldera had sought to capture widespread political discontent with the now disgraced former Venezuelan President, Carlos Andrés Pérez, by selectively seeking retribution against those business owners and managers intimately linked with him. When Salas Römer became associated with those who had implemented the government’s bank intervention, such as the former head of the special committee on bank crisis,32 the former head of the agency administering statized banks33 and a member of the intervention team of two of the most prominent statized banks,34 those suspicious of the government’s handling of the bank crisis became wary of Salas Römer. Similarly, Salas Römer’s rumored association with those who had stoked the ﬂames of public disgust with bankers,35 and those suspected of spreading rumors of imminent bank collapse (Zapata, 1995, pp. 15, 19–20, 32), also made some businessmen wary of Salas Römer. In other words, some pro-Chávez business managers and owners may have had good reason to believe their chances of establishing close ties with Chávez were much better than they were with Chávez’ leading competition; someone they deeply distrusted because of the individuals with whom he was associated (Santodomingo, 1999; Zapata, 2000, p. 22). Thus, I also coded pro-Chávez business owners and managers as having incentives to distrust Salas Römer’s associates (DISTRUST ¼ 1) if that pro-Chávez business owner or manager had a negative association with the bank crisis. 114 LESLIE C. GATES Business owners and managers that had been closely associated with a bank that failed, faced considerable losses, or faced a serious threat of a depositors rush were coded as having a negative association with the bank crisis, as were those that had close network ties to one of the bankers negatively affected by the bank crisis. RESULTS OF DATA CODING Table 1 demonstrates that although some pro-Chávez business owners and managers could be considered protectionists (PROTECT ¼ 1), most could not. Only seven of the 28 pro-Chávez business owners and managers had interests in sectors we would expect to favor protectionist policies. Six of them were (or in one case had been) agro-industrialists.36 The one exception was the owner of an airline (case 2). The airline industry is a ﬁxed asset sector, like agro-industry, that depends in protections from international carriers. But, the majority of pro-Chávez business owners and managers could not be considered protectionist. Notably, 12 (43%) had primary and an additional two (7%) had secondary interests in the ﬁnancial sector – a liquid asset sector we might expect to support radical neoliberal economic reforms. Even the four pro-Chávez business owners and managers with either primary or secondary manufacturing sector interests were concentrated in the internationally competitive industries which thrived after neoliberal reforms were introduced.37 The nine pro-Chávez business owners and managers with interests in the telecommunications and media sector (ﬁve with primary interests and four with secondary interests) also did not have a structural predisposition for protectionism. The telecommunications sector is a ﬁxed asset sector that includes a diverse set of industries from the telephone industry, to major radio and television networks, to cable providers. Nevertheless, these enterprises shared an interest in privatizing and deregulating the industry. For example, businesses poised to invest in the telephone service industry advocated privatizing Venezuela’s telephone company, CANTV, in the 1990s, in conjunction with foreign multi-nationals. Those in the media, including newspapers, and television networks, oppose tariffs on content and physical materials needed to produce and distribute their product (such as ink and satellite dishes) and supported unregulated access to a strong local currency, the Venezuelan Bolivar (VEB), to help them import these components of their business.38 Chief among those pro-Chávez owners and managers in the telecommunications sector was the head of one of Latin America’s largest 115 The Business of Anti-Globalization Politics Table 1. Pro-Chávez Business Owners and Managers by their Structural Predispositions. Asset Structure Liquid Asset Sectors Market Orientation Fixed Asset Sectors Export Oriented Market Structure Domestic Oriented Potentially Competitive Pro-Chávez business owners and managers by primary interests and structural predisposition Protectionist Non-protectionist Banking (cases 1, 4, 5, 7, 11, 12, 13, 16, 17, 19, 24, 28) Number of cases As a percent of totala 12 43 Construction (case 9) Cement (case 21) Food processing (case 25) Telecommunications/media (cases 3, 6, 10, 20, 26) Tourism (case 27) 9 32 Pro-Chávez business owners and managers by secondary interests and structural predisposition Protectionist Non-protectionist Banking Construction (cases 10, 21) (cases 6, 15) Food processing (case 6) Paper (case 28) Telecommunications/media (cases 5, 7, 17, 25) Number of cases 2 8 As a percent of total 7 29 Total number of 14 13 cases Primary or 50 46 secondary interests as a percent of total Non-Competitive Transportation (case 2) Agroindustry (cases 22, 23, 18, 14, 8) 6 21 Agroindustry (case 26) 1 4 7 25 a Total number of Pro-Chávez business owners and managers ¼ 28. The bottom row does not sum to 100% because one individual only has secondary business interests. This individual (case 15) built a career at a bank but then moved into government in the early 1990s. media-based conglomerates.39 His television station gave Chávez positive media coverage and a newspaper in which he had a controlling interest published the ﬁrst polls indicating Chávez’ rise in public opinion (Santodomingo, 1999, p. 34).40 Table 2 indicates that there is considerable variation across the cases in the presence or absence of the conditions that might have led them to assist Chávez. Twenty-one of the 28 (75%) pro-Chávez business owners and managers depended on the state for their business proﬁt and were therefore structurally predisposed to prioritize the state. Only eight of the 28 (29%) pro-Chávez business owners and managers had direct network ties to 116 Table 2. LESLIE C. GATES Presence or Absence of Causal Conditions for Business Owners and Managers to Support Chávez. Case ID# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Column sum Column sum as percent of total PROTECT DEPEND NETWORK DISTRUST 0 1 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 1 0 0 0 1 1 0 0 0 0 0 1 0 1 1 1 1 1 0 1 1 1 1 1 0 1f 1 1 0 1 1 1 0 0 1 1 1 0 1 0 0 0 1 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 0 0 1 1 0 0 1 1 1h 1a,b 1 1c 1d 1a,b 1b,c 1b 0 0 0 0 1d,e 1a,b 0 1b 0 1g 0 1d 0 0 0 0 1g 0 0 0 0 6 21 21 75 8 29 13 46 Notes: Column categories: PROTECT ¼ structurally predisposed to favor protectionist policies; DEPEND ¼ structurally predisposed to prioritize access to the state; NETWORK ¼ had network ties to Chávez; DISTRUST ¼ had incentives to distrust Salas Römer associates as those closely associated with the state’s bank intervention or as competitors; 1 ¼ presence of condition; and 0 ¼ absence of condition. a Had struggled for power over a business with Salas Römer associate. b Had bank that failed. c Was in direct competition with businesses that Salas Römer associates closely identify with. d Had close network ties to bankers that failed and blamed the spread of rumors on Salas Römer associates. e Had bank that survived, but faced possible rush on deposits when Salas Römer associates allegedly spread rumors that the collapse of their bank was imminent. f Had secondary interest in sector with this structural predisposition. g Had bank that survived with the aid of private sector rescue packages, but only after suffering signiﬁcant loses. h Had extraordinary success soon after the 1998 election. The Business of Anti-Globalization Politics 117 Chávez. Meanwhile, 13 (46%) of the 28 pro-Chávez prominent business owners and managers had incentives to distrust Salas Römer either as competitors or for their close association with the government’s handling of the bank crisis. Indeed, six of the 12 pro-Chávez prominent business owners and managers who had primary business interests in the ﬁnancial sector lost money as a result of the crisis. As indicated on Table 2, four of these six lost their banks (cases 1, 5, 7 and 13) and two suffered signiﬁcant losses but their banks managed to survive (cases 17 and 24) with the help of private rescue packages.41 Moreover, the four with primary interests in banking who lost their banks also faced criminal charges for allegedly defrauding depositors. Of the remaining six with primary ﬁnancial sector interests, one survived an imminent rush on deposits (case 12) and three had close network ties with failed bankers (cases 4, 12 and 19).42 Both of the prominent business owners and managers with secondary interests in the ﬁnancial sector were also negatively affected by the bank crisis as a result of their long associations with several banks that failed (cases 6 and 15). In total, all but ﬁve of the 17 banks which faced rumors of imminent failure and required special attention from the state had at least one pro-Chávez business owner and manager associated with them.43 RESULTS OF DATA ANALYSIS In order to assess the combination of factors associated with pro-Chávez business managers and owners, I reduce the multiple conﬁgurations present in the data to the simple most common paths. As this study only includes cases of pro-Chávez business owners and managers, I extend a technique recommended by Ragin and Sonnett (2004) for improving parsimony without sacriﬁcing important elements of complexity. They argue that researchers can reduce complexity by including hypothetically possible conﬁgurations as ‘‘don’t care’’ conﬁgurations. QCA will then use these conﬁgurations only if they help simplify the paths to a particular outcome (Ragin & Sonnett, 2004, p. 5). But, Ragin and Sonnet urge researchers to use theory in order to determine which hypothetical conﬁgurations they should include in the analysis as ‘‘don’t cares’’. Researchers may safely assign a ‘‘don’t care’’ outcome to conﬁgurations that do not exist but would be easy to imagine based on current theory and evidence. Such ‘‘easy counterfactuals’’ are those conﬁgurations that posit the presence of a condition that existing theory and evidence suggests is likely to be related to the 118 LESLIE C. GATES outcome of interest. However, they argue that conﬁgurations which do not exist and which seem hard to imagine should not be coded as ‘‘don’t care’’. Such ‘‘difﬁcult counterfactuals’’ are those that posit the lack of a condition may cause a particular of outcome, despite evidence that in the presence of said condition, other cases produced the outcome of interest. I extend Ragin and Sonnet’s logic regarding counterfactual conﬁgurations to low-frequency conﬁgurations.44 As Table 3 indicates, there are four conﬁgurations represented by more than one case and four conﬁgurations represented by only one case. Upper case letters represent the presence of a condition. Lower case letters represent the absence of a condition. I apply Ragin and Sonnet’s logic in determining which of the four conﬁgurations represented by a single case I might safely recode as having a ‘‘don’t care’’ outcome and which ones I should exclude from the analysis. My theory predicts that the presence of any of the conditions are likely to lead business people to assist Chávez, but posits no theoretical reason that the absence of a condition alone or in any combination would be likely to lead businessmen to assist Chávez. Therefore, I recode the two unique conﬁgurations that most closely match Ragin and Sonnet’s deﬁnition of an ‘‘easy counterfactual’’ as ‘‘don’t cares’’. However, because these conﬁgurations actually exist in my data, I consider these cases ‘‘more likely to matter’’. These are the cases that have at least one of the conditions deemed theoretically likely to lead business people to assist Chávez but which differ from higher frequency conﬁgurations in that they have at least one additional condition present. I exclude from the analysis the remaining two cases that have unique conﬁgurations because they are more like ‘‘difﬁcult counterfactuals’’. These ‘‘less likely to matter’’ cases are cases in which only one of the conditions deemed theoretically relevant was present. Table 3. All Conﬁgurations Associated with Pro-Chávez Business Owners and Managers. Conﬁgurations protect DEPEND network DISTRUST protect DEPEND network distrust PROTECT depend NETWORK distrust protect DEPEND NETWORK distrust PROTECT depend network DISTRUST protect DEPEND NETWORK DISTRUST PROTECT depend network distrust protect depend NETWORK distrust Number of Cases Case ID Numbers 11 7 4 2 1 1 1 1 Cases: 1, 3, 5, 6, 7, 12, 13, 15, 17, 19, 24 Cases: 9, 10, 11, 16, 20, 21, 25 Cases: 8, 14, 22, 23 Cases: 26, 28 Case 2 Case 4 Case 18 Case 27 The Business of Anti-Globalization Politics 119 The fact that the ‘‘more likely to matter’’ cases were identiﬁed by my sources as likely to have been signiﬁcant contributors to Chávez lends additional credence to including them in QCA’s minimization process as don’t cares. It further suggests there may be a cumulative effect of combining these conditions. For example, the presence of three of the four hypothesized conditions in case 4 may help explain why he was probably one of Chávez’ biggest ﬁnancial backers who also helped funnel money from other business owners and managers to Chávez (Zapata, 2000, pp. 130, 133).45 Not only did this individual have direct ties to Chávez forged in his home state of Baranı́s (Zapata, 2000, p. 98), but as a banker he was also structurally predisposed to prioritize access to the state. Moreover, he had incentives to distrust Salas Römer. The close association of case 4 with two bankers that had strong ties to one of the ﬁrst banks to collapse probably evoked his empathy for their plight and may even have raised suspicions about his own business practices. The widely known willingness of the owner of an airline (case 2) to lend Chávez a personal jet may have stemmed not just from a structural predisposition to sympathize with Chávez’ protectionist convictions but also his incentives to distrust Salas Römer after his airline suffered signiﬁcant setbacks under Caldera’s administration.46 The fact that none of the ‘‘less likely to matter’’ cases are likely to have given signiﬁcant ﬁnancial assistance further helps to justify excluding them from the analysis. As a minor agro-industrialist, case 18 had a structural predisposition to favor Chávez’ protectionism, but could offer little ﬁnancial assistance.47 Similarly, a minor hotel operator (case 27) could have given small amounts to the campaign, but his more important contribution to the campaign was undoubtedly his active involvement in the campaign itself.48 Table 4 displays the two paths (conﬁgurations of conditions) associated with pro-Chávez business owners and managers and the paths employed to produce each path. I used fuzzy set Qualitative Comparative Analysis (fsQCA) to minimize the conﬁgurations.49 The analysis dropped two cases: the two cases in which state dependence (DEPEND) were combined with direct network ties (NETWORK). The fsQCA analysis yields the same results, however, if these two cases are recoded as more likely to matter conﬁgurations. This reconﬁrms their idiosyncratic uniqueness. Both of these individuals reputedly gave generously to the campaign, suggesting that their direct network ties to Chávez reafﬁrmed their predisposition to assist the front-runner regardless of his policy preferences. As a banker, case 28 would have been eager to secure contracts with government agencies.50 Indeed, he enjoyed business success in the initial years after the election that appeared to go beyond what the market might otherwise have permitted.51 By 1998, 120 LESLIE C. GATES Table 4. Paths Taken by Businessmen Identiﬁed as Assisting Chávez. Paths 1. protect DEPEND 2. PROTECT depend NETWORK distrust Conﬁgurations Code protect DEPEND network DISTRUST protect DEPEND network distrust protect DEPEND NETWORK DISTRUST PROTECT depend NETWORK distrust 1 1 – 1 Notes: Upper case letters represent presence of condition. Lower case letters represent absence of condition. Conditions not listed were dropped out of the path because the fsQCA determined they were irrelevant to the outcome. Conﬁgurations code refers to how the conﬁguration was coded in fsQCA. Coding Categories: PROTECT ¼ structurally predisposed to favor protectionist policies, DEPEND ¼ structurally predisposed to prioritize access to the state, NETWORK ¼ had direct tie to Chávez, DISTRUST ¼ had incentives to distrust Salas Römer, ¼ and, + ¼ or, 1 ¼ combination associated with assisting Chávez and ¼ combination more likely to matter. case 26 was the president of Venezuela’s second largest cable provider and would therefore have had incentives to support the candidate with whom he had direct ties in hopes that he might favorably inﬂuence the pending regulatory reforms. State Dependence as a Necessary and Sufficient Condition The dominance of path 1, indicated in Table 4, suggests the potent inﬂuence of Venezuela’s oil dependence on the political interests of business. Dependence on the state was necessary and sufﬁcient in the absence of protectionist interests for 20 of the 28 pro-Chávez business managers and owners. The analysis determined that both network ties and distrust of Salas Römer were irrelevant to the outcome and were therefore dropped out of path 1. Although 18 of the 20 that took path 1 did not have network ties to Chávez, the case coded as ‘‘more likely to matter’’ which was taken into consideration in determining this path, did have NETWORK ties. Similarly, although 12 businessmen who were structurally predisposed to prioritize access to the state also had incentives to distrust Salas Römer, eight others did not. Seven businesspeople uniquely matched the conﬁgurations of path 1. They included two businesspeople with interests in cement and construction, three newspaper publishers and two bankers. In each of these cases, dependence on the state made them predisposed to assist whichever candidate appeared most likely to win the elections. Indeed, a banker quipped that he assisted Chávez ‘‘just in case [he won]’’ and that he doubted Chávez would The Business of Anti-Globalization Politics 121 end up being that radical or difﬁcult to persuade after being elected.52 Nevertheless, these cases represented the minority of those who took path 1. The majority of businessmen that took path 1 (12) were both structurally predisposed to prioritize access to the state and had incentives to distrust Salas Römer’s associates. All but one were bankers who also had incentives to distrust Salas Römer for his association with those involved with the bank crisis.53 The one non-banker was a television network owner (case 3) who had incentives to distrust Salas Römer because of Salas Römer’s close personal association with a rival television network owner (Santodomingo, 1999, p. 29). This rival television network owner had historically split the television market with one other network (owned by case 6) until the government approved a third private broadcasting network for case 3 in 1988 (Ortiz, 2004, pp. 80–81). The government made this decision soon after the rival television network had issued harsh accusations of corruption in the current administration. Case 3 and case 6 had reason to believe that the rival television network owner might seek to undermine their current market dominance if he were to gain power via a Salas Römer victory (Ortiz, 2004, p. 86) because cases 3 and 6 had jointly sought to marginalize their rival’s market share in the 1990s (Ortiz, 2004, p. 80). Three bankers (cases 1, 5 and 13) had incentives to distrust Salas Römer’s associates as competitors as well as for their involvement with the bank crisis. All three faced massive depositor withdrawals, hostile state interventions and criminal charges. But, they also had incentives to distrust Salas Römer’s close economic advisor as a competitor. This economic advisor had taken control of the banks controlled by two of these bankers (cases 1 and 5) in the 1980s.54 With the help of another banker (case 13), these bankers (cases 1 and 5) won back control over Venezuela’s premier bank at the time in 1993 (Zapata, 1995, p. 28).55 The harsh treatment they received during the bank crisis appeared to both of these bankers to be retribution for having pushed the individual now rumored to be Salas Römer’s close economic advisor out.56 They therefore had reason to believe that they might not prosper during the next presidential administration, if Salas Römer won the election and this advisor gained power. Protectionist Interests Necessary in Conjunction with Network Ties The second path represented in Table 4 indicates that protectionist economic interests were necessary for some pro-Chávez business owners and managers but only when combined with network ties in the absence 122 LESLIE C. GATES of both state dependence and distrust of Salas Römer. A major agroindustrialist (case 8) along with smaller agro-industrialists who grew cotton (case 22) exempliﬁed path 2 taken by four businessmen. Attracted by Chávez’ protectionist rhetoric, they promoted a silent pro-Chávez rebellion within the otherwise pro-neoliberal (Giacalone, 1999; Becker, 1990) FEDECAMARAS (Santodomingo, 1999; Zapata, 2000, pp. 31, 96, 97, 132). Policy preferences tied to a protectionist mode of insertion into the global economy were, however, insufﬁcient for these business managers and owners. Path 2 highlights how access to the state can become an over-riding concern in petro-states, even among those who act according to their expected sector-based policy preferences according to world systems theory. CONCLUSION This study contributes to our understanding of private sector political behavior. In particular, it offers new insight into one of the central puzzles regarding campaign ﬁnancing: why business managers and owners would support a leftist candidate. It does so with a study of the ﬁrst electoral campaign of one of Latin America’s most outspoken critics of globalization: that of President Hugo Chávez in 1998. The analysis of 28 prominent business managers and owners identiﬁed by inside sources as likely contributors to Chávez’ campaign reveals that for most pro-Chávez business managers and owners it was sufﬁcient to be in a sector which was dependent on the state. The predominance of this path undermines the notion, supported by research on the earlier generation of Latin American leftists and broadly consistent with world systems expectations regarding the political behavior of business in middle-income states, that businesspeople which tend to beneﬁt from protectionist policies would be most likely to assist leftist candidates. Indeed, most of these state-dependent pro-Chávez business managers and owners should have been predisposed to oppose Chávez’ anti-neoliberal policy agenda. Instead, these cases conﬁrm recent studies of campaign ﬁnancing which indicate that business managers and owners in sectors that depend on government contracts are more likely to prioritize access to the state and therefore are more open to supporting leftist political candidates. Furthermore, although a small number of pro-Chávez business owners and managers were predisposed to share Chávez’ enthusiasm for protectionist economic policies, this predisposition was not sufﬁcient. It was associated with pro-Chávez business owners and managers only when combined with the presence of direct network ties. The fact that protectionist The Business of Anti-Globalization Politics 123 predispositions were only associated with pro-Chávez business owners and managers in combination with network ties suggests the need to modify the expectations for political behavior in middle-income states based on worldsystems theory and research on prior Latin American populists in certain contexts. It emphasizes how the concern for access to the state may color policy convictions for most business, regardless of sector speciﬁc interests, in oil-exporting economies, where the private sector is generally more dependent on the state. As such, these cases support the proposed extension of the reasoning offered by recent campaign ﬁnance research for why businesspeople might assist a leftist candidate beyond sector-based variation to cross-national variation in the private sector’s state dependency. The extension posits that incentives to support such a candidate, such as network ties to the candidate, as well as disincentives to support alternative candidates, such as a strong distrust of those closely associated with the candidate, may be more important in determining business’ political behavior in economies where business largely depends on the state. Given prior research which indicates that the private sector in oil-exporting states, like Venezuela, may be acutely state dependent, one might expect these incentives and disincentives, independent of sector-speciﬁc interests, to play a dominant role in determining the political behavior of business. Indeed, a concern for state access appeared to galvanize those favoring protectionist policies that might otherwise have been apathetic in the 1998 Venezuelan presidential elections, given Chávez lead in the polls. Moreover, most state-dependent pro-Chávez businesspeople also had incentives to distrust Chávez’ leading competition. Thus, this general concern for state access also appeared to persuade those who might otherwise have favored the country’s further integration into the global economy to assist a radical anti-neoliberal candidate. This study suggests that future research on the rise to political power of politicians opposed to globalization should consider not just how sectorbased interests may shape the political behavior of business managers and owners, but also how the structure of some domestic economies may generate unique opportunities for leftist candidates. If the political behavior of business managers and owners varies according to varying domestic economic structures, we might then expect that the predominant rationale for business to assist anti-neoliberal presidential candidates might vary cross nationally. Clearly oil dependence does not characterize all countries where anti-neoliberal presidents have succeeded. Thus, in countries where the private sector is not as dependent on the state as in petro-states, we would not expect business to prioritize access to the state as they did in Venezuela. We 124 LESLIE C. GATES would, instead, expect business assistance for left-leaning candidates in such economies to come from protectionist business owners and managers. Furthermore, given that businesses in protectionist sectors are more likely to be small ﬁrms, one might not expect business assistance to ﬁgure as prominently in such campaigns. The 2002 election of President Lula de Silva in Brazil, for example, may conform more closely to this scenario. Alternately, the recent election of South America’s newest outspoken critic of neoliberalism, Bolivian President Evo Morales, may conﬁrm the unique opportunities leftist candidates may have in economies with statedependent private sectors. Like the Venezuelan state, the Bolivian state reaped the majority of its revenue from the extraction and export of natural resources (natural gas, tin and oil among others). Like the Venezuelan private sector, the Bolivian private sector also accounted for a lesser share of the country’s investments and much of the private sector depended on the state for subsidies and protections. In such a setting we might expect the private sector to place greater priority on access to the state, making individual businesspeople more susceptible to assisting leftist candidates regardless of their sector-based policy predispositions. If so, then we might expect countries that depend on exporting natural resources to take leadership in deﬁning regional political agendas during periods, such as we face today, when rising anti-American sentiment fosters popular support for leftleaning political leaders. NOTES 1. Neoliberal economic reforms typically include: (1) stabilization policies, which constrain wages, lift price constraints and reduce state spending and (2) structural adjustment policies, which liberalize trade along with controls on the ﬂow of capital in and out of a country and privatize state-owned enterprises. 2. A Member of the Finance Committee for Chávez’ campaign (interviewed 12/5/ 2005) described a wide range of fundraising strategies, including various types of fundraising events, that the campaign pursued before soliciting business for campaign contributions. According to several anonymous sources close to the campaign (interviews conducted in late 2005), Chávez also received signiﬁcant ﬁnancial assistance from the Cuban government, retired military leaders, MAS governors, old leaders of the communist party, the rector of Venezuela’s leading public university and a major narcotics distributor. 3. The Venezuelan president who introduced an aggressive stabilization policy in 1989 by eliminating price controls on gasoline, and restructured the economy to be more oriented toward global markets by privatizing some state enterprises and liberalizing trade, faced widespread riots, a general strike and was impeached in 1993 (Naı́m, 1993; McCoy & Smith, 1995). The Business of Anti-Globalization Politics 125 4. Simon Romero, ‘‘Coup? Not His Style, But Power? Oh, Yes,’’ The New York Times, 4/28/2002, 3, LEXIS, News Library, World News File, North/South America News Sources. 5. For example, Jim Shultz, the executive director of a policy analysis group in Bolivia called Democracy Center, was quoted saying: ‘‘There’s a common thread that runs through Lula and Kirchner and Chávez and Evo, and the left in Chile to a certain degree, and that thread is a popular challenge to the market fundamentalism of the Washington Consensus.’’ Juan Forero, ‘‘Elections Could Tilt Latin America Further to the Left,’’ New York Times, 12/10/2005, International, Americas, NYTimes.com 6. Note, however, that ‘‘no particular activity (whether deﬁned in terms of its output or of the technique used) is inherently core-like or periphery-like’’ (Arrighi & Drangel, 1986). 7. My informants, as well as those likely to have made contributions to Chávez, are not identiﬁed by name here because of the political sensitivity of the issue. At the time of this publication, Venezuela remains fairly polarized politically and many of those closely associated with the campaign as well as those likely to have assisted Chávez in the past are now ﬁrmly opposed to Chávez. 8. ‘‘Coup and Counter-coup; Venezuela,’’ Economist.com, 4/12//2002, LEXIS, News Library, Business News File, Business and Finance Sources; Simon Romero, ‘‘Coup? Not His Style, But Power? Oh, Yes,’’ The New York Times, 4/28/2002, 3, LEXIS, News Library, World News File, North/South America News Sources; C. Rodriguez Marturet, ‘‘Gustavo Cisneros? Presidente de Venezuela?’’ in Soberanı´a (2002). 9. ‘‘Venezuelan Farmers Go on Strike,’’ Xinhua News Agency, 8/19/1997, NEXIS, News Library, World News File, North/South America News Sources. 10. Marita Seara, ‘‘A Sector in Crisis: Cinderella: The Textile Industry,’’ Business Venezuela, 10/11/1998, LEXIS, News Library, World News File, North/South America News Sources. 11. ‘‘Venezuela Trade: Door to Andean Imports Remains Only Half-open,’’ Latin America Regional Reports: Andean Group, 9/2/1983, RA-83-07, LEXIS, News Library, World News File, North/South America News Sources; Joseph Mann, ‘‘Venezuelans Face Heavy Foreign Exchange Losses,’’ Financial Times, 3/7/1989, 1, LEXIS, News Library, World News File, North/South America News Sources. 12. Peter Passell, ‘‘Economic Scene; Cement Shoes For Venezuela,’’ The New York Times, 9/25/1991, D, LEXIS, News Library, World News File, North/ South America News Sources; Raymond Colitt, ‘‘Brazil and Venezuela Find Togetherness: Neighbors Overcome Decades of Dissension to Develop Strong Links in Trade and Energy,’’ The Financial Post, 7/24/1996, 1, LEXIS, News Library, World News File, North/South America News Sources; Estrella Gutierrez, ‘‘TradeVenezuela: More Liberal Trade with Chile in 1997,’’ IPS-Inter Press Service, 12/26/ 1996, LEXIS, News Library, World News File, North/South America News Sources. 13. Marita Seara, ‘‘A Sector in Crisis: Cinderella: The Textile Industry,’’ Business Venezuela, 10/11/1998, LEXIS, News Library, World News File, North/South America News Sources. 14. Member of the Finance Committee for Chávez’ campaign, interviewed 12/5/2005. 15. Personal email communication with an expert on Venezuelan campaign ﬁnance, 11/30/2005. 16. Member of Chávez’ public relations team during campaign, interviewed 11/21/ 2005. 126 LESLIE C. GATES 17. Personal email communication with expert on Venezuelan campaign ﬁnance, 11/30/2005. 18. Interview with Jesse Chacón, former director of The National Commission of Telecommunications (CONATEL) and current Communication and Information Minister published by VenezuelaAnalysis.com 2/13/2004, http://www.venezuelanalysis.com/ articles.php?artno=1105. 19. ‘‘Venezuela. It’s all Chavez,’’ The Economist, 7/4/1998, U.S. Edition, World Politics and Current Affairs, The Americas, LEXIS, News Library, World News File, North/South America News Sources; David Paulin, ‘‘Chavez Goals Strike Fear in Oil Executives; Venezuela’s Poor See Him as Hero,’’ The Washington Times, 10/20/ 1998, LEXIS, News Library, World News File, North/South America News Sources. 20. ‘‘Former Bank Chief Convicted,’’ The Guardian, 8/4/1998, The Guardian Foreign Page, LEXIS, News Library, General News File, Major Papers Sources. 21. Falling oil prices had compounded a growing sense of insecurity among Venezuela’s private sector, following the two 1992 coup attempts and the 1993 impeachment of President Carlos Andrés Pérez. As debtors began to default on their loans, bankers turned to ever more speculative actions, including trading on the Caracas Stock Exchange and buying and selling real estate in order to maintain sufﬁcient liquidity. By early 1994, banks were at their breaking point. See ‘‘A Really Big Bank Bust; Venezuela’s Crash of the Century is Still Crashing,’’ The Washington Post, 3/19/ 1995, LEXIS, News Library, World News File, North/South America News Sources. 22. Joseph Mann, ‘‘Sticks and Carrots for Venezuela’s Banks: Selective Assistance and Pressure is on Offer to the Troubled Financial Institutions,’’ Financial Times, 8/11/1994a, LEXIS, News Library, Business News File, Business and Finance Sources. 23. ‘‘Venezuela: Arrests Begin in the Banco Latino Scandal,’’ ISP-Inter Press Service, 3/3/1994, LEXIS, News Library, World News File, North/South America News Sources. 24. Joseph Mann, ‘‘Sticks and Carrots for Venezuela’s Banks: Selective Assistance and Pressure is on Offer to the Troubled Financial Institutions,’’ Financial Times, 8/11/1994a, LEXIS, News Library, Business News File, Business and Finance Sources; ‘‘Venezuela: Arrests Begin in the Banco Latino Scandal,’’ ISP-Inter Press Service, 3/3/1994, LEXIS, News Library, World News File, North/South America News Sources. These eight ﬁnancial institutions were Amazonas, Bancor, Barinas, Construcción, La Guaira, Maracaibo and Metropolitano banks and the Sociedad Financiera Fiveca ﬁnance company according to ‘‘Unexpected Moves in Bank Crisis: Troubled Institutions Closed, Re-opened to Pay Depositors,’’ Latin America Regional Reports: Andean Group, 6/30/1994, RA-94-05, LEXIS, News Library, World News File, North/South America News Sources. 25. Joseph Mann, ‘‘Sticks and Carrots for Venezuela’s Banks: Selective Assistance and Pressure is on Offer to the Troubled Financial Institutions,’’ Financial Times, 8/11/1994a, LEXIS, News Library, Business News File, Business and Finance Sources. Some believed this was because Caldera had continued to allow the staterun guarantee fund to allocate emergency aid to the eight banks in trouble without removing the bank boards of directors. See ‘‘Venezuelan Banking; Chaos in Caracas,’’ The Economist, 6/18/1994, Finance, LEXIS News Library, World News Library, North/South America News Sources. 26. ‘‘Venezuelan Government To Liquidate Intervened Banks,’’ The Associated Press, 8/11/1994, Business News, LEXIS, News Library, World News File, North/ South America News Sources. The Business of Anti-Globalization Politics 127 27. Joseph Mann, ‘‘Sticks and Carrots for Venezuela’s Banks: Selective Assistance and Pressure is on Offer to the Troubled Financial Institutions,’’ Financial Times, 8/11/1994a, LEXIS, News Library, Business News File, Business and Finance Sources. 28. Joseph Mann, ‘‘Sticks and Carrots for Venezuela’s Banks: Selective Assistance and Pressure is on Offer to the Troubled Financial Institutions,’’ Financial Times, 8/11/1994a, LEXIS, News Library, Business News File, Business and Finance Sources; ‘‘Government Takes Over More Banks; Selective Program of Assistance and Pressure,’’ Latin America Regional Reports: Andean Group, 9/8/1994, RA-94-07, LEXIS, News Library, World News File, North/South America News Sources. 29. ‘‘Venezuela: Review 1996,’’ Americas Review World of Information, 11/1995, Comment & Analysis, Country Proﬁle, LEXIS News Library, World News File, North/South America News Sources. According to this article, the government declared it would no longer intervene in troubled banks just hours before three new banks failed and the state intervened on their behalf. 30. Stephen Fidler, ‘‘Caracas Takes Over More Banks,’’ Financial Times, 12/16/ 1994, LEXIS, News Library, Business News File, Business and Finance Sources; ‘‘Unexpected Moves in Bank Crisis: Troubled Institutions Closed, Re-opened to Pay Depositors,’’ Latin America Regional Reports: Andean Group, 6/30/1994, RA-94-05, LEXIS, News Library, World News File, North/South America News Sources. 31. ‘‘Venezuela: Arrests Begin in the Banco Latino Scandal,’’ ISP-Inter Press Service, 3/3/1994, LEXIS, News Library, World News File, North/South America News Sources. 32. This special Junta de Emergencia Financiera, formed in mid-February 1994, led the campaign to criminally charge bankers. See Zapata (2000, p. 64) and Mann, J. ‘‘Venezuela Bank Head Named as Depositors Fume,’’ Financial Times, 2/21/1994, p. 6, LEXIS, News Library, Business News File, Business and Finance Sources. 33. See ‘‘Cabinet Shufﬂe Announced.’’ Union Radio, BBC Summary of Broadcasts, 5/29/1994, Latin America and the Caribbean; Venezuela, LEXIS News Library, World News File, North/South America News Sources for announcement. 34. A member of both the Banco Latino and Banco de Venezuela intervention teams, this rumored associate took a hard-line approach to bank intervention, as illustrated by his efforts to undermine one of the fallen banks even after it was statized (Zapata, 1997, pp. 42–49). 35. A rival banker who had denounced the extravagance of bankers involved with failed banks (including cases 1, 5, 6 and 7) and an owner of a television network station who publicly blamed the collapse of Banco Latino on two prominent Venezuelan businessmen (cases 6 and 7) were among those rumored to be associated with Salas Romer (Zapata 1995, p. 36). On the former, see Zapata (1995, p. 16) and Kilby, Paul. ‘‘Out of the Time Warp,’’ Latin Finance, 9/1997, Venezuela Report, p. 41, LEXIS, News Library, World News File, North/South America News Sources. The former publicly denounced case 1 for having ‘‘employed 45 personal security guards’’ and having ofﬁces full of artwork that would ‘‘put J. P. Morgan to shame’’. He decried case 5’s purchase of a series of huge overpriced ranches and indicated publicly that he thought cases 6 and 7 were to blame for the bank crisis. See ‘‘Is Still Crashing,’’ The Washington Post, 3/19/1995, p. C03, LEXIS, News Library, World News File, North/South American News Sources. 36. As a former head of Venezuela’s agricultural association, FEDEAGRO, this individual (case 26) had historically advocated protectionist policies. 128 LESLIE C. GATES 37. For example, case 21 owned a major cement factory (Zapata, 2000, p. 98); case 25 headed a market dominant pasta making enterprise and case 6 was not only Venezuela’s CocaCola bottler, but also was the leading bottler in Latin America as well as a competitive beer producer and distributor. See Kenneth Gilpin, ‘‘Panamerican Beverages and Venezuelan Bottler to Merge,’’ The New York Times, 5/13/ 1997, D. Lexis, News Library, World News File, North/South America News Sources. In addition, one of the bankers (case 28) proﬁted from manufacturing paper. See ‘‘Businessmen Weigh More Than They Own,’’ Latin America Special Report, 10/26/1984, Venezuela, LexisNexus News Library, World News Files, North/South America News Sources. 38. Deroy Murdock, ‘‘Venezuela’s Attack on the Press,’’ The Washington Times, 6/15/1995, LEXIS, News Library, World News File, North/South America Sources. 39. Raymond Colitt, ‘‘Venezuela’s Unfolding Television Drama: CGC Hopes Programming Will Help it Win Latin America’s Media War,’’ Financial Times, 3/24/ 1998, Companies and Finance: International, LEXIS, News Library, Business News, Business and Finance Sources. Jo Dallas, ‘‘Cisneros’ Split Image,’’ Multinational News International, 7/1997, LEXIS, News Library, Business News File, Business and Finance Sources. 40. Other television network owners (cases 3 and 17) had provided positive coverage of Chávez’ February 4, 1992 coup effort (Zapata, 2000, p. 96) as well as the campaign in 1998 (Zapata, 2000, p. 130). 41. In one of the latter cases, shareholders invested large sums of capital to save the bank. In the other, the bank earned $18 million by selling half of the business to a Colombian bank. See ‘‘Venezuela: Review 1996,’’ Americas Review of Information, 11/1995, Comment & Analysis, p. 92, LEXIS News Library, News File, North/South America News Sources; ‘‘Government Acts on Five Banks,’’ Facts on File News Digest, 3/16/1995, F2, Other News, p. 202, LEXIS News Library, News File, North/ South America News Sources. 42. Case 4 had close network ties to bankers who had banks which closed (cases 13 and 15). For example, he owed his start in the insurance business to one of these bankers (case 15) (Zapata, 2000, pp. 61–62). The bank with which case 12 was associated had done a signiﬁcant amount of business with the ﬁrst bank to fall, Banco Latino (Zapata, 1995, p. 33). 43. The president of another bank that failed, Banco Metropoliana, was not rumored to support Chávez probably because he was president Caldera’s son-in-law. See Alison MacGregor, ‘‘A Fugitive in Ottawa,’’ The Ottawa Citizen, 3/21/1998, LEXIS News Library, World News File, North/South America News Sources. I have been unable to verify whether top ranking ofﬁcials in four additional banks were proChávez: three of these were banks that were eventually taken over in June 1994 (Amazonas, Construcción and Sociedad Financiera Fiveca) and one was a bank that suffered considerable losses in January 1994 due to rumors of imminent failure (Banco Principal). 44. This method was adopted as per personal correspondence with Charles Ragin, one of the leading scholars on the use of Qualitative Comparative Analysis (12/7, 12/9, 12/14/2005). 45. Member of Chávez’ public relations team during campaign, interviewed 11/21/ 2005. The Business of Anti-Globalization Politics 129 46. His distress with the previous administration and eagerness to secure a better relationship with the government in hopes that they might help him out of his ﬁnancial troubles was conﬁrmed by a member of the Finance Committee for Chávez’ campaign, interviewed 12/5/2005. 47. Close friend and advisor of Chávez, interviewed 12/2/2005. 48. Member of Chávez’ public relations team during campaign, interviewed 11/21/ 2005 and 12/6/2005. 49. Program accessed at www.fsqca.com, December 2005. 50. Member of Chávez’ public relations team during campaign, interviewed 11/21/ 2005. A close friend and advisor of Chávez, interviewed 12/2/2005, personally took case 28 to meet Chávez and conﬁrmed that he made large donations. 51. John Barham, ‘‘Trouble in the Andes,’’ LatinFinance, 2000, 9, p. 26, LEXIS News Library, World News File, North/South America News Sources. 52. Personal email communication with an expert on Venezuelan campaign ﬁnance, 11/30/2005. 53. ‘‘Venezuela: Arrests Begin in the Banco Latino Scandal,’’ ISP-Inter Press Service, 3/3/1994, LEXIS, News Library, World News File, North/South America News Sources. 54. Case 1 lost his bank to this individual in 1985. See ‘‘Bank post battle,’’ Latin America Weekly Report, 12/13/1985, LEXIS, News Library, World News File, North/South America News Sources. Case 5 lost control over his bank to this individual in 1989. See ‘‘Venezuela-Finance: Another Large Bank Taken Over by Government,’’ IPS-Inter Press Service, 8/8/1994, LEXIS, News Library, World News File, North/South America News Sources. 55. ‘‘Buying Positions for the Reform; Hostile Purchase is Crest of Recent Acquisitions Wave,’’ Latin America Weekly Report, 11/1/1990, WR-90-42, LEXIS, News Library, World News File, North/South America News Sources. 56. Joseph Mann, ‘‘Caldera Critics Face Wave of Security Raids,’’ Financial Times, 7/5/1994b, LEXIS, News Library, Business News File, Business and Finance Sources. 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Plomo más Plomo es Guerra: Processo a Chávez. Caracas: Alfadil Ediciones. Case ID# Campaign Sources Journalists D Expert B C E F 1 2 3 4 Yes Yes Yes Yes No Yes Yes Yes ? Yes Yes Yes p. 127 p. 132 p.127, 130 p. 96 5 6 Yes Yes No Yes No Yes p. 98 pp. 69, 127, p. 30 pp. 34–36, 45, 132 Yes Yes 7 8 9 10 11 12 13 14 15 Yes Yes ? Yes Yes Yes Yes Yes Yes Possible Yes ? N/A N/A Possible No No Possible Yes Yes Yes Yes Yes Yes ? Yes Yes pp. 65–70 pp. 70, 97, 133 pp. 96, 127 p. 98 pp. 97, 132 pp. 96, 98, 133 p. 127 p. 127 pp. 98, 133 p. 29 Yes Yes Yes N/A Yes Yes Yes Yes Yes Yes Yes Yes Lopez Ulacio (Sánchez Molina, 2000, p. 101) Anonymous FEDEAGRO source (Sánchez Molina, 2000, p. 97) Multinacional Seguro receipt to pay consultores 21 (Sánchez Molina, 2000) Sánchez Molina (2000, p. 114) Economist.com 4/12/02 ‘‘Coup and Counter-coup’’ Römero, S. ‘‘Coup? Not his style y’’ 4/28/ 02, NYT 135 A Other Sources The Business of Anti-Globalization Politics APPENDIX A. PROBABLE DONORS BY CONFIRMATION SOURCE 136 APPENDIX A. (Continued ) Case ID# Campaign Sources Journalists D Expert B C E 16 17 18 19 20 21 22 Yes Possible Yes Yes Yes Yes Yes Doubtful Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes p. 96 p. 98 pp. 96, 133 pp. 37–38, 70 pp. 96, 132 pp. 132, 45, 96 p. 132 Yes Yes Yes Yes Yes Yes Yes 23 24 Yes ? Yes Yes Yes Yes p. 132 p. 127 Yes Yes 25 26 27 28 Yes Yes Yes Yes Yes Yes N/A Yes Yes ? Yes Yes p. 132 p. 96 p. 98 Yes Yes N/A Yes p. 89 F Anonymous FEDEAGRO source (Sánchez Molina, 2000) Bank with which this individual was associated was listed as donor in records of Chavez’ party submitted to the National Elections Commission (Sánchez Molina, 2000) Barreto, a journalist who remains loyal to government doubts it (Sánchez Molina, 2000, p. 104) Sources: A, member of Chávez’ public relations team during campaign; B, close friend and advisor of Chávez; C, member of the Finance Committee for Chávez’ campaign; D, Juan Carlos Zapata – journalist; E, Roger Santadomingo – journalist; F, political scientist, expert on Venezuelan campaign ﬁnance. LESLIE C. GATES A Other Sources The Business of Anti-Globalization Politics 137 APPENDIX B. ACRONYMS AD COPEI FEDECAMARAS QCA FEDEAGRO CONINDUSTRIA RCTV – Democratic Action (Acción Democrática) – Committee for Independent Electoral Politics (Comité de Organización Polı́tica Electoral Independiente) – Federation of Chambers and Associations of Commerce and Production (Federación de Cámaras y Asociaciones de Comercio y Producción De Venezuela) – Qualitative Comparative Analysis – National Confederation of Agricultural Producers (Confederación Nacional de Asociaciones de Productores Agropecuarios) – Confederation of Venezuelan Industrialists (Confederacion Venezonala de Industriales) – Radio Caracas TV

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The Business of Anti-Globalization Politics: Lessons from Venezuela's 1998 Presidential Elections

The Business of Anti-Globalization Politics: Lessons from Venezuela's 1998 Presidential Elections

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