Nairobi — The once cosy affair between President Yoweri Kaguta Museveni and the donor community is headed for the rocks. The British government, Uganda's biggest aid donor, has cut Ush48 billion ($26.5 million) in aid to Uganda and withheld another Ush16 billion ($5 million).
The decision comes after an economic and governance assessment raised concerns over the government's commitment to the independence of the Judiciary, freedom of the Press and freedom of association following the events surrounding the arrest and trial of the leader of the Forum for Democratic Change, Dr Kizza Besigye.
Britain also cites deliberate delays in the government's own road map for the political transition; the continuation of State financing for the ruling party in a new era of multi-party politics; and a significant overrun on public administration expenditure.
Hilary Benn, Secretary of State for International Development, while addressing the House of Commons said some of the aid will be held until after the elections in February, when a decision will be made on whether to disburse it.
In December 2004, UK and Uganda signed a Poverty Reduction Budget Support arrangement for a grant of up to £145 million over three years.
This budget support arrangement is linked to reforms detailed in the Poverty Eradication Action Plan, including macro-economic management and governance.
Britain indicated then that up to £40 million was available in financial year 2004/05, £50 million in 2005/06 and £55 million in 2006/07.
All this now hangs in the balance.
British's tough action against the government of Museveni follows a similar move by Sweden, which withheld ($8m). Other donors are already withholding similar proportions of their programmes. Norway and Ireland have reduced their budget support commitments made earlier in the year by approximately £2 million.
The Dutch cut nearly £5 million of their budget support in November.
Sweden has recently announced a budget support cut of nearly £2 million and is withholding a further £5 million after their ambassador was violently chased out of court during the trial of Besigye before the General Court Martial.
The minister of State for Information, Dr James Nsaba Buturo, dismissed the aid cut as co-ordinated pressure that is being applied in the mistaken view that it would "derail the way we are doing things".
"This is what they call drip-drop support; it is their right, they have a view, we don't agree with that view.
We are totally satisfied that everything is in accordance with the road map; they have a different notion of democracy and we don't believe that what we have here is not democracy," he told a press conference.
President Museveni, in a protest letter to Benn over the aid cut, said he had "a real problem with this paternalistic arrangement of the so-called donor-beggar relationship."
He went on: "What I find unacceptable is for some of you to continue to think and say that because you give us a modest sum of money, we have to abdicate our responsibility to think and let them run our affairs."
Despite the denials and finger pointing, Uganda is in a real problem.
Close to 60 per cent of the national budget is donor-funded. Britain is the biggest of Uganda's five bilateral partners.
But this is not the only troubling issue in the landlocked country.
In 1999, Congo filed a case against Uganda in the International Court of Justice at The Hague, accusing it of human rights abuses and armed aggression.
DRC accused Uganda of massive human rights abuses, looting and destruction in a war on its territory.
The Congo, which is rich in gold, diamonds and timber, was the battleground for rebels, local factions, tribes and neighbouring countries, including Uganda, in a 1998-2003 war in which four million people died, mainly from hunger and disease.
In the suit, Congo called for compensation for what it said were acts of looting, destruction and removal of property.
Uganda lost the case and will pay up to $10b (Ush18 trillion) in reparations.
The figure might not make immediate sense to an ordinary Ugandan but it is almost five times Uganda's national budget.
Uganda's 2005 National Budget was a paltry Ush3.8 trillion with over 55 per cent donor-funded. Now they have to part with Ush18 trillion.
Not that the Monday ruling came as a surprise.
A UN report in November 2001 said the initial motivation for Rwanda and Uganda to intervene in the central African nation had been to secure their borders.