* Legislation to outlaw homosexuality
* Bill likely to pass with some modifications
* Donor influence seen on the decline
KAMPALA, Dec 2 (Reuters) - Uganda is likely to pass a bill criminalising homosexuality in the east African nation and deal a blow to rights activists, but the act will have some changes to appease donors who fund about a third of the budget.
While Uganda has been lauded for its reforms and economic growth since 1986, rights groups and some donors have criticised President Yoweri Museveni's government for increasingly cracking down on opposition, media and civil society.
Donor influence is seen waning as the country moves join the league of oil producers, and Western nations -- which have largely criticised the anti-gay bill -- may be unwilling to fight the act ahead of a 2011 poll.
"Many donors think with oil coming, the window of opportunity to support change is being closed very quickly," said Daniel Kalinaki, managing editor of the independent Daily Monitor newspaper. "The bigger picture is Museveni trying to whittle down donor influence."
The draft Anti-Homosexuality Bill is part of a growing campaign against homosexuals in Uganda, rights groups say. Critics say the aim is to divert attention from corruption and other political issues ahead of the 2011 national vote.
But the bill's author, lawmaker David Bahati, says the legislation is about promoting family values. "Homosexuality is not part of the human rights we believe in," he said.
Activists and political observers expect the private members' bill, which proscribes the death penalty for "serial offenders" and is still in the committee stage, to pass with little opposition and some minor changes.
Likely changes may include modifying the death penalty to life imprisonment, altering clauses nullifying international treaties, conventions and protocols that contradict the act, and removing a section about extradition.
"It's catastrophic," said Frank Mugisha, chairman of Sexual Minorities Uganda (SMUG), a local activist group.
"People are being arrested, intimidated already. What's going to happen if it's passed?"
Bahati, of the ruling National Resistance Movement party, said diplomatic pressure would not affect the legislation.
"We cannot exchange our dignity for money," he said.
Rights groups say gays and lesbians already face illegal detention and abuse under Uganda's current laws, a situation that is likely to worsen if the bill is passed.
"Certain provisions in this bill are illegal. They are also immoral," said Kate Sheill, Amnesty International's expert on sexual rights, in a statement with 16 other rights groups.
"They criminalise a sector of society for being who they are, when what the government should be doing instead is protecting them from discrimination and abuse."
Museveni has been quoted in that local media as saying that homosexuality is a Western import, joining some Ugandan and continental religious leaders who believe it is un-African.
Activists see the legislation as another sign of the growing impact of U.S. evangelicals and anti-gay campaigners in Uganda. But Bahati denied any foreign influence contributed to the bill.
The act will criminalise anyone "who acts as an accomplice or attempts to promote or in any way abets homosexuality", and a person in authority who "aids, abets, councils or procures another to engage in acts of homosexuality".
Activists say they will contest the bill in court if passed.
"We're not going to stop. We're going to challenge it in the constitutional court," Mugisha of SMUG said. "The bill is not just about homosexuals, it can touch anyone." (Editing by Daniel Wallis and Alison Williams) ((Email: firstname.lastname@example.org; tel: +254 20 222 4717)) (For more Reuters Africa coverage and to have your say on the top issues, visit:
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