UPDATE 1-Uganda says EU envoy apologised for criticising Museveni
* EU ambassador apologises for comment, Uganda says
* Envoy said president's inaction on graft was a "pity"
* Ugandan relations with West strained over corruption
* Donors withdrew direct budget support over alleged graft (Recasts with government saying envoy apologised)
By Elias Biryabarema
KAMPALA, June 14 (Reuters) - Uganda said on Friday that the European Union's envoy had apologised for criticising President Yoweri Museveni's handling of corruption, adding to friction with the West.
Western donors withdrew almost all direct budget support to the east African nation after allegations that $13 million had been stolen by officials in the prime minister's office.
EU ambassador Roberto Ridolfi was quoted in the privately owned Daily Monitor newspaper on Wednesday as saying it was a "pity" that Museveni's state of the nation speech failed to address graft, a crackdown on media and his own succession.
The EU delegation's office issued a statement confirming Ridolfi's remarks as carried by the newspaper but said it disagreed with the headline the paper had chosen, which read: "European Union diplomat attacks Museveni over graft".
Ridolfi said at a meeting called by junior Foreign Affairs Minister Okello Oryem that he had been quoted out of context. Oryem had told Ridolfi that his remarks were "tantamount to undue interference in the internal affairs of Uganda and is unacceptable", a government statement said.
One of Africa's longest-serving leaders, Museveni has come under increasing criticism over an alleged failure to tackle Uganda's deeply entrenched corruption and his reluctance to cede power. Many Ugandans believe he is preparing his son, Kainerugaba Muhoozi, to take over when he retires.
A private letter last month from General David Sejusa, the head of internal security and long regarded as close to Museveni, called for an investigation into allegations of a plot "to assassinate people opposed to Museveni's succession plan".
In May also, Uganda shut down the Daily Monitor and one other paper and two radio stations for 10 days for carrying reports about Museveni's succession and saying that there were plans to assassinate those opposed to his plans.
The government allowed them to reopen only after they said they had accepted a range of restrictions.
Kainerugaba, who has risen swiftly to the rank of brigadier general, commands the army's elite presidential guard that also provides security for Ugandan oil fields near the border with Democratic Republic of Congo. (Editing by Louise Ireland)