| KAMPALA, June 1
KAMPALA, June 1 Anti-government protests over
soaring prices that plunged the start of President Yoweri
Museveni's fourth term into crisis appeared to fizzle but
opposition activists were planning more to regain lost momentum.
Rights groups said at least nine people had been killed by
the security forces since the outset of the demonstrations that
began on April 11.
The government's heavy-handed response that landed
opposition leader Kizza Besigye in a Kenyan hospital drew
Fierce riots erupted across the capital, Kampala, on April
29, a day after television pictures showed Besigye, who had
become the face of the protests, being doused with pepper spray
and dragged away by police. [ID:nLDE73S0PH]
Museveni has blamed drought and global oil prices for the
leap in consumer prices, which pushed the rate of inflation
UGCPIY=ECI to 16.0 percent in May.
The veteran leader's latest crackdown on dissent will firm
his critics' conviction that Museveni's leadership is displaying
an increasingly autocratic streak.
Uganda, east Africa's third largest economy, has taken a
step closer to becoming a significant oil producer after British
oil explorer Tullow Oil (TLW.L) agreed to sell stakes in its
operations there to France's Total (TOTF.PA) and China's CNOOC
(0883.HK) for $2.9 billion. [ID:nLDE72E1GE].
Museveni surprised political analysts last month when he
appointed a political rookie finance minister and handed another
relative unknown the energy portfolio. [ID:nLDE74R07R]
PROTESTS FIZZLE OR LULL?
Huge crowds welcomed Besigye back from Kenya on May 13,
overshadowing Museveni's swearing in the same day. Security
forces teargassed his supporters and shot dead one man who got
too close to the presidential convoys leaving the inauguration.
There has been no significant unrest since then, with
Besigye confined to his house by police on a number of protest
days and deciding not to protest on others.
The one-time close ally of Museveni is now in the United
States for more treatment to his eyes.
In his absence, the protests have wilted. The latest
campaigns urging motorists to honk their car horns at 5pm each
day and to march on parliament have made little impact.
What to watch:
-- Besigye. He is key to galvanising the widespread
discontent over prices, but how much appetite does he have to
take on the security troops who have displayed unwavering
loyalty to Museveni?
-- Market reaction. To date Uganda's shilling UGX= has
appeared relatively unfazed by the unrest. However, traders warn
more violence could unsettle foreign investors and weaken the
local currency through the psychological level of 2,400 per
NEW OIL ROW, NEW CABINET
Museveni named Maria Kiwanuka, a well-known entrepreneur who
owns a radio station and has never been a minister or
legislator, finance minister, while a former head of the
state-run electricity utility, Irene Muloni, was handed
responsibility for the energy and mineral resources ministry.
Their appointments were intended to reassure investors
worried about what is perceived as an entrenched culture of
corruption in the country. Critics fear they will be walk-overs.
"Kiwanuka comes with no baggage. But she is a clean swimmer
jumping into a dirty pool because the whole financial system in
Uganda has problems - nepotism, bribery, corruption," said
political analyst Nicholas Ssengoba.
Museveni also appointed Amama Mbabazi as prime minister, a
move that caught analysts off guard because Mbabazi had been
named in leaked U.S. cables as having taken bribes from Italian
oil firm Eni (ENI.MI).
Mbabazi has denied the claims.
In Uganda's oil sector, Tullow's sale of a one third
interest in fields around Lake Albert to each of Total and CNOOC
has paved the way for a $10 billion project to develop the
Meanwhile, Heritage Oil HOIL.L started arbitration
proceedings against the Ugandan government to seek the release
of $405 million held in relation to the sale of its Ugandan
assets to Tullow.
What to watch:
- How the row between Heritage and Uganda plays out?
Analysts said a similar dispute between the government and
Tullow had risked hurting Uganda's reputation.
-- More accusations of corruption.
-- Uganda plans to open a new petroleum exploration
licensing round for blocks in its oil-rich Albertine Rift basin
in 2011. Investors will be watching out for any changes to
Somalia's al Shabaab Islamist rebels have threatened more
attacks along the lines of the twin suicide-bomb blasts in
Kampala in July last year, which killed 79 people.
The latest alert saw police warn that the militants, or
their sympathisers, might strike football fans watching last
week's Champions League final. The attacks failed to
The insurgents have vowed to target Uganda and nearby
Burundi until they withdraw their peacekeeping troops from
Somalia's capital, Mogadishu. The troops are all that stop
insurgents from toppling the weak Somali government, many
What to watch:
-- More attacks could deter foreign investment inflows, send
the shilling UGX= south, disrupt the business tempo, hurt
tourism and knock the economy.
(Editing by Richard Lough)