Uganda's Politics of War and Debt Relief Author(s): William Reno Source: Review of International Political Economy, Vol.

9, No. 3 (Aug., 2002), pp. 415-435 Published by: Taylor & Francis, Ltd. Stable URL: http://www.jstor.org/stable/4177429 . Accessed: 26/07/2011 14:16
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PoliticalEconomy August2002:415-435 9:3 Reviewof International

RJoutiedge
Taylor&FrancisGroup

Uganda's politics of war and debt relief

William Reno
North Western University, USA

ABSTRACT The return of interstatewar in Africa after the end of the cold war and global awareness of predatory economic motivations for war raises the question of whether African states are reviving early modern European methods of building states. This study of Uganda's interventionin Congo reveals that this is not so. Uganda's peripheral position in the world economy, coupled with its relationswith creditors,gives its leaders unexpected capabilitiesto plundera neighbouringcountry'sresources.Creditors remainsurprisinglywilling to toleratethis behaviour,while providing debt relief. Uganda's leaders exploit creditoranxieties about growing disorder among highly indebted countries and fears that chaos will undermine debt.Nonetheless,warfare,plunder creditoreffortsto manageuncollectable and manipulationof creditorinterests does not result in strongerinstitutions. The predatorybehaviour of the Ugandan militaryresemblesthat of their state-buildingcounterparts. contemporaryplunderersform their But own ties to the world economy. Uganda's leader faces greater obstacles to consolidating control over violent commerce, and private interests of plunderersactually weakens existing centralpolitical control as Uganda's leaders and its creditorsbecome even more tied to new loans to maintain short-termorder.

KEYWORDS Debt; warfare;Uganda; state building; plunder;reform. Bismarck certainly despised Parliamentary and peaceful struggles, although from a different angle, we must not be oblivious of their limitations either... I wish that some militaristic African could knock together Uganda, Kenya, Tanzania, Zambia, Rwanda, Burundi, etc. to form one state. (Yoweri Museveni, 1966: 11) What interested me most in history was the formation of states in Europe ... I was also fascinated by the French Revolution, and bourgeois opposition to taxes imposed by the feudal order because Reviewof International PoliticalEconomy ISSN 0969-2290print/ISSN 1466-4526online C 2002 Taylor & FrancisLtd http:/ /www.tandf.co.uk
DOI: 10.1080/09692290210150671

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it interfered with trade - which was also the reason that the Prussian Junkers wanted a unified government. (Yoweri Museveni, 1997: 14) Uganda is one of at least 14 sub-Saharan African states that have intervened militarily in neighbouring states since 1990, often drawing claims from observers that these armies combine war with commerce. States that have sent combat soldiers beyond their borders include Angola, Eritrea, Ethiopia, Ghana, Guinea, Nigeria, Rwanda, Zimbabwe and others. At a conceptual level these wars draw attention to the historical relation of state formation and markets. Referring to early modern Europe's history and evoking Ugandan president Museveni's words above, for example, one is reminded of Tilly's 'portrait of war makers and state makers as coercive and self-seeking entrepreneurs' (Tilly, 1985: 169). Tilly provides a caveat that contemporary states do not recapitulate European experience. He explains that the dependence of most post colonial states upon external patrons and the appearance of global norms of non-intervention helped many internally weak states maintain separate national existences (1992). Yet the interventions of Uganda and other states in the conflict in Congo shows that at least some post-colonial African states manage to field armies and influence developments beyond their borders, even in defiance of pronouncements of creditors and in violation of long-standing norms that African states will respect each other's borders. How should one understand this use of force in terms of the evolution of political communities? Does cross-border intervention signal a turn to conditions that Tilly described of early modern European state building or the nineteenth-century European images evoked in Museveni's words above? If such a change has occurred it would go far to satisfying a condition that Herbst poses as necessary for building stronger states in Africa: 'If the boundaries could have been challenged, rule over the hinterland would have had to have been stronger' (2000: 94). If Uganda's intervention and the political economy of war in Congo marks a revival of state building then it also revives competitive international relations where internally weak, patronagebased 'quasi-state' regimes (Jackson, 1990) face geo-political pressures and opportunities that compel rulers to experiment with administrative innovations, including war, to consolidate their power, control markets, and manage rivals. On the face of it Uganda's military, the Ugandan People's Defense Force (UPDF), has shown considerable capacity to control territory and accumulate resources. Its occupation since 1996 of part of Congo larger than Uganda itself and involving 10,000 soldiers in 2001 despite announced withdrawals, (UN, 2001c; 5) should stretch - and thereby 416

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increase - the capabilities of Uganda's state administration. (As of mid2001 Ugandan forces had withdrawn from western locations, but Uganda's UN representative advised that Uganda 'would continue to examine the wisdom of maintaining a presence in Buta and Bunia' (UN, 2001a: 2). A recent UN report charges that Uganda's army - along with those of several other states, especially neighbouring Rwanda, loot resources and conduct commerce in Congo (UN, 2001b). Could it be that these economic predations, what some regard as a 'criminalization' of the state (Bayart et al., 1999; Strange 1996: 114-16; van Creveld, 1999), is in fact state building? Tilly's classic description of state building as a form of organized crime, with kings as godfathers selling protection to cooperative gangs and to merchants, meant to apply to early modern European conditions, reinforces the relevance of considering whether the proliferation of violence and organized looting bears some similarity to patterns that marked the emergence of states in Europe (Tilly, 1985: 169-91). THE DIFFICULTY OF STATE BUILDING IN THE PERIPHERY I argue that the appearance of interstate conflict does not signal a decisive shift within Uganda toward centralizing and strengthening state authority. In fact, the UPDF's conduct of war in Congo undermines the coherence of the UPDF and thus of the Ugandan state as a whole. It is notable, however, that international actors and global norms dedicated to preserving African borders play a surprisingly limited role in hindering Museveni's ability to use war to strengthen his position vis-a?-vis strongmen in his own country, or discipline predatory gangs or conduct interstate warfare. Instead, Museveni's regime finds ways to manipulate outside actors and norms to pursue its regional designs. Uganda's officials exploit anxieties of foreign officials and of multilateral creditors to limit political disorder in poor countries and to avoid sudden write-offs of unpayable sovereign debt. Ugandan officials and these outsiders engage in mutual deception designed to preserve a facade of Uganda's respect for borders, payment of debts and orderly internal political development. In fact Uganda is neither a case of state building through centralizing violent accumulation, nor is it a weak 'quasi-state' entirely dependent on the patronage of strong outside actors to survive. Instead Uganda's president (and rulers in other states that intervene in Congo's war such as Rwanda and Angola, not included in detail in the scope of this article) use warfare to refashion their relations with a changing global political economy and protect their regimes. Their peripheral stance vis-a'-vis global economic and strategic concerns of more powerful states and institutions still leave them and their state administrations very weak in 417

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relative terms. But rulers in peripheral states find new opportunities to manipulate the changing interests of global political actors and exploit economic niches. This context also amplifies disorderly aspects of combining warfare and economic predation. Museveni shares with rulers in Rwanda (with 20,000 troops in Congo), Zimbabwe (12,000 in Congo) and Nigeria (3,000 in Sierra Leone) a tendency to lose control over military predations. Military officers and some rank-and-file soldiers become violent entrepreneurs, organizing their own connections to global commercial networks to take advantage of the unregulated environment of war zones and the broader deregulatory context of economic reforms. Incumbent rulers often recognize that predation solves short-term problems of political control by keeping soldiers occupied. But ultimately returning these soldiers to their home countries further entrenches these violent entrepreneurs in military organizations and aggravates domestic factionalism as other strongmen position themselves to get a share of the loot. This element of warfare, a normal component of state building in other places at other times, instead creates violent entrepreneurs within the military and government who will resist institutional efforts to control them, and may defy the ruler's personal authority to get what they want. More generally, this political economy of warfare shows that even if wider interstate competition returns to Africa, warfare will not become a state building tool in the context of Africa's position on the margins of the world economy. This does not contradict views that military activity will force African regimes to pay more attention to effectively organizing state agencies (Ayoob, 1998; Herbst, 1996/97). Instead, it predicts that these efforts will fail, producing more disorder and even weaker states. Under other conditions, Museveni should have a fair chance to build a state through conquest in a neighbouring state, especially given that most of the UPDF's leadership shared the experience of guerrilla struggle and the creation of a system of local resistance councils to mobilize inhabitants in 1981-6 before taking power in Uganda. But Tilly notes that state building through war no longer works in peripheral states today (and also failed in many instances in early modern Europe). Only now, we find that the reason among states on the periphery of the world political economy is not due to a relative lack of external pressure on states to organize to fend off external threats. As Africa shows, weak states now invade one another. Instead, a large part of the cause of the failure to organize violence as a tool for state building is found in the nature of commercial linkages of these peripheral regions to the world economy.

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WAR, PLUNDER AND WEAK STATES IN A GLOBAL CONTEXT Cold War superpowers gave diplomatic support and resources to client regimes that could barely control domestic territory, much less regulate transactions across their borders or sustain internal administrative hierarchies in a meaningful sense for most citizens. Other forms of assistance to very weak states have filled in where strategic aid has declined, which has allowed regimes to continue to short-change the interests of citizens (Uvin, 1999; de Waal, 1997). This observation that external guarantees of state survival weaken internal incentives to build effective administrations describes the politics of many states. By 1985, for example, Zaire (now called Congo) had 12,000 miles of motorable roads, down from 88,000 miles at independence in 1960 (Ayoade, 1988: 106). Zaire's president Mobutu did not have to concern himself with actually controlling all parts of Zaire. His reliance on foreign patrons, primarily the US and France, gave him sufficient resources to hold onto power. External support for existing borders outlives the cold war. Since the end of the colonial era, would-be expansionists have faced global condemnation of conquest, such that even Indonesia coughed up tiny East Timor in 1999, despite its 1975 invasion of the former Portuguese colony and suppression of separatists. State building in the mode of conquest that Museveni notes above could include Iraq's absorption of Kuwait, or attempts to unify a Serbian ethnic nation in former Yugoslavia, all of which faced huge international resistance. Most post-Cold War insurgencies attract broad international condemnation and sanctions (unless they capture capitals). This reinforces the notion that the sovereignty of existing states endures, no matter how weak or inept the regime (Jackson and Rosberg, 1982; Mazrui, 1993; Herbst, 1996/97). Even where regimes collapse altogether, outsiders refuse to accept the extinction of sovereignty. Somalia persists as a globally recognized state even though its southern half lacks a central government, while the Somaliland administration in the north that provides order and delivers public services receives no formal recognition from other states. Would-be state building insurgents rarely gain much aid and investment from abroad, while those who inherit existing sovereignty tap a wide array of existing channels for support. This happens almost no matter how groundless their claim to exercise authority in the eyes of local people. Nonetheless, rulers still have to rule, or at least manage their rivals. International support for African sovereignty offers additional resources to manage political rivals or would-be rivals by giving rulers the prerogative to decide who has access to the country's territory. Even if borders are not controlled, global recognition of this right enables rulers to shield transactions from the eyes of outsiders. This is part of a general 419

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trend in some African countries toward the personal appropriation of state institutions and the development of smuggling, the growth of private armies, and the development of an economy of plunder where the state is used as a vehicle to organize such activity. This reaches an extreme in Liberia, which had a 1998 official budget of about $50 million (IMF, 2000: 30), while clandestine businesses reportedly thrived with official connivance. Investigators even accuse Taylor of using his position as president of a globally recognized state to shield commercial transactions with Sierra Leone and Angolan rebels and to do business with Ukrainian and South African criminal networks for his personal profit (UN, 2000). Since solid external recognition for existing state sovereignty offers rulers few incentives to bargain with citizens for revenue and loyalty in exchange for state services, one sees little prospect of ending Africa's postcolonial legacy of weak states and its global economic and diplomatic marginality (but not irrelevance as Uganda shows below). But Uganda's intervention in Congo and Liberian influence in Sierra Leone and Guinea (and interventions of Angola, Zimbabwe, Chad, Rwanda, Burundi, and Namibia in Congo, Angola's intervention into CongoBrazzaville, Nigeria's into Liberia, Sierra Leone and Guinea-Bissau, and Guinea's into Sierra Leone) challenge the relationship of regimes in weak states to war, sovereignty, and external resources. So if 'War makes states', in Tilly's explanation of early modern European state formation, and 'Banditry, piracy, gangland rivalry, policing and war making all belong on the same continuum' (1985: 170), where does contemporary violence and plunder in Africa fit into this relationship of war and state formation? Uganda's Congo War, with army officers in business as diamond and gold traders protected by private military service companies, bears more than passing resemblance to alliances such as between northern European monarchs and merchants who together used violent, predatory means to wrest market shares from Venice and Genoa (Rapp, 1975). Zimbabwe's president Robert Mugabe incites supporters to seize the property of white farmers and ignore court orders to return it, while sending 12,000 troops to Congo to defend mine sites that he and his generals run with foreign partners for their personal gain. This is not terribly different from the methods of England's King Henry VIII, who urged armed followers to plunder the Catholic Church of a quarter to a third of the fixed assets of his kingdom, then encouraged them to use their fortunes to finance violent speculative ventures of buccaneers who preyed upon the commerce of foreigners (Hoskins, 1970). Other elements of historical state building experience appear in the adjunct roles that foreign firms play in organizing predation. The Dutch West India Company, for example, helped finance and provision a Portuguese campaign to retake Brazil, then attempted its own occupation of sugar growing areas (Andrade Arruda, 1991: 380). Likewise, an 420

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American businessman appeared in eastern Congo in the late 1990s with offers to set up a private 'African Union Reserve System' that would run the financial affairs of Congo's insurgents in exchange for exclusive mining concessions (New Vision, 1 Dec, 1999: 3). Similar activities need not produce similar outcomes. Europe's 'plunderer could become in effect the chief of police as soon as he regularized his "take", adapted it to the capacity to pay, defend his preserve against other plunderers, and maintain his territorial monopoly long enough for custom to make it legitimate' (Lane, 1958: 403). This transformation required various internal social bargains, such as deals with urban merchants if they existed in large numbers, alliLnces with local notables to help repress rebellious peasants, or other internal deals to promote an over-arching order. Now bargaining occurs within the external framework of a global diplomatic and intellectual preoccupation with norms of sovereignty, reinforced in post-Cold War Africa by outsiders' anxieties about disorder. Regardless of historical era, hard-pressed rulers have used theft from neighbours or helped followers to steal as a key component to consolidate domestic political bargains. Africa has often been a target for violent accumulation. But even here, plunder has been put to reciprocal, if unequal advantage. Pre-colonial commercial oligarchies acted as middlemen to European traders at the expense of building indigenous administrative capacity. This relationship emerges in contemporary examples of rulers deriving rents through skimming humanitarian aid and diverting profits from money laundering and illicit trade. Defending regimes against challengers relies heavily on these deals with outsiders. It is thus not that, as Ayoob speculates, 'statemaking and what we now call 'internal war' are two sides of the same coin' (1998: 42). Internal and regional war occurs in a context of considerable external involvement, including informal deals between local and international actors, and is connected to negotiating terms of external dependence. Despite the difficulty of managing predatory associates, rulers still find short-term political gains in fighting wars in neighbouring states for the mundane reasons such as gaining new sources of patronage for followers, just as rulers in other times and regions did in their attempts to solidify control over strongmen. Here rulers encounter the diplomatic mirror of the external economic factors that sabotage their efforts to combine plunder and control in historically more conventional fashions. As noted above, rulers use sovereignty to shield clandestine transactions, a divergence of practice from ideal that Krasner calls the 'organized hypocracy' of sovereignty (1999). Creditor and president each use the other to pursue interests while maintaining that a particular norm guides their behaviour. Uganda's president exploits disjunctures between norms, which exist in the sense that they shape what resources are available and what 421

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behaviour is rewarded, versus interests, which facilitate Museveni's tacit bargains with the same actors who enforce norms so that both can 'cheat' on those norms to solve short-term crises that could threaten norms if norms alone guided action. Nonetheless, as Uganda shows, control over force and the ability to use it in foreign lands is only one part of state formation. It becomes destructive to this project when it is not accompanied by the ruler's exclusive ability to control those who plunder. The economic dynamics of armed gangs may resemble that of states, but durable institutions will not be built without this control. THE UPDF IN CONGO Congo's civil war began in earnest in 1996 in a context where private economic groups for the most part already operated amidst the collapse of state institutions and many clandestine operators had important ties to Uganda businesses and politicians stretching back to the 1960s (Perrot, 1999). Congo's prewar rulers drew most of their income from exports of natural resources, not from taxing citizens or businesses. In 1992, copper made up 58 percent of Congo's official exports (IMF, 1994: 31). Compact, valuable resources like gold, diamonds and cobalt left the country through clandestine channels, some of which politicians controlled. In the late 1980s, for example, possibly as much as four tonnes of gold left Congo through untaxed channels each year (MacGaffey, 1991: 19). Much of the production of these commodities was concentrated in the eastern parts of the country, within easy reach of Uganda. By mid-1996, the UPDF was deeply involved in assisting fighters of the Alliance des Forces Democratiques pour la Liberation du Congo (AFDL). Ugandan officials justified the UPDF's intervention as a strategy to drive Ugandan insurgents away from Uganda's western border (Africa Confidential,1 Aug 1997: 4-5). This arrangement also gave UPDF officers, opportunities to profit from local trade. Ultimately, this development gradually deprived Uganda's ruler of control over violence and posed a growing danger that military factions would fight each other for spoils of war. This mirrored the development of non-state clandestine commercial organizations. For example, AFDL head Laurent Kabila spent many years trading in agricultural and mineral commodities with East Africa, building up a business network that later facilitated his connections with foreign firms once he became Congo's president in 1997. Opportunities for soldiers to profit personally appeared in conjunction with the war itself. UPDF forces have controlled large parts of northeastern Congo since 1997 after they helped Kabila to power. The UPDF extended their areas of occupation when they backed another rebel group in August 1998, the Rassemblement pour la Democratie 422

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Congolaise, (RDC) to overthrow Kabila after he denounced his former allies as foreign invaders, failed to impose order, and abandoned commercial deals he made while a rebel leader. The UPDF quickly occupied Kisangani, a major trading city with river and air transport facilities. Other towns such as Isoro and Butembo hosted UPDF brigades. After the UPDF's falling out with Kabila, these towns, along with Kisangani, served as points to train and aid forces of another proxy, the Mouvement pour la Liberation du Congo (MLC), along with the RDC. Ugandan officials offered credible arguments that anti-government Ugandan rebels used Congo's territory to launch attacks on Uganda. They argued that the UPDF intervention was a last resort, given Mobutu's, then Kabila's inability and unwillingness to restore state control over eastern Congo. There is a lot of merit in this justification. Congobased Ugandan rebels of the Alliance of Democratic Forces (ADF) had attacked Ugandan border towns and threatened the security of local citizens. Ugandan officials complained that since no Congolese government controlled the border area it was Uganda's right to defend itself by occupying potential rebel sanctuaries in Congo (Weiss, 2000). Ugandan officials were genuinely concerned about ADF infiltrations. But this classic self-help strategy is difficult to justify in the context of global norms that maintain the principle of sanctity of borders. As details below show, the violation of sovereignty more than the issue of looting irritated Uganda's creditors and diplomatic backers. More important, the deployment of UPDF troops 1,000 kilometers west of Uganda's border suggests that other motivations came to overshadow borderland security. The behaviour of UPDF officers shows that personal economic motivations may have proven more attractive than organizational imperatives of an efficient intervention against threats to the Ugandan state, and shaped the character of the intervention. For example, a close relative of President Museveni took personal advantage of commercial opportunities that the war offered, and combined his duties as presidential advisor (and briefly, head of the army) with business ventures. He reportedly maintained gold buying firms in UPDF controlled areas of Congo, an area responsible for an estimated $60 million in gold exports to Uganda in 1996 (Sebunya, 1997: 32). A Colonel (later Brigadier and UPDF Chief of Staff) stationed in Congo ran business ventures of his own. In early 1999 this officer joined JeanPierre Bemba, the son of former Zairian President Mobutu's principal business partner (and later MLC leader), to export coffee and timber from areas under UPDF control. A UN report accuses high officers in the UPDF of using aircraft and military airports to organize this and other trades, including trafficking in stolen vehicles, agricultural products and minerals (UN, 2001b, paras 31-45). This pursuit of personal wealth is ironic in light of the UPDF's deep ties to Museveni's original 423

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insurgent force, the National Resistance Army (NRA) that captured Uganda's capital in January 1986. The NRA was among the first postcolonial African insurgent movements to capture power from incumbent rulers. Resisting factionalism, and taking great care to discipline fighters and prevent looting, the NRA captured a state that had been shattered under the rule of Idi Amin and Milton Obote over the previous 15 years and re-established an effective central government (Ngoga, 1998). These business dealings generated some benefits for the state, while still personally lucrative for individual UPDF officers and their Congolese partners. Ugandan official figures record that gold exports rose from $12.4 million in 1994-5 to $110 million in 1996-7. 'According to figures from the Ministry of Natural Resources', cites an official report, 'gold production represented only 0.2% of gold exports during 1996/7' (Government of Uganda, 1998: 46), and official statistics reported gold production in 2000 still at .04 percent of exports (Africa ResearchBulletin, 5-6/2001, 14788). By 1999, the IMF acknowledged that gold had become Uganda's largest non-coffee official export (Staff Team on Uganda [IMF], 1999: 73). There is little evidence that Uganda produces gold in anywhere near these quantities according to industry specialists (Raw Materials Group, 1999). Trade between Congo and Uganda likely accounts for some of this gold. The robbery of a commercial passenger bus (travelling several times a week between Kampala and Congo), for example, netted for bandits a haul of 120 carats of diamonds and $250,000 in cash (Interview, Kampala, 13 April, 2000). A UPDF officer who is a cousin of the president's wife ran his own Congo businesses. He reportedly doled out diamond and cobalt concessions to a firm named Victoria, whose key shareholder was a presidential family member, initially in collaboration with Rwandan military officers (Africa Analysis, 30 April, 1999: 1; Indian Ocean Newsletter, 11 Sept, 1999; 5). An exiled UPDF major claimed that military involvement in commerce 'is an open secret to all Ugandans ... Even in Bunia there are business interests owned by a retired and other senior officers, their relatives are running others' and blamed disagreements between UPDF units on arguments over business opportunities (Monitor, 25 April, 2001: 16). Various officers reportedly maintain cell phone networks in Congo, and generate complaints among compatriots for their use of military transport to move goods. The duty-free import of goods into Uganda from Congo became severe enough that officials of the Ugandan Internal Revenue agency complained to the Ministry of Defense about this revenue loss (UN, 2001b, para 73). Business-military networks connected Congo's wartime commerce to commerce in Uganda. The president's relative held a 45 percent share in a private security company that is a subsidiary of a British firm with alleged ties to mercenaries employed in Sierra Leone and Angola in the 424

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mid 1990s (Chapleau and Missier, 1998: 142). The Ugandan firm has two local subsidiaries, an electronics assembly operation and a small arms plant. He also reputedly owned stakes in air cargo companies (New Vision, 29 July, 1997: 1; Africa Confidential,17 Jan, 1997: 5-7). Other business networks cater to security concerns. Airscan, an American security firm with contracts in Angola reportedly appeared in Uganda to train and equip UPDF soldiers (Venter, 1998: 63). This firm, however, was unlikely to have been involved in trading concessions for military assistance since the firm was a contractor for the US-sponsored African Crisis Response Initiative military training programme. (UPDF participation in this program ended in 1999 because of Kampala's activities in Congo.) But other businesses such as air cargo firms handle trade from Congo, including one owned by a presidential relative's wife (UN, 2001b, para. 74). RENEGOTIATING RELATIONS WITH CREDITORS

There is little doubt that UPDF behaviour in Congo falls within the category of 'criminalization' in that state agencies are used to generate private profits in international trade (Perrot, 1999). It is more significant how this theft shapes the organization of Uganda's army and its relation to state institutional power. Clearly some officers profit personally. Individual aggrandizement and business disputes are cited in mysterious attempts on the lives of key army commanders - a development not conducive to the efficiency of the military's bureaucratic hierarchy (New Vision, 19 April, 2000: 20). Officers, including a presidential relative, have been implicated in shady transactions involving UPDF purchases of overpriced used arms procured through contract firms that they own. Personal aggrandizement also appears to have helped lengthen the war. Even the head of the Ugandan-supported MLC rebels complained: 'One of the reasons for the war is the control of resources, especially exclusive control of the diamond market' (Sunday Monitor, 18 Feb, 2001: 29). But could theft organized by a state conceivably play a role in supporting both the regime and greater state bureaucratic capacity to carry out non-military activities? In this case it does so only temporarily. More important, instead of boosting long-term state capacity directly, it plays an important political role in managing Uganda's relations with multilateral creditors. This trade promotes exports of 'non-traditional' [often Congolese] products by violent entrepreneurs that help make Uganda appear as though it is improving its position as an example of exportled growth and successful economic reform. Deregulation of raw materials purchasing and export, coupled with lower tariffs gives exporters of gold, for example, incentives to use official channels. Even if produced elsewhere, entrepreneurs benefit from bringing goods to Uganda for export where they have access to lower cost insurance and 425

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freight services. Reasonable (or avoidable) taxes are tolerable in relation to the risk premiums that long-haul air transporters and foreign partners demand in rebel held areas of Congo. Furthermore, businesses based in rebel zones would not be able to find reputable insurance companies to indemnify them against risk in deals with non-sovereign insurgents, they would face scrutiny from NGO and UN investigators concerned about the connection between commerce with rebels and conflict, and would find greater difficulty in raising capital. Thus shifting trade to Uganda captures prerogatives of sovereignty as an asset for managing commercial risk. Meanwhile, creditors present Uganda's export performance as evidence that policies stressing poverty reduction through economic growth via increased trade and investment really work in very poor countries. Uganda's status as an early client of the Heavily Indebted Poor Country Initiative (HIPC), a joint programme of the World Bank, IMF and Paris Club bilateral creditor countries to reduce unsustainable levels of debt service for very poor countries is integral to creditors' tacit acceptance of war-related commerce. This initiative is unusual for writing off principal owed by debtors, then requires governments to use savings to pay for social services and strengthen state bureaucracies. Private sector war-related commerce also helps Ugandan officials addresses creditor concerns about the diversion of state resources away from debt servicing to war fighting. IMF officials in 1999 set 1.9 percent of Uganda's GDP as an upper tolerable limit for military spending before loans were delayed or halted. Creditors worried that military spending would undermine efforts to balance the country's budget. The IMF resident representative in Uganda, Zia Ebrahim Zadeh even complained that 'although the Defense budget was supposed to be 1.9 percent of the GDP, the IMF team had found that the target had been surpassed to well over 2.2 percent in the first six months' (Monitor, 13 March, 1999: 2; see also Monitor, 10 March, 1999: 1-2) in defiance of a key creditor condition. On the other hand, other cases show that not defying creditor's terms can damage the interests of regime and creditors. In Sierra Leone IMF officials in 1996 pressured the government to end its contract with a South African mercenary force that was protecting it, due in part to the budgetary impact of the monthly $1.8 million fee for its services, and, according to a former US ambassador, to IMF suspicions that IMF funds deposited in the government's bank accounts were used to pay the firm (Hirsch, 2001: 40). Meanwhile, creditors promised that Sierra Leone would receive debt relief (West Africa, 29 July, 1996: 1196). Three months later, rebels seized the unprotected capital, forced an elected president into exile, and ended discussions with creditors over addressing the country's considerable arrears on debt repayment. Diplomatic moves in 426

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the UN and in foreign countries to isolate these rebels, notorious for massive human rights violations, resulted in an embargo that removed the country's debt issue from the hands of IMF and World Bank officials, and left them without globally recognized interlocutors in Sierra Leone with whom they could organize an orderly way of managing the country's building arrears. Anecdotal evidence suggests that creditors learned from Sierra Leone's experience that ignoring a regime's security threats poses the risk of destroying interlocutors who are willing and capable of meeting a state's international obligations and creating disorder in its stead (Interview, Kampala, 13 April, 2000). At the very least, conflicts involving insolvent countries such as Congo, Sudan and Somalia, and the potential for conflict in places like Nigeria, threaten claims of creditors that debts ultimately are collectable and that treatment of debtors must be uniform. Greater creditor concern that debtor governments retain enough control to at least acknowledge debts and make token attempts to pay arrears gives regimes in debtor countries leverage to fake or conceal sources of economic performance. Whether the mutually accepted ruse extends to faking economic data is unclear, though data in the table below show that creditors tolerate varying reports of fiscal and policy performance. These anxieties may give debtors enough leverage that they do not have to fake performance. In 1999 the Ugandan government acknowledged that defense expenditures reached 2.7 percent (Government of Uganda, 1999: 93) and 2.2 percent in 2000 (Republic of Uganda, 2000: 70). Security spending exceeded the IMF-imposed limit, especially if one includes informal commercial activity via air cargo companies, military service firms and private arms imports related to the war. Regardless, creditor officials in 2001 cited security spending figures since 1998/99 as /no more than two percent of the forecast GDP' (World Bank, 2001c: 4). Spending figures may have been even higher if one includes aspects of the war effort related to commercial activities and off-budget financing. Breaching the 1.9 percent lead to a brief delay of disbursement of an IMF loan and US and British aid programs were reduced, though without wholesale reevaluation of relations with Uganda. Nonetheless, the creditor- Uganda relationship resembles what Graham Allison called the 'Trollope Ploy' to explain a case of mutually convenient misinterpretation in international relations (Allison, 1971: 227). This term refers to recurring scenes in the novels of the Victorian writer Anthony Trollope in which a marriage-hungry maiden takes imprudent gestures such as a squeeze of the hand as a proposal of matrimony, regardless of actual intent, in hopes that the object of her desire will play along. Uganda's militarized commerce also helps assuage creditor concerns about performance of Uganda as a debtor country, particularly as a participant in HIPC. As noted above, HIPC is a part of comprehensive 427

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multilateral and bilateral debt relief. Uganda, one of the first HIPC clients, was able to reduce its debt service to the IMF in 1997. Originally scheduled for $175 million in 1998-99, payments fell to $132 million after a negotiated $650 million decline in Uganda's overall $3.5 billion foreign debt. This decline, combined with growing exports, lowered Uganda's debt service to export ratio from 23 percent in 1997-8 to 16 percent in 1998-9 (Africa Economic Digest, 19 April, 1999: 5-6). Negotiations in February 2000 scheduled Uganda for an overall 40 percent reduction in multilateral debt, with an estimated total debt service relief of $1.95 billion (World Bank, 2000: 10). Despite the UPDF intervention in Congo, World Bank and IMF officials rate Uganda among the top HIPC clients, a situation that increased exports helped create. Even after the April 2001 UN report that criticized Uganda's army for alleged commercial activities, donors pledged $900 million in 2001-02 for development assistance. Uganda also was awarded in 2001 a $150 million 'poverty reduction support credit' beyond initial HIPC provisions (World Bank, 2001b). Meanwhile, 1998 gold exports - presumably some from Congo accounted for 9 percent of all exports by value. The climb in the value of gold exports from negligible amounts prior to 1997 helped to redress a 1996 trade deficit of about $600 million (Staff Country Report [IMF], 1998: 74). According to Ugandan official figures, gold exports for 1994 were $224,000, but rose to over $80 million in 1998. The official tally of gold exports fell to almost nil in 1999 (Republic of Uganda 2000: A36) while the UN reported that 1999 and 2000 exports continued at 1998 levels (UN, 2001b, Table 1). Subsequent Ugandan Ministry of Energy and Mineral Development reports showed 1999 gold export volumes rising to over 11 tonnes in 1999 from five tonnes in 1998, and falling slightly to 10.8 tonnes in 2000 (cited in Ankomah, 2001: 32). This steep increase began in 1996 (Government of Uganda, 1999: 75), the year the UPDF began its intensive involvement in Congo. Coffee exports from Congo are harder to tally, though by 1998 Uganda reportedly exported a considerable amount of Congolese coffee to Indian Ocean ports (New Vision, 7 Dec, 1999: 15). Meanwhile, HIPC has provided Uganda with outside loans and debt relief sufficient to finance as much as half of its official budget and 80 percent of its development expenditures since the mid-1990s. External assistance has been critical in underwriting increasing state provision of social services (Table 1). External budget support for social services also helps the president tolerate a patronage-based political system that would otherwise risk wrecking the country's economy and alienating less favoured citizens. These patronage-oriented commercial networks incorporate external and domestic markets in ways that blur distinctions between formal and 428

RENO: UGANDA'S POLITICS OF WAR AND DEBT RELIEF Table 1 Services as a percentageof public expenditures Health Education Defence Per capita economic growth 1990-4 2.2 6.4 2.5 2.2 1995-7 3.7 10.71 8.3 3.7

E. A. and Source: Calamitsis, Basuand D. Ghura(1999)'Adjustment Growthin Sub-Saharan Africa',WP/99/51, Washington,DC: IMF,pp. 31, 32.

informal markets, since profit from warfare is clandestine in the sense that creditors and donors publicly condemn it, but formal in the sense that its proceeds can appear in official statistics as evidence of economic development and deregulation that these same outsiders use to legitimate their decisions. The statistics themselves reveal flexibilities in creditor-debtor relations. The figure for 1995/97 education spending, 10.7 percent in Table 1, is listed at 13.05 percent for the same period in another IMF document (McDonald et al.: 26). The Ugandan Government reported spending closer to a quarter of its budget on education in 1997/98 in a document prepared for the World Bank (Republic of Uganda, 2001: 11, 53). Variations and uncertainties in reported data occur alongside a willingness of all actors to maintain very flexible public stances toward potentially troublesome aspects of their relationships. In this regard, Ugandan officials and Uganda's foreign supporters collaborate in a mutual violation of norms of creditor-debtor relations. This does not signal that norms always take a back seat to case-by-case calculations of interests. Instead, creditors bend in this case to preserve the principle that all poor countries must take responsibility for all their debts, that HIPC will help them accomplish debt reduction, and that neo-liberal economic policies work. Meanwhile, Museveni engages multilateral creditors to get loans and debt relief to invest in state institutions and infrastructure. This may actually bolster state institutions, much as high earnings from primary commodity exports and state-to-state aid in the 1960s enabled some regimes to maintain fairly effective state bureaucracies alongside patronage. Evidence of technocratic institutional concerns also appear in the instance noted above when Ugandan officials complained that smuggling associated with military activities in Congo deprived the treasury of income. State institutions are more capable, especially compared to the regimes of Idi Amin (1971-9) and Milton Obote (1980-5), but they do not become so through an internal strategy of centralizing violence and using that control to increase resources in state hands. In fact, UPDF involvement in the Congo war does the opposite by institutionalizing the private interests of officers within the military. And when a ruler is forced to choose
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between either gutting state bureaucracies, or telling powerful strongmen that they will no longer receive special favours because the money is needed for social services, strongmen usually win out. This is true at least until an autonomous commercial class can assert an interest in economic and bureaucratic efficiency. Unfortunately for Uganda, many business operators appear to owe their commercial success to positions in a patronage network. The internal political consequences of tolerating personal profit during war and using state resources for patronage are masked by the mutual dependence of the Ugandan regime's relations with its creditors, and anxieties of both to avoid disorder. Museveni's regime reaps popular legitimacy from providing order and creditor-funded services, both bed-rock issues in Museveni's successful campaign in the 2001 presidential election. Creditors in turn claim Uganda as a seemingly successful HIPC client that can be used to set a higher performance standard for other countries included in this programme. 'If Uganda can do it, no other government has an excuse', said an official in reference to Uganda's achievement of fiscal benchmarks prior to its HIPC approval (Interview, Kampala, 17 April, 2000). It is also possible that (at least in the shortrun) the increasing capabilities of state institutions and the availability of social services in Uganda are compatible with UPDF intervention in Congo's war, alongside Museveni's management of his relatives and other strongmen through manipulating patronage so long as creditors tolerate a facade of successful reform in Uganda. Put differently, it might be fair to say that creditor resources help make it possible for the UPDF to remain in Congo while providing political support for Museveni's regime. Mutual deception brings other risks. Intra-military conflict shows that Museveni needs to worry about officers who pursue interests and powers beyond their official positions. Factional divisions in the military appeared in the 2001 election campaign as many in the UPDF supported Col Kizza Besigye, Museveni's main challenger for the presidency. Some Besigye backers complain about 'personalization' of the military through the interference of the president's relatives and their control over commercial opportunities related to the war through such instruments as Victoria. Besigye noted that some in the military were becoming rich: 'Go to the border points of Uganda and Congo and you will see many trucks loaded with timber and coffee crossing into Uganda,' he said (Monitor, 19 Dec, 2000: 1). He noted that 'soldiers' salaries are being stolen while they contract all sorts of wild tropical diseases' (Monitor, 26 Dec, 2000: 3). These controversies resonate in the army, leading to the arrest of some junior officers, while others went into hiding (Indian Ocean Newsletter, 17 Feb, 2001: 1). These officers might agree with Besigye's message of reform. Equally likely is a sense among junior officers and 430

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soldiers that senior officers get rich in Congo and do not share these opportunities. Other indications of unauthorized use of violence appear in allegations and reports that soldiers engage in banditry in Congo, partly to compensate for inadequate salaries and salaries stolen by superiors. Complaints that this behaviour continues when soldiers are transferred back to Uganda centre on UPDF units in northern Uganda that are sent to fight a local insurgency (Monitor, 21 Jan, 2000: 23). The use of military units to collect taxes within Uganda further connects violence and accumulation, even when it also increases state revenues, and raises the risks of military indiscipline (Monitor, 17 March, 2000: 11). A joint UgandanRwandan report following a 1999 clash of their two armies in Congo allegedly partly blamed the battle on a business dispute. More alarming was the June 2001 defection of about fifty army officers who vowed to launch a guerrilla war against Museveni's regime (Africa Analysis, 13 July, 2001: 6). Smooth relations with creditors are not guaranteed either. US government officials criticize Ugandan involvement in Congo's War while IMF and World Bank reports express concern about military expenses and corruption. But as noted above, IMF loan disbursements were merely delayed over this issue beginning in mid-1999. Meanwhile, Ugandan fiscal institutions have been slow to develop. Income tax collection, a good measure of individual compliance with laws and of state capacity to enforce directives, has risen from only 1.3 percent of GDP in 1995-6 to a meagre 1.9 percent in 1999-2000 (calculated from Uganda Bureau of Statistics, 2000: 124, 149, 151). Overall tax collection as a percentage of GDP in 1997-98 stood at 11.6 percent and 11.5 percent in 1999-2000 (Republic of Uganda 2000: iii), below the African average of 16.2 percent (Ghura, 1998: 6). But if foreign backers enforced rigid conditions on the Ugandan Government, Museveni's regime would be exposed to greater risk of popular rejection as social services declined and disgruntled military officers might view the president as politically vulnerable. A coup or rising social disorder would empower individuals who would probably use state office to enrich themselves. Thus Museveni's outside backers are trapped: Back away from Museveni's regime and expect disorder and a roll-back of reforms, or support him and his patronage politics and facilitate the UPDF's continued involvement in Congo. Neither is a strategy for building a state in the image of early modern Europe because both lack the crucial feature of durable centralized institutional control over coercion. Officers continue to use official positions for personal gain, and it is not clear that Museveni can control this behaviour. Bringing all soldiers and officers back to Uganda will be politically dangerous too, leaving some to contemplate how they can use electoral politics to get 431

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better access to private wealth, while others may prey upon Ugandans as among Congolese, which would undermine the Museveni regime's claim of legitimacy and the interests of its foreign backers. This mutual dependence also reflects the duration of creditor backing for Museveni and his reformist associates in Uganda since the start of creditor monitored programmes in 1987, and the subsequent dependence of Museveni on creditors to maintain local legitimacy. This mutual vulnerability raises the cost to creditors of jettisoning a long relationship over incremental violations of conditions since violent removal of Museveni would damage creditor credibility elsewhere (de Torrente, 1999). CREDITORS AND THEIR NEED FOR ORDER IN THE PERIPHERY

Multilateral creditors also appear willing to deal more selectively with other highly indebted countries in ways that give regimes more flexibility than their desperate financial situations would suggest. Rwanda also is a HIPC client that deploys several thousand soldiers in Congo to back a proxy rebel movement. The World Bank advertises that Rwanda will save $39.6 million in debt service payments under HIPC debt reductions, compared to internal revenues of about $150 million collected in 1999 (World Bank, 2001a, Table 3). This external support occurs despite UN claims that Rwanda's military uses income from exports of Congolese diamonds, gold and niobium (a mineral used in cell phones) to finance its intervention in Congo outside Rwanda's formal budgeted expenditures (UN, 2001b). Liberia faces international sanctions under UN Security Council Resolution 1343 of 7 March 2001 for trading diamonds with Sierra Leone rebels, which involved Liberian government officials at the highest levels. Liberia hosted an IMF team a year earlier, when UN investigators and foreign officials already suspected that this trade was worth over $100 million annually. The visitors praised Liberian success in bringing the country's tiny $50 million official budget in 1998 in closer balance with official revenues, and proposed that monthly payments of $50,000 toward debt arrears would be sufficient to convene a donor's conference to discuss Liberia's qualification for debt relief (IMF, 2000: 11, 25), an issue that became subordinate to subsequent international sanctions - another lesson of the costs to creditors of acknowledging violations of norms. In fact, regimes in the most volatile regions may be relatively more immune from creditors' political conditions than are more assiduous followers of creditor prescriptions in peaceful areas, since creditors need to preserve official interlocutors who will recognize the state's sovereign obligations. These regimes are usually buffered from consequences of international condemnations of their involvement in local wars, even 432

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if individual military officers and government officials profit personally from war. Their behaviour need not necessarily weaken the overall global framework of creditor-debtor norms. In fact, they can play a role in buttressing them in areas that are economically and strategically marginal to strong states. After all, Bolivian officials can hardly complain about stringent requirements to qualify for HIPC, especially since their counterparts in truly worse-off places like Uganda and Rwanda mastered these demands. Meanwhile, Chad, with its numerous insurgencies and violent changes of government, will receive $260 million in debt relief under a HIPC programme (Africa Research Bulletin, 5/6 2001: 14795-6) even though the president earlier used oil company contract signing bonuses to purchase arms in defiance of creditor conditions. After a brief dispute over arms purchases, the IMF restored relief. A week later - on election day (22 May, 2001) - the World Bank added Chad to the HIPC initiative. Again defying conditions, the president had opposition leaders arrested soon after the elections. Thus even if the weakest in the international system are not as weak as expected, their actual relationships with outsiders do not help build stronger states. Instead, they may enable rulers to weather less central control over violence out of short-term expedience, leaving the longterm goal of building a state even more distant. From the point of view of creditors this relationship may be tolerable in pursuit of the overall goal of orderly write-downs of debt and justification for certain policies. For rulers it offers one of the few tools to simultaneously manage patronage politics and provide social services to citizens while preserving their own hold on power. The true contours of this relationship between debtor and creditor are most apparent to citizens in debtor countries, however. Unsurprisingly, many Chadians accused creditors of taking the president's side in the country's political battles (Africa Confidential, 15 June 2001: 5), which is exactly what creditors do when they apply conditions selectively, whether they intend it or not. REFERENCES
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