Oil and Aid

Recent weeks have seen a number of significant developments in Uganda’s nascent oil sector, which in combination, may speed up the start of production. The first occurred on 21st March, when President Museveni finally signed into law the Petroleum (Exploration, Development, Production and Value Addition) Bill. The bill – which is designed to be the first of three new pieces of legislation relating to country’s recent oil finds in the Lake Albertine Graeburn – had taken more than two and a half years to get through parliament, following a sustained challenge led by a group of rebel MPs within the ruling National Resistance Movement (NRM). Then, on 3rd April, a three-member arbitration panel in London found in favour of the Ugandan government in its long-running legal dispute with Canada’s Heritage Oil (over US$434 million which Kampala claims it is owed in capital gains tax on Heritage’s 2009 sale of its oil rights in Uganda to Ireland’s Tullow Oil). Although the decision does not end the dispute – despite the Ugandan government’s claim to the contrary – it nevertheless significantly strengthens the legal basis for Kampala’s future dealings with international mining companies operating in the country. Finally, on 15th April, the government announced that it had finally reached a decision on the building of a new oil refinery at Kabaale-Biseruka (which is close to the newly discovered fields) – in which the government hopes to retain a 40% stake. On the one hand, the planned refinery is much smaller than the one the government had hoped for: the new plant will have an initial capacity of only 30,000 barrels per day (b/d), which is significantly lower than the 200,000 b/d originally envisaged. Yet on the other, this means that the refinery will be much cheaper to build, and will therefore come on-stream much more quickly.

These potential breakthroughs with the oil sector come at an important time for the Ugandan government, which is still struggling with the fall-out from November’s aid suspensions by many of the country’s main donors. The donors’ coordinated action – which followed allegations that the Office of Prime Minister Amama Mbabazi had embezzled US$13 million of aid meant for the Peace, Recovery and Development Plan for Northern Uganda (PRDP) – involved the freezing of the entire Joint Budget Support Framework (JBSF) for 2013, and has left the government with a shortfall of US$300 million (7.1%) in its annual budget. In response, in early March the Finance Ministry was forced to publish a revised budget which envisaged deep cuts to ministries’ spending, and to social service provision, as well as a reduction in infrastructural investment. Anecdotal evidence suggests that large numbers of civil servants have already gone several months without pay. In addition, the government have also now revised downwards their growth forecasts for 2013, from 5%, to 4.2%. All of this, then, combined with country’s still very high inflation rate, has left the government facing a severe economic crisis.

On the one hand, the donors’ recent actions have once again highlighted the ineffectiveness of aid suspensions as a policy device. As with the similar suspensions that were recently imposed on Rwanda, the donors – even as they were coordinating their actions – don’t seem to have given much thought as to what they were trying to achieve in the process. Certainly, no explicit demands appear to have been made of the Ugandan government, other than by Sweden (which in late November, demanded that Kampala repay in full the US$6.7 million that Stockholm had contributed to the PRDP). As a result, other than impacting the rank and file of civil servants (who have not been paid in 2013) and presumably also those members of the Ugandan public who rely on social services, it is not clear what effects the aid suspensions are likely to achieve. In an attempt to assuage the donors – and to overturn the suspensions – in November, the Ugandan government ordered the office of the Audit-General to begin a ‘forensic audit’ exercise on the accounts of all government departments, to try to identify fraudulent activity. The following month, they also introduced a ‘High Level Government Finance Reform Action Matrix’, as a general measure aimed at improving economic governance in the country. In addition, the Bank of Uganda (BOU) has also now pledged to reform the system through which bank accounts are set up in the country (in an attempt to reduce the number of ‘ghosts accounts’ through which embezzled funds are frequently channelled.

However, none of this is likely to have much impact on the activities of the upper-echelons of the NRM - or those with connections to senior figures. Moreover, pressure on the president to target senior colleagues such as Mbabazi has been further weakened, over the past month or so, by growing divisions within the donor community over when the suspensions should end. Following an early-March meeting of all members of the JBSF in Kampala, it emerged that only Britain (which appears to have been the driving force behind the frieze in the first place), as well as Sweden and Denmark, remain committed to the ongoing aid suspensions. Meanwhile, Germany, Ireland, the EU and others have all now indicated that they favour a resumption of aid to Kampala, probably by the year’s end. Yet unless the donors can present a ‘united front’ to Uganda over the action, it is doubtful that the suspensions – however long they are in effect for – will exert any real political pressure in the country.

On the other hand, though, the recent aid suspensions have had a marked effect in accelerating the government’s current drift towards ‘economic nationalism’. Museveni’s desire to move in this direction has been evident at least since the publication of the recent National Development Plan (NDP), in April 2010. Whilst not advocating full-blown protectionism, the NDP certainly envisages the government exerting much greater control over its own economy. The current aid suspensions have then further accelerated the government’s moves down this line, as evidenced both by their recent moves aimed at getting oil production on-stream as quickly as possible, and by their related shift towards China as a source for development finance. In addition to being heavily involved in Uganda’s oil plans – through the state-owned China National Offshore Oil Company (CNOOC) – in mid-April Beijing agreed a new US$9.8 million loan to Kampala. Crucially, the new loan, which is part of the US$20 billion that China pledged to Africa in July, appears to have no conditionalities whatsoever attached to it, and the money can therefore be spent entirely at the Ugandan government’s discretion. It also follows another loan, of US$350 million, that China Exim Bank gave to Uganda last year, which the government is planning to spend on a new Entebbe-Kampala road. In these ways, then, Kampala appears to have much greater control over the new Chinese aid than it ever has with monies provided by the ‘traditional donors’.

However, despite the recent progress that has been made with oil, President Museveni now faces a number of serious obstacle in his plans to further develop the nascent sector, and to use this to further his grip on the domestic economy. In particular, a group of young rebel MPs within the ruling party have vowed to block the presidents moves at every turn. The group has become particularly emboldened since the election of the current (ninth) parliament, in February 2011, during which they have also made oil issues their particular cause celebre. It is this group that was primarily responsible for delaying the first Petroleum bill for so long, and they are now gearing up for a serious fight over thelast piece of planned oil-related legislation: the Public Finance Bill 2012 (which includes an extended section on ‘Petroleum Revenue Management’). Although Museveni has expressed a desire to have this new law passed within the next few months, the ‘young turks’ – supported by the large sections of the media – have vowed to side with the parliamentary opposition in order to defeat it.

In response to the growing threat posed by these rebel MPs, in January, Museveni briefly vowed to suspend parliament, and to impose martial law on the county – a threat that was later repeated by the head of the army, General Aronda Nyakairima. However, if the aim of the threat was to silence the young turks, then it backfired spectacularly, because it galvanized support for the group not only in parliament, but among the wider population as well. In addition, Museveni’s threat of a ‘palace coup’ also drew a strong reaction from the international community. Nevertheless, over recent months the executive has continuously targeted individual rebels. In December, one of the group’s most outspoken members, Cerinah Nebanda (former MP for Butaleja District), was found dead at a clinic in Kampala, in apparently mysterious circumstances. The government initially claimed that she had been the victim of a drug overdose. However, following apparent discrepancies with the autopsy results, Museveni himself was forced to give two press conferences denying official involvement. 

Then, in January, another leading rebel figure, Theodore Ssekikubo (MP for Lwemiyaga) was arrested on charges of ‘inciting violence’, for a speech he made at Nebanda’s funeral. Although he was later released without charge, in early April, Ssekikubo, along with three other members sitting MPs (Wilfred Niwagaba, Muhammed Nsereko and Barnabas Tinkasiimire), were officially expelled from the NRM. The expulsions have set up a potential constitutional crisis, in that being expelled from the party does not necessarily require the four MPs to stand down from parliament – even though this is the president’s obvious wish. Interestingly, the person who will now have to deliberate on the matter in non other than Speaker of the House Rebecca Kadaga who, although the Vice Chairperson of the NRM, is  also the de facto leader of the rebel group, and is one of Museveni’s most outspoken critics. As if all of this doesn’t make the president’s task of silencing parliamentary criticism over oil difficult enough, Museveni is also faced with a resurgent opposition Forum for Democratic Change (FDC), who have been galvanized by the recent election of their new leader, Mugisha Muntu.

With real momentum now developing around the nascent oil sector, it is possible that production might now begin sooner rather than later (although exact predictions as to when exactly when this will be remain notoriously difficult to make). But whether this does signal a genuine shift towards economic nationalism in Uganda will depend very much on how the JBSF donors position themselves in the months ahead. Yet with China becoming increasingly influential in the country, and with Beijing increasingly being viewed by the government as their favoured ‘development partner’, a genuine shift in lines of influence is now possible. In the end, it may be an alliance of rebel government MPs and opposition members who are best placed to check the excesses of the Museveni executive for the foreseeable future.

Rise of the Kingdoms

Since the start of this year, officials from the Kingdom of Bunyoro have been repeating calls for the creation of a ‘regional tier of government’ for their part of Uganda, and also claiming that this should receive up to 12.5% of all revenues from the region’s new oil fields (in the Albertine Graben) – once production starts. The demand is unlikely to be met by President Yoweri Museveni, but it nevertheless demonstrates just how emboldened the kingdom has become in its dealings with central government since major oil discoveries were first made in the area (in 2006). Following the discoveries, the government initially proposed an 80%-20% split in future oil revenues between the state and the districts from which the oil had come. Crucially, though, it was argued that as a ‘cultural institution’, the kingdom itself lay outside the formal structures of district administration, and was therefore initially entitled to nothing. 

However, from that time onwards the kingdom and its allies have mounted a concerted lobbying campaign both in parliament – especially through regional MPs associated with the Bunyoro Parliamentary Caucus and the Greater North Parliamentary Forum – and in the media, and this has latterly forced the government’s hand. From mid-2009 onwards, Museveni has had to consult the kingdom on practically all regional matters, and he was eventually forced to concede on oil revenues as well. Thus, when the first new piece of oil legislation, the Petroleum (Exploration, Development and Production) Bill was finally passed – in December – it included provision for some of the monies to be paid to the kingdom as well.

However, kingdom supporters are now using this newfound political leverage to try to force

The Kingdom of Bunyoro

concessions on various other issues as well, including on some which are not directly related to oil. For example, in April last year, Bunyoro officials lobbied the Ministry of Justice over the establishment of a regional justice centre in Hoima Town. In July, the King of Bunyoro himself, Solomon Gafabusa Iguru, met with the president at his official residence in Kirukura District, during which he pressed Museveni over state investments in regional education, health care, and road building projects. Then in October, kingdom supporters also played a leading part in getting the Uganda National Roads Authority (UNRA), to release its long proposed plan for an upgrading of the main Kigumba-Masindi-Hoima-Kabwoya Road (one of the main thoroughfares through the region). Yet perhaps the biggest display of the kingdom’s new found confidence occurred in July, when Bunyoro officials sponsored a major fundraising event at the Ndere Centre in Kampala, which was attended by a broad swathe of the capital’s ethnic Banyoro elite. The event was both a celebration of cultural pride, but also an attempt to mobilize support for the kingdom’s ongoing efforts over oil revenues, and regional development in general.

The discovery of such large oil reserves within the kingdom’s historical territory has of course given particular impetus to Bunyoro’s recent political resurgence (current estimates put the reserves at least 3.5 billion barrels). However, jockeying over future petrodollars is only one of the factors that has led to the revival of the kingdom as a political force. Equally, if not more, important has been the effects of the Museveni government’s long-standing policy of ‘decentralization’ – which have fuelled the rise not only of Bunyoro, but of a number of other ‘traditional’ kingdoms (and other traditional authorities) in other parts of Uganda as well.

Decentralization has been the cornerstone of the Museveni government’s internal political policy since it came to power in 1986. Institutionalized through a range of legislation passed between 1987 and 1997, the system claims to increase popular participation, and improve accountability and service delivery. However, in recent years, a growing consensus has emerged that from the 2000s onwards, Museveni has also used decentralization – and the proliferation of local administrative structures that it allows for – as a kind of ‘divide and rule’ strategy, aimed at fragmenting political opposition throughout the country. For example, it is notable that when Museveni came to power, in 1986, Uganda had 22 districts, whereas today, it has 111 and one city (Kampala).

However, effective as this strategy has undoubtedly been in thwarting major opposition parties such as the Forum for Democratic Change (FDC), it has also latterly spawned a generation of MPs who are more committed to local issues that to the political centre (for example, all of the younger rebel MPs who have challenged Museveni in recent times began their political careers in the local administration system). More generally, the proliferation of districts has generated more complex sub-national political landscapes. It is in this context, then, that ‘traditional’ authorities have latterly started to thrive. And this revival of kingdoms (and other traditional authorities besides) has been particularly marked in those places where the institutions involved have been able to mobilize local grievances over resource allocation – as Bunyoro has done in relation to oil.

Buganda is another traditional kingdom that has recently revived its political relevance by mobilizing grievances over resources. In one sense, the ‘Buganda question’ – the question of exactly how (by what institutional arrangements) the Kingdom of Buganda is incorporated into the Ugandan nation state, has been a vexed one from colonial times onwards. However, the issue has become politically charged again in recent years, as a result of decentralization. In Buganda’s case, the fragmentation of the kingdom’s historic territory into an ever greater number of separate districts initially weakened the ethnic Baganda elite’s sense of common purpose. In response, both kingdom officials, members of the Buganda parliament (the Lukiiko), and Baganda members of the national parliaments, lobbied intensively for increased powers for the kingdom, as the rightful ‘supra-district’ political entity in the central region. Museveni refused to grant these powers, but he did eventually concede to the creation of a separate ‘Buganda Council’ – to coordinate healthcare, education and infrastructure projects across districts – and he later talked about the creation of a ‘regional tier of government’ for Buganda as well (although to date, this has never been instituted).

However, since the mid-2000s, the kingdom has made its greatest gains over questions of land – gains which have ultimately resulted in Buganda becoming, once again, a key player in the national political landscape. The main catalyst here was Museveni’s new Land Act (which was passed in 1998, although was not implemented until several years later), which devolved all land claims down to newly created District Land Boards (DLBs, one of which was established for each new district in the country). One of the key effects was to divide a number of existing, and in some cases very long-standing, land disputes across multiple DLBs – effectively making it less likely that these claims would ever be settled. The kingdom itself had a particular stake in the problem, given that it is at the centre of the largest land dispute in Uganda (relating to 9000 square miles of land that were taken away from Buganda in 1969, yet which are still claimed by the Kingdom). However, its attempts to challenge the government on the Land Act resonated with a wide range of ethnic Baganda land owners, many of whom found that their claims were similarly divided across different districts (and this situation was relatively common, even for relatively small land owners). More generally, the kingdom’s attempts to present itself as the ‘defender of land’ also resonated with the wider Baganda public – even with those who owned very little, or even no, property at all – in the context of rapid population expansion in Kampala. Following attempts by the kingdom to further provoke the issue through its main radio station, CBS, the issue eventually resulted several days of rioting in and around the capital (in September 2009).

Recent years have also witnessed an attempt by elites associated with the former Kingdom of Ankole to

John Patrick Barigye, self-proclaimed Ntare VI of Ankole before his death in October 2011

re-establish their political relevance by mobilizing over resource issues. Ankole is in many ways the most controversial of Uganda’s former kingdoms, given that it was historically divided into two castes – an elite pastoralist caste (the Bahima), and a ‘commoner’ agricultural caste (the ‘Bairu’) – and was thus, in a sense, always divisive. Indeed, for this reason, it was the only one of the traditional kingdoms to not be reinstated by the Museveni government in 1986, and even today, it is still not officially recognized. Nevertheless, this has not stopped those associated with the current claimant to the Ankole throne, Charles Rwebishengye (son of the late John Patrick Barigye), from attempting to reinsert themselves in the region’s political affairs. In recent years, this group has mobilized under the umbrella of the Ankole Cultural Trust (ACT), which has again gained in popularity by assisting its members with land disputes and, more importantly, by providing a range of education scholarships to supporters’ children – especially in some of the poorer new districts in the Southwest. The success of these initiatives was demonstrated in August, when the ACT staged a huge fundraising event in the region capital, Mbarara, which was attended by all of the 200 most prominent clans in the region.

Recent developments have therefore highlighted the various ways in which Uganda’s ‘traditional kingdoms’ have now become a key part of the country’s increasingly complex national political landscape. Whilst kingdom elites remain unlikely to directly challenge President Museveni’s power in the short term, they may become more important players in the future, especially in the event of any radical shift in Uganda’s governing structures (a prospect that has become more plausible, in recent months, following talk of 'palace coups', and the like). Indeed, it was in order to check this potential rise in their influence that in 2010 the president tabled the Traditional Leaders’ Bill - which aimed to limit the powers of Uganda’s various monarchs (something that Museveni is technically already entitled to do, under article 246 of the constitution). However, as a further sign of the kingdoms’ political force, they were able to mobilize their supporters in parliament to have the more controversial clauses of that bill dropped.

Museveni's Military Might

In February, a delegation of senior government officials from Mali visited Kampala, leading to speculation that Uganda may soon commit peacekeeping troops to that country. In December, the UN Security Council voted to create a new international peacekeeping force for the country, the African-led International Support Mission for Somalia (AFISMA), and it is now widely anticipated that Uganda may be looking to play a significant role within that. If Kampala does commit, it will give the Ugandan Army (UPDF) a military footprint in West Africa, in addition to its already extensive presence across large parts of the central and eastern continent.

In May last year, the UPDF and the US Army Africa (USARAF) co-hosted the second biennial African Land Forces Summit (ALFS) in Kampala. The stated aim of the meeting – which brought together army top-brass from 36 African nations – was to foster relationships between national armies, with a view to engendering future military co-operation (for example, in relation to regional security threats). However, for many commentators, the stated purpose of the conference was overshadowed by the symbolism of the event, which appeared to confirm Uganda’s rise as one of the pre-eminent military powers in Africa – something which has been very greatly assisted, in recent years, by US backing – at the same time as signalling future threats to the country (as characterized, in particular, by Sudan’s refusal to attend the summit). As such, it also raised important questions about the UPDF’s future role in Uganda’s own domestic political landscape, and about Kampala’s increasing use of its army as a primary tool of foreign policy, especially in the region.

In recent years, both the size of the UPDF, and the complexity of its organizational structure, have grown significantly. Following a mass recruitment of 9,000 new soldiers in late 2009, in August 2011, the army passed out a further 3,300 new troops, bringing the total number of regular forces to over 55,000. In addition, in March 2012, senior officers recalled 1,700 former soldiers, suggesting that, although the UPDF does not officially have a reserve force, it has greater numbers of men at its disposal than even this total would suggest (some estimated put the UPDF's unofficial reserves at around 10,000). Over the same period, President Museveni (who is also commander-in-chief of the UPDF), has undertaken a series of mass promotions among the UPDF officer class. For example, in January 2011, he promoted 208 middle-ranking officers. This was followed, in late September that year, by the promotion of 9 senior colonels to the rank of brigadier – the group included Museveni’s son, Kainerugaba Muhoozi, and also one woman, Proscovia Nalweyiso – and in April 2012, by the advancement of a further 204 middle ranking officers (most of whom moved from the rank of captain, to that of major).

Moreover, all of this also took place against a backdrop of increased military spending in the country. In a series of reports published from late 2011 onwards, a leading arms-control NGO, the Stockholm International Peace Research Institute (SIPRI), found that between the periods 2002-2006 and 2007-2011, Uganda’s arms imports increased by 300%. During 2006-11, Kampala imported 38,000 small arms and light weapons (nearly 20% of the total across Africa), whilst in 2011, Uganda’s total defence expenditure exceeded US$1 billion – by far the highest in the region. Certainly, these figures were inflated by Museveni’s 2010 decision to purchase 6 Su-30MK combat aircraft from Russia (which, although they are relatively old technology in global terms, will nevertheless eventually give Uganda one of the most advanced airforces in East and North-east Africa). However, recent reports have suggested that the UPDF’s spending is unlikely to stop there. In particular, rumours persist that the army has already bought, or else is about to buy, a range of new armour (although UPDF commanders have refused to comment on subject, arguing that the details of arms procurement are classified).

This rapid expansion of the UPDF since 2009 primarily reflects the growing role that the army now plays in Uganda’s domestic political landscape. With Museveni increasingly isolated within parliament – following a sustained challenge by a group of younger rebel MPs from within his own ruling National Resistance Movement (NRM) – both he and the executive have become ever more reliant on the army as a means for quashing dissent. For example, in early September 2009, the president deployed the UPDF throughout Kampala in order to put down Baganda ethno-nationalist riots. In April 2011, the special forces group (SFG, which are headed by Kainerugaba Muhoozi) were similarly used to bring a series of opposition-led riots under control. And throughout early 2012, the UPDF were again active in relation to opposition leader Kizza Besigye’s ‘Walk to Work’ (W2W) campaigns. Elsewhere, Museveni has also become increasingly dependant upon the military as a means for strengthening state control over Uganda’s troubled Karamoja region (in the North-east of the country, and in which the UPDF’s 3rd and 5th divisions are currently based).

However, it is in relation to Uganda’s nascent oil sector that the president has become most reliant upon the army. From the time that significant oil deposits were discovered in the Lake Albert basin (from 2006 onwards), Museveni and his inner-circle have attempted to control the nascent oil fields by effectively militarizing the entire region in which they are located. Thus, following a series of cross-border skirmishes between the UPDF and the Congolese Army (FARDC), in 2009, Kampala announced construction of a new army base in Kyangwali Sub-county, Hoima District – which when complete, will be one of the biggest military installations in the country. In early 2010, Museveni then handed over security for all of the oil fields to his son’s SFG, whose duties include policing the ‘special permits’ which are now required for anyone – including elected officials – to access local populations. Moreover, the UPDF’s role in the oil sector is likely to expand once production begins in earnest, in a few years' time.

Yet even if Uganda’s current military expansion is driven primarily by domestic concerns, it would not have been possible were it not for Kampala’s commitment to ongoing military operations in Somalia. From the time the current African Union Mission to Somalia (AMISOM) began, in January 2007 – with backing from the UN Security Council – Uganda has provided the lion’s share of troops for the mission, as well as much of its command-and-control structures. Indeed, following al-Shabaab’s bombings in Kampala in July 2010, Uganda has recently increased its overall commitment to the mission, to 8,000 troops.

The key point though is that prior to the UPDF becoming involved in Somalia, Uganda’s overall military expenditure was effectively capped by the donor community. Throughout the late 1990s, and early 2000s, the World Bank and Britain’s Department for International Development (DfID), in particular, put sustained pressure on Museveni and his executive to limit defence spending as a percentage of their overall budget – even in the context of (then) expanding military operations against the Lord’s Resistance Army (LRA) in the north of the country. However, following the creation of the AMISOM mission, any such spending limits have effectively been lifted, with the US, the UK and the EU all contributing to the costs of the intervention. The US, in particular, has already spent US $550 million on military training and equipment for the Somalia force, and much of this has gone directly to Uganda. For example, since 2007, American military contractors have operated a training camp for Somalia-bound UPDF troops at Kakola (about 50 miles northeast of Kampala), which in May 2012 passed out 3,500 men. In addition, since 2007, Uganda has received other forms of military support from the US besides (i.e. over and above that which they have received specifically for AMISOM). Most notably, in October 2011, President Obama deployed 100 US Army Special Forces (Green Berets) to assist in the UPDF in their hunt for LRA leader Joseph Kony.

Moreover, all of this has also given Museveni renewed confidence in using the army as a primary means for achieving various of Uganda’s other foreign policy objectives across the region. For example, it has resulted in the Ugandan president reinvigorating the UPDF’s operations in North-eastern Congo and the Southern Central African Republic (CAR) to capture Kony and his men. These operations had been ‘running out of steam’ a little, especially in light of more pressing domestic concerns. However, in the context of Uganda’s renewed military strength – and again, with additional US support – in March last year the UPDF announced that it would form the majority of a new brigade-strong AU force against the LRA. Moreover, following its creation, the new structure almost immediately proved a success, when in May, a UPDF patrol captured a senior LRA commander, Caesar Acellam, near to the DRC-CAR border.

Recent months have also seen a ratcheting-up of the Ugandan government’s rhetoric regarding the current conflict between South Sudan and Sudan. Having supported the Southern People’s Liberation Movement/Army (SPLM/A) from the mid-1980s onwards, Uganda remains a staunch ally of (the now independent) South Sudan, and could thus be expected to be draw into the conflict on Juba’s side. Moreover, this possibility became increasingly real last year, when the Sudanese Ambassador to Uganda Amb Hussein Awadi claimed that Kampala had been providing covert support to rebel groups in Darfur. Reflecting Uganda's new military strength, Kampala's response to these claims has been notably robust. Thus, following the Sudanese Ambassador’s comments, Security Minister Wilson Mukasa refuted the allegations, but also said that Uganda was well capable of repelling a Sudanese attack, and thus had nothing to fear from such an eventuality. Kampala has also been similarly blasé about the possibility of future armed conflict with Egypt over ongoing disputes over ownership and control of water in the River Nile. Indeed, at the time he announced the purchase of the Su-30MK aircraft to his cabinet, Museveni claimed that the new jets would ensure victory over Egypt in the event of any such war.

President Museveni is likely to become increasingly reliant on the UPDF as a tool for quelling domestic opposition in the months and years ahead. He is also likely to deepen their engagement in various theatres of conflict throughout the region, and across the continent. Kenya remains Uganda’s primary ally, and relations between Kigali and Kampala are at an all time high. Therefore armed conflict with either of those states is highly unlikely in the foreseeable future. However, the UPDF’s engagement in North-eastern Congo is likely to continue, and to expand, for many months to come, whilst the potential for renewed conflict with Sudan grows all the time.

More problems with oil

In mid-September, shadow attorney general Abdul Katuntu, and government MP Theodore Ssekikubo, announced that they had gathered enough support for a petition on oil tax payments to force a special sitting of parliament (in the end, they gathered the names of at least 166 sitting MPs, significantly more than the 125 that are required to force an emergency debate. The signatories included a large number of members from the ruling National Resistance Movement, NRM). The MPs’ petition related to an ongoing dispute between the Ugandan government and Canadian oil firm Heritage Oil, over the latter’s sale of its exploration rights in the Lake Albert basin to UK-based Tullow Oil in July 2010 (Heritage is claiming back the US$405 million that was paid in capital gains tax on the US$1.5 billion deal). After several months of legal wrangling in Uganda itself, in late August, the government agreed that the case be shifted to an arbitration tribunal in London. However, MPs remained unhappy that important details of the dispute – including key documents (not least Heritage’s original Production Sharing Agreements, PSAs), as well as the government’s reasons for agreeing to take the case to London – remained classified. They are therefore attempting to now use parliamentary privilege to force further disclosures. 

Then, in early October, another government MP, Gerald Karuhanga (MP for Youth, Western Uganda), tabled documents which purported to show that Foreign Minister Sam Kutesa had received a £16.5 million bribe from Tullow Oil. The claim led to older allegations against Internal Affairs Minister Hilary Onek and Prime Minister Amama Mbabazi resurfacing in the press - allegations that they had received bribes from Tullow and ENI, respectively. Interestingly, the documents relating to both the Kutesa and the Onek allegations have long been proved to be fake (even before the former were tabled in parliament). As early as mid-2010, the Maltese Police had dismissed the documents relating to Onek as forgeries (they involved a Maltese bank account). And the evidence against Mbabazi is equally thin, being based only on one of the US Embassy cables that were released by Wikileaks. Nevertheless, the allegations have had a major political impact. Just two days after Karuhanga's portfolio was presented to parliament, Kutesa resigned, and in the subsequent debate over the documents, Onek announced that he too would be stepping down - although it is not clear whether or not he has actually done so. (Kutesa's resignation also coincided with the start of his court case concerning another set of bribery allegations, related to the CHOGM meeting of 2007). Following Karuhanga's disclosures, Mbabazi has also come under increasing pressure - with growing calls for him to resign as well - although he has so far managed to remain aloof. 

The current anger over the Heritage dispute, and the corruption allegations, reflects wider concerns amongst legislators over the way in which President Museveni and his inner-circle have handled oil issues, and the secrecy with which they have surrounded these dealings, from the time of Heritage and Tullow’s initial explorations in the Lake Albert basin, in 2007, onwards. In particular, recent months has also seen growing criticism of Museveni’s decision of early-2010 to place all of the western oil fields under the control of the Special Forces group, which is commanded by his son Lt. Col. Kainerugaba Muhoozi. Ostensibly done for reasons of security – following an earlier series of cross-border skirmishes between the Ugandan Army (UPDF) and their Congolese counterparts (the FARDC) – many now argue that the Special Forces’ deployment is in fact being used to control all access to the oil fields, and also to surrounding areas and populations. Thus, for example, the Special Forces group is also now policing the special permits which, issued by the executive, are required for anyone wishing to interview local authorities in the oil districts, to conduct research amongst local farmers and herders, and/or to take photographs in the region. (In addition, throughout 2011, a growing number of MPs, NGOs and journalists have found the permits themselves increasingly difficult to secure).

Opposition MPs, along with various Ugandan academics, NGOs, and the Ugandan Civil Society Coalition on Oil (CSCO), have also voiced growing concerns over the new legislative framework that the president and his senior ministers have begun to develop around the oil finds. In February 2008, the Ministry of Energy and Mineral Development (MEMD) published a National Oil and Gas Policy (NOGP), which paved the way for new legislation related to revenue management and administration, revenue management, and environmental management. However, when Museveni released advanced copies of the first of these bills – the Petroleum (Exploration, Development, Production and Value Addition) Bill – in May 2010, it came in for immediate criticism. In particular, the draft legislation was once again seen as too secretive (for example, if passed, the new law would not even require mining companies to declare quantities of oil being extracted), but also as granting the Energy Minister too much power (amongst other things, he would have full discretion over all licencing issues), yet without providing adequate provision for an independent Petroleum Authority. In response, Museveni quietly dropped the bill in the run-up to the February elections. However, cross-party legislators are now gearing-up for further battles, following Energy Minister Irene Muloni's recent claim that she plans to have all three of new laws passed by the year's end. It is in this context, then, that a British-based NGO, International Alert, has recently published an overview of existing oil and gas laws in Uganda, as a guide for MPs in their upcoming debates over future oil legislation.

Moreover, it is not only at the national level that Museveni faces growing pressure over his handling of oil issues. In addition, in recent months local bodies such as the Kingdom of Bunyoro have also become increasingly vociferous in their complaints against the president (the majority of the newly-discovered reserves lie within the Bunyoro region). Bunyoro’s current grievances trace to the 2008 NOGP, which requires that 20% of all state oil revenues be returned to the region the oil came from, yet which effectively bars the Kingdom itself from receiving any of these monies (given that the institution is a purely ‘cultural’ organization). However, during 2011, this antagonism has been further exacerbated by a series of land disputes, including one in January during which a group of pastoralists known as the Balaalo were evicted from lands adjacent to the oil fields in Buliisa District. It has also occurred in a context in which Banyoro have become increasingly emboldened in their dealings with the central government, not least as a result of a growing ‘cultural pride’ that has been generated by a project to create a new US$1.5 million cultural centre in Hoima Town (the project is itself being partly funded by Tullow Oil). As a result, recent months have seen a growing number of localized protests against the police and the oil companies, including one in late August during which villagers in Buliisa blocked a road between the Kigogole oil well and Tullow’s nearby workers’ camp (the protest resulted in 10 arrests). In early September, Kingdom officials announced that they were joining up with regional MPs (of the Bunyoro Parliamentary Caucus) to lobby for a greater share of future oil revenues. Amongst the various initiatives already announced by the partnership are a planned land committee, to  investigate disputes such as that involving the Balaalo, and a development group which will lobby for projects such as the proposed tarmacking of the Kihumba-Hoima-Kyenjojo road, and the mooted upgrades of several regional hospitals.

Nevertheless, the president himself may yet come to regard all of these developments as but minor inconveniences, given the enormous political capital that he stands to gain from forthcoming oil revenues. In April, Tullow Oil paid into the Bank of Uganda US$313 million, against the outstanding tax bill from the Heritage purchase. This payment is also now a source of legal action, again in London, with Tullow claiming that the money was actually part of Heritage's tax liability (they are now trying to recover it from the Canadian firm). Nevertheless, the payment removes the final hurdle in Uganda for Tullow’s proposed US$2.9 billion farm-out deal with France’s Total and the China National Offshore Oil Corporation (CNOOC), and as a result, that deal should now be completed soon (indeed, it was cleared by the Ugandan regulators on 12th September). As a result production may begin as early as mid-2012. Whilst it is difficult to separate out fact from rumour in the current talk over oil, it is highly likely that at least some of the president’s inner-circle will make vast personal fortunes once production starts. More importantly, though, once oil exports begin, Uganda will be much better placed to service its huge foreign debts, and to bolster its meagre foreign currency holdings (which have dwindled in recent months, not least as a result of the Museveni’s decision to purchase US$740 million-worth of Russian fighter jets). Once production starts, oil is expected to generate US$2 billion a year; the current national budget is US$3 billion pa. These factors will in turn greatly improve Uganda’s trade volumes, especially with its partners in the East African Community (EAC). Moreover, given how astute Museveni has always been at turning any economic success into political gain – and given that he has recently faced popular protests over rising food and fuel prices – it is almost inconceivable that the president will not turn all of this to his significant advantage with the electorate. 

These same developments are also likely to have positive effects upon Uganda’s foreign relations, and especially upon its relations with other EAC states. These relations will be further improved by Uganda’s recent decision to build a US$2 billion public-private oil refinery near Hoima, which when complete, will have a capacity to refine 150,000 barrels per day (bpd). Given that Uganda’s domestic market currently uses only about 12,000 bpd, it is highly likely that the refinery will soon be flooding regional markets with cheap petrol. Indeed, it is with this in mind that in April, the MEMD applied to parliament for a US$13.5 million loan to buy land for an extension of Kenya’s existing Mombasa-Eldoret pipeline into Kampala. The idea of extending the pipeline was first been mooted in the mid-2000s, as a means for more easily importing petrol into Uganda. However, in the current context the plan has gained even greater urgency, as a potential infrastructure for exporting petrol as well (the updated plan almost triples the original estimate for the project, not least because it now includes a reverse flow on the pipeline). In addition, the EAC recently secured a US$600,000 grant from the African Development Bank to conduct a feasibility study on developing the pipeline into a pan-regional facility, which when complete, could extend as far as Kigali and Bujumbura. Finally, Nairobi is also hoping to gain from additional Ugandan crude oil that may be transported across its territory. With current estimates suggesting that the Lake Albert oil fields may eventually produce up to 350,000 bpd, it is clear that even when it is fully operational, the Hoima refinery will be able to process only part of Uganda’s output. The remainder, then, will have to be transported to the coast for shipping via Kenya.

However, in the meantime, Museveni will continue to face opposition from MPs over his handling of oil, and especially from the 'young turks' within his own parliamentary party. Whilst these challenges are unlikely to become significant enough to ultimately threaten his position as president, they are likely to become a growing 'thorn in his side'. Museveni has already suffered some significant setbacks at the hands of the new (9th) parliament, and he may well have to make further concessions (including some major concessions?) before it is completed. However, his own personal standing with the electorate is unlikely to be significantly effected by these wrangles. In the meantime, local disputes in Bunyoro - especially those involving land - will rumble on, and may well intensify in the months and years ahead. Moreover, whilst these issues remain relatively localized at present, they could potentially escalate further, especially if they were to take on an ethnic-hue - for example, by becoming articulated as difficulties between the region's ethnic Banyoro, and Bakiga, populations - or more significantly, if a foreign power were to meddle in the region's affairs. 

Whatever happens, it is unlikely that Uganda's problems with oil are over yet.

The trouble with oil

Here's a subject that we will be returning to again: Uganda's newly discovered oil reserves.

Since late 2007, reserves of between 2-6 billion barrels have been found by the UK's Tullow Oil, in the Lake Albert basin. When production starts later this year, Uganda could become the fourth biggest producer in Africa.

In a recent report, the National Planning Authority (NPA) suggested that oil revenues will transform the country's economy, reducing its reliance on foreign aid (which currently accounts for 32% of the budget), and turning it into a middle income country by 2015.

However, much will depend, of course, on how the oil funds are distributed, and the arguments have already begun:

• Museveni initially refused to make the Tullow contracts public, amid rumours that he was negotiating the terms himself. Damagingly, the contracts were then made public by a UK-based activist group, Platform. They can be viewed here.
• The opposition Forum for Democratic Change (FDC) now plans to challenge the legality of the contracts through the courts.
• Arguments have also begun at the local level. Once production starts, the government plans to retain 80% of the revenues for itself, and to return 20% to the region from which it came (Bunyoro). However, some are now saying that this should go only to ethnic Banyoro, and not to any of the region's other ethnic groups (Bunyoro is also home to large populations of Baganda and Bakiga).

Thus, before even a single barrel has been produced, the 'black gold' is already raising both political and ethnic tensions.