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Uganda's Politics of War and Debt ReliefAuthor(s): William RenoSource: Review of International Political Economy, Vol. 9, No. 3 (Aug., 2002), pp. 415-435Published by: Taylor & Francis, Ltd.Stable URL: http://www.jstor.org/stable/4177429 .

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RJoutiedgeReviewof International oliticalEconomy :3August2002:415-435 Taylor&FrancisGroup

Uganda's politics of war and debt relief

William Reno

North Western University, USA

ABSTRACT

The return of interstatewar in Africaafter the end of the cold war andglobal awareness of predatory economic motivations for war raises thequestion of whether Africanstates are reviving early modern Europeanmethods of building states.Thisstudy of Uganda'sintervention n Congoreveals that this is not so. Uganda's peripheral position in the worldeconomy, coupled with its relationswith creditors,gives its leaders unex-pected capabilities oplunderaneighbouring ountry'sresources.Creditorsremainsurprisinglywilling to tolerate hisbehaviour,whileprovidingdebtrelief. Uganda's leaders exploit creditoranxietiesabout growing disorderamong highly indebted countries and fears that chaos will undermine

creditor fforts o manageuncollectabledebt.Nonetheless,warfare,plunderand manipulationof creditor nterestsdoes not result in strongerinstitu-tions. Thepredatorybehaviourof the Ugandan militaryresemblesthat oftheirstate-buildingcounterparts.Butcontemporaryplunderersform theirown ties to the world economy. Uganda's leader faces greaterobstaclesto consolidating control over violent commerce,and private interests ofplunderers actually weakens existingcentralpoliticalcontrol as Uganda'sleaders and its creditorsbecome even more tied to new loans to maintainshort-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 theirlimitations 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 inEurope ... I was also fascinated by the French Revolution, andbourgeois opposition to taxes imposed by the feudal order because

Reviewof International oliticalEconomyISSN0969-2290print/ISSN 1466-4526online C 2002 Taylor & FrancisLtd

http: /www.tandf.co.ukDOI: 10.1080/09692290210150671



REVIEW OF INTERNATIONAL POLITICAL ECONOMY

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 inter-

vened 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 makersand state makers as coercive and self-seeking entrepreneurs' (Tilly,

1985: 169).

Tilly provides a caveat that contemporary states do not recapitulateEuropean 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 sepa-

rate national existences (1992). Yet the interventions of Uganda and other

states in the conflict in Congo shows that at least some post-colonialAfrican 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 interven-tion signal a turn to conditions that Tilly described of early modern

European state building or the nineteenth-century European images

evokedin

Museveni's words above? If such a change has occurred itwould 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 economyof war in Congo marks a revival of state building then it also revives

competitive international relations where internally weak, patronage-based 'quasi-state' regimes (Jackson, 1990) face geo-political pressuresand 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 DefenseForce (UPDF), has shown considerable capacity to control territoryand accumulate resources. Its occupation since 1996 of part of Congolarger than Uganda itself and involving 10,000 soldiers in 2001 despiteannounced withdrawals, (UN, 2001c; 5) should stretch - and thereby

416



RENO: UGANDA'S POLITICS OF WAR AND DEBT RELIEF

increase - the capabilities of Uganda's state administration. (As of mid-2001 Ugandan forces had withdrawn from western locations, butUganda'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 withthose of several other states, especially neighbouring Rwanda, lootresources and conduct commerce in Congo (UN, 2001b). Could it bethat these economic predations, what some regard as a 'criminaliza-tion' 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 buildingas a form of organized crime, with kings as godfathers selling protec-tion to cooperative gangs and to merchants, meant to apply to earlymodern European conditions, reinforces the relevance of consideringwhether the proliferation of violence and organized looting bears somesimilarity to patterns that marked the emergence of states in Europe(Tilly, 1985: 169-91).

THE DIFFICULTY OF STATE BUILDINGIN THE PERIPHERY

I argue that the appearance of interstate conflict does not signal a deci-sive shift within Uganda toward centralizing and strengthening stateauthority. In fact, the UPDF's conduct of war in Congo undermines thecoherence of the UPDF and thus of the Ugandan state as a whole. It isnotable, however, that international actors and global norms dedicatedto preserving African borders play a surprisingly limited role in hinder-ing Museveni's ability to use war to strengthen his position vis-a?-visstrongmen in his own country, or discipline predatory gangs or conduct

interstate warfare. Instead, Museveni's regime finds ways to manipulateoutside actors and norms to pursue its regional designs. Uganda's officialsexploit anxieties of foreign officials and of multilateral creditors to limitpolitical disorder in poor countries and to avoid sudden write-offs ofunpayable sovereign debt. Ugandan officials and these outsiders engagein mutual deception designed to preserve a facade of Uganda's respectfor borders, payment of debts and orderly internal political development.

In fact Uganda is neither a case of state building through centralizingviolent accumulation, nor is it a weak 'quasi-state' entirely dependent

on the patronage of strong outside actors to survive. Instead Uganda'spresident (and rulers in other states that intervene in Congo's war suchas Rwanda and Angola, not included in detail in the scope of this article)use warfare to refashion their relations with a changing global politicaleconomy and protect their regimes. Their peripheral stance vis-a'-vis

global economic and strategic concerns of more powerful states andinstitutions still leave them and their state administrations very weak in

417




relative terms. But rulers in peripheral states find new opportunities to

manipulate the changing interests of global political actors and exploiteconomic niches.

This context also amplifies disorderly aspects of combining warfareand economic predation. Museveni shares with rulers in Rwanda (with20,000 troops in Congo), Zimbabwe (12,000 in Congo) and Nigeria (3,000in Sierra Leone) a tendency to lose control over military predations.Military officers and some rank-and-file soldiers become violent entre-preneurs, organizing their own connections to global commercial net-

works to take advantage of the unregulated environment of war zonesand the broader deregulatory context of economic reforms. Incumbent

rulers often recognize that predation solves short-term problems of polit-ical control by keeping soldiers occupied. But ultimately returning thesesoldiers to their home countries further entrenches these violent entre-preneurs in military organizations and aggravates domestic factionalismas other strongmen position themselves to get a share of the loot. Thiselement of warfare, a normal component of state building in other placesat other times, instead creates violent entrepreneurs within the militaryand government who will resist institutional efforts to control them, andmay defy the ruler's personal authority to get what they want.

More generally, this political economy of warfare shows that even ifwider interstate competition returns to Africa, warfare will not becomea state building tool in the context of Africa's position on the marginsof the world economy. This does not contradict views that militaryactivity will force African regimes to pay more attention to effectivelyorganizing state agencies (Ayoob, 1998; Herbst, 1996/97). Instead, itpredicts that these efforts will fail, producing more disorder and evenweaker states. Under other conditions, Museveni should have a fair

chance to build a state through conquest in a neighbouring state, espe-cially given that most of the UPDF's leadership shared the experienceof guerrilla struggle and the creation of a system of local resistance coun-cils to mobilize inhabitants in 1981-6 before taking power in Uganda.But Tilly notes that state building through war no longer works in periph-eral states today (and also failed in many instances in early modernEurope). Only now, we find that the reason among states on the peripheryof the world political economy is not due to a relative lack of externalpressure on states to organize to fend off external threats. As Africa

shows, weak states now invade one another. Instead, a large part of thecause of the failure to organize violence as a tool for state building isfound in the nature of commercial linkages of these peripheral regionsto the world economy.

418




WAR, PLUNDER AND WEAK STATESIN A GLOBAL CONTEXT

ColdWar

superpowers gave diplomatic supportand resources to

clientregimes that could barely control domestic territory, much less regulatetransactions across their borders or sustain internal administrative hier-

archies 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 guaranteesof state survival weaken internal incentives to build effective adminis-

trations describes the politics of many states. By 1985, for example, Zaire

(now called Congo) had 12,000 miles of motorable roads, down from88,000 miles at independence in 1960 (Ayoade, 1988: 106). Zaire's pres-ident Mobutu did not have to concern himself with actually controllingall 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 con-

demnation of conquest, such that even Indonesia coughed up tiny East

Timor in 1999, despite its 1975 invasion of the former Portuguese colonyand suppression of separatists. State building in the mode of conquestthat 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 insur-

gencies 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 regimescollapse altogether, outsiders refuse to accept the extinction of sover-

eignty. Somalia persists as a globally recognized state even though its

southern half lacks a central government, while the Somaliland admin-

istration 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 thosewho inherit existing sovereignty tap a wide array of existing channelsfor 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 resourcesto manage political rivals or would-be rivals by giving rulers the pre-rogative to decide who has access to the country's territory. Even if bor-ders are not controlled, global recognition of this right enables rulers toshield transactions from the eyes of outsiders. This is part of a general

419




trend in some African countries toward the personal appropriation ofstate institutions and the development of smuggling, the growth of pri-vate armies, and the development of an economy of plunder where the

state is used as a vehicle to organize such activity. This reaches an extremein Liberia, which had a 1998 official budget of about $50 million (IMF,2000: 30), while clandestine businesses reportedly thrived with officialconnivance. Investigators even accuse Taylor of using his position aspresident of a globally recognized state to shield commercial transactionswith Sierra Leone and Angolan rebels and to do business with Ukrainianand South African criminal networks for his personal profit (UN, 2000).

Since solid external recognition for existing state sovereignty offersrulers few

incentives to bargain with citizens for revenue and loyalty inexchange for state services, one sees little prospect of ending Africa'spostcolonial legacy of weak states and its global economic and diplo-matic marginality (but not irrelevance as Uganda shows below). ButUganda's intervention in Congo and Liberian influence in Sierra Leoneand Guinea (and interventions of Angola, Zimbabwe, Chad, Rwanda,Burundi, and Namibia in Congo, Angola's intervention into Congo-Brazzaville, Nigeria's into Liberia, Sierra Leone and Guinea-Bissau, andGuinea'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 Euro-

pean state formation, and 'Banditry, piracy, gangland rivalry, policingand war making all belong on the same continuum' (1985: 170), wheredoes contemporary violence and plunder in Africa fit into this relation-ship of war and state formation? Uganda's Congo War, with army officersin business as diamond and gold traders protected by private militaryservice companies, bears more than passing resemblance to alliances such

as between northern European monarchs and merchants who togetherused violent, predatory means to wrest market shares from Venice andGenoa (Rapp, 1975). Zimbabwe's president Robert Mugabe incites sup-porters to seize the property of white farmers and ignore court ordersto return it, while sending 12,000 troops to Congo to defend mine sitesthat he and his generals run with foreign partners for their personal gain.This is not terribly different from the methods of England's King HenryVIII, who urged armed followers to plunder the Catholic Church of aquarter to a third of the fixed assets of his kingdom, then encouraged

them to use their fortunes to finance violent speculative ventures ofbuccaneers who preyed upon the commerce of foreigners (Hoskins, 1970).

Other elements of historical state building experience appear in theadjunct roles that foreign firms play in organizing predation. The DutchWest India Company, for example, helped finance and provision aPortuguese campaign to retake Brazil, then attempted its own occupa-tion of sugar growing areas (Andrade Arruda, 1991: 380). Likewise, an

420




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 dynamicsof armed gangs may resemble that of states, but durable institutions willnot be built without this control.

THE UPDF IN CONGO

Congo's civil war began in earnest in 1996 in a context where privateeconomic groups for the most part already operated amidst the collapseof state institutions and many clandestine operators had important tiesto Uganda businesses and politicians stretching back to the 1960s (Perrot,1999). Congo's prewar rulers drew most of their income from exportsof 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 thecountry through clandestine channels, some of which politicians con-trolled. In the late 1980s, for example, possibly as much as four tonnesof gold left Congo through untaxed channels each year (MacGaffey, 1991:19). Much of the production of these commodities was concentrated inthe eastern parts of the country, within easy reach of Uganda.

By mid-1996, the UPDF was deeply involved in assisting fighters ofthe Alliance des Forces Democratiques pour la Liberation du Congo

(AFDL). Ugandan officials justified the UPDF's intervention as a strat-egy to drive Ugandan insurgents away from Uganda's western border(AfricaConfidential,1 Aug 1997: 4-5). This arrangement also gave UPDF

officers, opportunities to profit from local trade. Ultimately, this devel-opment gradually deprived Uganda's ruler of control over violence andposed a growing danger that military factions would fight each otherfor spoils of war. This mirrored the development of non-state clandes-tine commercial organizations. For example, AFDL head Laurent Kabilaspent many years trading in agricultural and mineral commodities with

East Africa, building up a business network that later facilitated hisconnections with foreign firms once he became Congo's president in 1997.

Opportunities for soldiers to profit personally appeared in conjunc-tion with the war itself. UPDF forces have controlled large parts ofnortheastern Congo since 1997 after they helped Kabila to power. TheUPDF extended their areas of occupation when they backed anotherrebel group in August 1998, the Rassemblement pour la Democratie

422




Congolaise, (RDC) to overthrow Kabila after he denounced his formerallies as foreign invaders, failed to impose order, and abandoned com-

mercial 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. Afterthe UPDF's falling out with Kabila, these towns, along with Kisangani,served as points to train and aid forces of another proxy, the Mouvementpour la Liberation du Congo (MLC), along with the RDC.

Ugandan officials offered credible arguments that anti-governmentUgandan rebels used Congo's territory to launch attacks on Uganda.They argued that the UPDF intervention was a last resort, givenMobutu's, then Kabila's

inabilityand

unwillingnessto

restorestate

con-trol over eastern Congo. There is a lot of merit in this justification. Congo-based Ugandan rebels of the Alliance of Democratic Forces (ADF) hadattacked Ugandan border towns and threatened the security of localcitizens. Ugandan officials complained that since no Congolese govern-ment controlled the border area it was Uganda's right to defend itselfby occupying potential rebel sanctuaries in Congo (Weiss, 2000). Ugandanofficials were genuinely concerned about ADF infiltrations. But thisclassic self-help strategy is difficult to justify in the context of global

norms that maintain the principle of sanctity of borders. As details belowshow, the violation of sovereignty more than the issue of looting irri-tated Uganda's creditors and diplomatic backers. More important, thedeployment of UPDF troops 1,000 kilometers west of Uganda's bordersuggests that other motivations came to overshadow borderland secu-rity. The behaviour of UPDF officers shows that personal economic moti-vations may have proven more attractive than organizational imperativesof 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 personaladvantage of commercial opportunities that the war offered, and com-bined his duties as presidential advisor (and briefly, head of the army)with business ventures. He reportedly maintained gold buying firms inUPDF controlled areas of Congo, an area responsible for an estimated$60 million in gold exports to Uganda in 1996 (Sebunya, 1997: 32). AColonel (later Brigadier and UPDF Chief of Staff) stationed in Congoran business ventures of his own. In early 1999 this officer joined Jean-

Pierre Bemba, the son of former Zairian President Mobutu's principalbusiness partner (and later MLC leader), to export coffee and timberfrom areas under UPDF control. A UN report accuses high officers inthe UPDF of using aircraft and military airports to organize this andother trades, including trafficking in stolen vehicles, agricultural prod-ucts and minerals (UN, 2001b, paras 31-45). This pursuit of personalwealth is ironic in light of the UPDF's deep ties to Museveni's original

423




insurgent force, the National Resistance Army (NRA) that captured

Uganda's capital in January 1986. The NRA was among the first post-colonial African insurgent movements to capture power from incumbent

rulers. Resisting factionalism, and taking great care to discipline fightersand prevent looting, the NRA captured a state that had been shatteredunder the rule of Idi Amin and Milton Obote over the previous 15 yearsand 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 Congolesepartners. Ugandan official figures record that gold exports rose from

$12.4 million in 1994-5 to $110 million in 1996-7. 'According to figuresfrom the Ministry of Natural Resources', cites an official report, 'goldproduction represented only 0.2% of gold exports during 1996/7'

(Government of Uganda, 1998: 46), and official statistics reported goldproduction in 2000 still at .04 percent of exports (AfricaResearchBulletin,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 anywherenear 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 (travel-ling 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 conces-sions to a firm named Victoria, whose key shareholder was a presidentialfamily member, initially in collaboration with Rwandan military officers

(AfricaAnalysis, 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 businessinterests owned by a retired and other senior officers, their relatives arerunning others' and blamed disagreements between UPDF units on argu-ments over business opportunities (Monitor,25 April, 2001: 16). Variousofficers reportedly maintain cell phone networks in Congo, and generatecomplaints among compatriots for their use of military transport to movegoods. The duty-free import of goods into Uganda from Congo became

severe enough that officials of the Ugandan Internal Revenue agencycomplained to the Ministry of Defense about this revenue loss (UN,2001b, para 73).

Business-military networks connected Congo's wartime commerce tocommerce in Uganda. The president's relative held a 45 percent share ina private security company that is a subsidiary of a British firm withalleged ties to mercenaries employed in Sierra Leone and Angola in the

424




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; AfricaConfidential,17 Jan, 1997: 5-7). Other business net-works cater to security concerns. Airscan, an American security firm with

contracts in Angola reportedly appeared in Uganda to train and equipUPDF soldiers (Venter, 1998: 63). This firm, however, was unlikely tohave 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 pro-gram ended in 1999 because of Kampala's activities in Congo.) But other

businesses such as air cargo firms handle trade from Congo, includingone 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 cate-

gory of 'criminalization' in that state agencies are used to generate privateprofits 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. Indi-vidual aggrandizement and business disputes are cited in mysteriousattempts on the lives of key army commanders - a development notconducive to the efficiency of the military's bureaucratic hierarchy (New

Vision, 19 April, 2000: 20). Officers, including a presidential relative, havebeen implicated in shady transactions involving UPDF purchases of over-priced used arms procured through contract firms that they own. Per-

sonal aggrandizement also appears to have helped lengthen the war.

Even the head of the Ugandan-supported MLC rebels complained: 'Oneof the reasons for the war is the control of resources, especially exclu-sive control of the diamond market' (Sunday Monitor, 18 Feb, 2001: 29).

But could theft organized by a state conceivably play a role in sup-

porting both the regime and greater state bureaucratic capacity to carryout non-military activities? In this case it does so only temporarily. Moreimportant, instead of boosting long-term state capacity directly, it playsan important political role in managing Uganda's relations with multi-lateral creditors. This trade promotes exports of 'non-traditional' [often

Congolese] products by violent entrepreneurs that help make Ugandaappear as though it is improving its position as an example of export-led growth and successful economic reform. Deregulation of rawmaterials purchasing and export, coupled with lower tariffs gives

exporters of gold, for example, incentives to use official channels. Evenif produced elsewhere, entrepreneurs benefit from bringing goods to

Uganda for export where they have access to lower cost insurance and

425




freight services. Reasonable (or avoidable) taxes are tolerable in relationto the risk premiums that long-haul air transporters and foreign part-ners demand in rebel held areas of Congo. Furthermore, businesses based

in rebel zones would not be able to find reputable insurance companiesto indemnify them against risk in deals with non-sovereign insurgents,they would face scrutiny from NGO and UN investigators concernedabout the connection between commerce with rebels and conflict, andwould find greater difficulty in raising capital. Thus shifting trade toUganda captures prerogatives of sovereignty as an asset for managingcommercial risk.

Meanwhile, creditors present Uganda's export performance as evi-dence that policies stressing

povertyreduction

through economic growthvia increased trade and investment really work in very poor countries.Uganda's status as an early client of the Heavily Indebted Poor CountryInitiative (HIPC), a joint programme of the World Bank, IMF and ParisClub bilateral creditor countries to reduce unsustainable levels of debtservice for very poor countries is integral to creditors' tacit acceptanceof war-related commerce. This initiative is unusual for writing off prin-cipal owed by debtors, then requires governments to use savings to payfor social services and strengthen state bureaucracies.

Private sector war-related commerce also helps Ugandan officialsaddresses creditor concerns about the diversion of state resources awayfrom debt servicing to war fighting. IMF officials in 1999 set 1.9 percentof Uganda's GDP as an upper tolerable limit for military spending beforeloans were delayed or halted. Creditors worried that military spendingwould undermine efforts to balance the country's budget. The IMF resi-dent 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 towell 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 creditorcondition.

On the other hand, other cases show that not defying creditor's termscan damage the interests of regime and creditors. In Sierra Leone IMFofficials in 1996 pressured the government to end its contract with aSouth African mercenary force that was protecting it, due in part to thebudgetary impact of the monthly $1.8 million fee for its services, and,

according to a former US ambassador, to IMF suspicions that IMF fundsdeposited in the government's bank accounts were used to pay the firm(Hirsch, 2001: 40). Meanwhile, creditors promised that Sierra Leonewould receive debt relief (WestAfrica, 29 July, 1996: 1196). Three monthslater, rebels seized the unprotected capital, forced an elected presidentinto exile, and ended discussions with creditors over addressing thecountry's considerable arrears on debt repayment. Diplomatic moves in

426




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 offi-

cials, and left them without globally recognized interlocutors in SierraLeone 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 con-

flict in places like Nigeria, threaten claims of creditors that debts ulti-

mately are collectable and that treatment of debtors must be uniform.Greater creditor concern that debtor governments retain enough controlto at least acknowledge debts and make token attempts to pay arrearsgives 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 nothave to fake performance. In 1999 the Ugandan government acknow-ledged 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 oneincludes 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 aspectsof the war effort related to commercial activities and off-budget financing.Breaching the 1.9 percent lead to a brief delay of disbursement of anIMF loan and US and British aid programs were reduced, though withoutwholesale reevaluation of relations with Uganda. Nonetheless, the cred-itor- Uganda relationship resembles what Graham Allison called the'Trollope Ploy' to explain a case of mutually convenient misinterpreta-tion in international relations (Allison, 1971: 227). This term refers to

recurring scenes in the novels of the Victorian writer Anthony Trollopein which a marriage-hungry maiden takes imprudent gestures such asa squeeze of the hand as a proposal of matrimony, regardless of actualintent, in hopes that the object of her desire will play along.

Uganda's militarized commerce also helps assuage creditor concernsabout performance of Uganda as a debtor country, particularly as aparticipant in HIPC. As noted above, HIPC is a part of comprehensive

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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 sched-

uled for $175 million in 1998-99, payments fell to $132 million after a

negotiated $650 million decline in Uganda's overall $3.5 billion foreigndebt. This decline, combined with growing exports, lowered Uganda's

debt service to export ratio from 23 percent in 1997-8 to 16 percentin 1998-9 (Africa EconomicDigest, 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 April2001 UN report that criticized Uganda's army for alleged commercial

activities, donors pledged $900 million in 2001-02 for development assis-

tance. Uganda also was awarded in 2001 a $150 million 'povertyreduction 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 Energyand Mineral Development reports showed 1999 gold export volumesrising 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 steepincrease 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 exporteda considerable amount of Congolese coffee to Indian Ocean ports (NewVision, 7 Dec, 1999: 15).

Meanwhile, HIPC has provided Uganda with outside loans and debtrelief 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 ofsocial services (Table 1).

External budget support for social services also helps the presidenttolerate a patronage-based political system that would otherwise riskwrecking the country's economy and alienating less favoured citizens.These patronage-oriented commercial networks incorporate externaland domestic markets in ways that blur distinctions between formal and

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Table1

Services as a percentageof public expenditures 1990-4 1995-7

Health 2.2 3.7

Education 6.4 10.71

Defence 2.5 8.3

Per capita economic growth 2.2 3.7

Source: .Calamitsis,A. BasuandD. Ghura 1999) Adjustment nd Growth nSub-SaharanAfrica',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 itsproceeds can appear in official statistics as evidence of economic devel-

opment and deregulation that these same outsiders use to legitimate their

decisions. The statistics themselves reveal flexibilities in creditor-debtorrelations. The figure for 1995/97 education spending, 10.7 percent in Table1, 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 pre-

pared for the World Bank (Republic of Uganda, 2001: 11, 53). Variationsand uncertainties in reported data occur alongside a willingness of all

actors to maintain very flexible public stances toward potentially trouble-some aspects of their relationships. In this regard, Ugandan officials and

Uganda's foreign supporters collaborate in a mutual violation of normsof creditor-debtor relations. This does not signal that norms always takea back seat to case-by-case calculations of interests. Instead, creditors bendin this case to preserve the principle that all poor countries must take

responsibility for all their debts, that HIPC will help them accomplishdebt 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 actu-ally bolster state institutions, much as high earnings from primary com-

modity exports and state-to-state aid in the 1960s enabled some regimesto maintain fairly effective state bureaucracies alongside patronage. Evi-dence of technocratic institutional concerns also appear in the instancenoted above when Ugandan officials complained that smuggling associ-

ated with military activities in Congo deprived the treasury of income.State institutions are more capable, especially compared to the regimesof Idi Amin (1971-9) and Milton Obote (1980-5), but they do not becomeso through an internal strategy of centralizing violence and using thatcontrol to increase resources in state hands. In fact, UPDF involvementin the Congo war does the opposite by institutionalizing the private inter-ests of officers within the military. And when a ruler is forced to choose

429




between either gutting state bureaucracies, or telling powerful strong-men that they will no longer receive special favours because the moneyis needed for social services, strongmen usually win out. This is true at

least until an autonomous commercial class can assert an interest in eco-nomic and bureaucratic efficiency. Unfortunately for Uganda, many busi-ness operators appear to owe their commercial success to positions in apatronage network.

The internal political consequences of tolerating personal profit dur-ing war and using state resources for patronage are masked by the mutualdependence of the Ugandan regime's relations with its creditors, andanxieties of both to avoid disorder. Museveni's regime reaps popularlegitimacy from

providing order and creditor-funded services, bothbed-rock issues in Museveni's successful campaign in the 2001 presi-dential election. Creditors in turn claim Uganda as a seemingly success-ful HIPC client that can be used to set a higher performance standardfor other countries included in this programme. 'If Uganda can do it, noother government has an excuse', said an official in reference to Uganda'sachievement of fiscal benchmarks prior to its HIPC approval (Interview,Kampala, 17 April, 2000). It is also possible that (at least in the short-run) the increasing capabilities of state institutions and the availabil-

ity of social services in Uganda are compatible with UPDF interventionin Congo's war, alongside Museveni's management of his relatives andother strongmen through manipulating patronage so long as creditorstolerate a facade of successful reform in Uganda. Put differently, it mightbe fair to say that creditor resources help make it possible for the UPDFto remain in Congo while providing political support for Museveni'sregime.

Mutual deception brings other risks. Intra-military conflict shows that

Museveni needs to worry about officers who pursue interests and pow-ers beyond their official positions. Factional divisions in the militaryappeared in the 2001 election campaign as many in the UPDF supportedCol Kizza Besigye, Museveni's main challenger for the presidency. SomeBesigye backers complain about 'personalization' of the military throughthe interference of the president's relatives and their control over com-mercial opportunities related to the war through such instruments asVictoria. 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 stolenwhile they contract all sorts of wild tropical diseases' (Monitor, 26 Dec,2000: 3). These controversies resonate in the army, leading to the arrestof some junior officers, while others went into hiding (Indian OceanNewsletter, 17 Feb, 2001: 1). These officers might agree with Besigye'smessage of reform. Equally likely is a sense among junior officers and

430




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 compen-sate for inadequate salaries and salaries stolen by superiors. Complaintsthat this behaviour continues when soldiers are transferred back to

Uganda centre on UPDF units in northern Uganda that are sent to fighta local insurgency (Monitor, 21 Jan, 2000: 23). The use of military unitsto collect taxes within Uganda further connects violence and accumula-

tion, even when it also increases state revenues, and raises the risks of

military indiscipline (Monitor, 17 March, 2000: 11). A joint Ugandan-Rwandan report following a 1999 clash of their two armies in

Congoallegedly partly blamed the battle on a business dispute. More alarmingwas 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 gov-ernment officials criticize Ugandan involvement in Congo's War whileIMF and World Bank reports express concern about military expensesand corruption. But as noted above, IMFloan disbursements were merely

delayed over this issue beginning in mid-1999. Meanwhile, Ugandan fis-cal institutions have been slow to develop. Income tax collection, a goodmeasure of individual compliance with laws and of state capacity to

enforce directives, has risen from only 1.3 percent of GDP in 1995-6to a meagre 1.9 percent in 1999-2000 (calculated from Uganda Bureau of

Statistics, 2000: 124, 149, 151). Overall tax collection as a percentageof 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 ofpopular rejection as social services declined and disgruntled militaryofficers might view the president as politically vulnerable. A coup orrising social disorder would empower individuals who would probablyuse state office to enrich themselves. Thus Museveni's outside backersare trapped: Back away from Museveni's regime and expect disorderand a roll-back of reforms, or support him and his patronage politics and

facilitate the UPDF's continued involvement in Congo. Neither is a strat-egy for building a state in the image of early modern Europe becauseboth lack the crucial feature of durable centralized institutional controlover coercion. Officers continue to use official positions for personal gain,and it is not clear that Museveni can control this behaviour. Bringing allsoldiers and officers back to Uganda will be politically dangerous too,leaving some to contemplate how they can use electoral politics to get

431




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 Museveniand his reformist associates in Uganda since the start of creditor moni-

tored 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 ORDERIN THE PERIPHERY

Multilateral creditors also appear willing to deal more selectively with

other highly indebted countries in ways that give regimes more flexibil-

ity 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 reduc-

tions, compared to internal revenues of about $150 million collected in1999 (World Bank, 2001a, Table 3). This external support occurs despiteUN claims that Rwanda's military uses income from exports of Congo-lese 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 $100million 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 towarddebt arrears would be sufficient to convene a donor's conference to

discuss Liberia's qualification for debt relief (IMF, 2000: 11, 25), an issuethat 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 assiduousfollowers of creditor prescriptions in peaceful areas, since creditors needto preserve official interlocutors who will recognize the state's sovereignobligations. These regimes are usually buffered from consequencesof international condemnations of their involvement in local wars, even

432




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 marginalto strong states. After all, Bolivian officials can hardly complain about

stringent requirements to qualify for HIPC, especially since their coun-

terparts 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 ResearchBulletin, 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 long-

term goal of building a state even more distant. From the point of viewof 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 patron-

age 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.

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