Political issues in Uganda have a direct effect on the willingness and ability of international donors to provide aid. If the Ugandan government under President Museveni doesn’t take steps to address these issues, the country may find itself in a difficult economic situation.

Relations between Uganda and its international aid partners are complicated. Uganda is supported by the US administration and the EU, on the basis of its development track record and of President Museveni’s role in reconstituting the country and promoting regional integration. It is also supported as a key political player in the region.

However, the good relations between Uganda and the international community, with particular regard to the European Union, were overshadowed in 2014 by the controversy over the Anti-Homosexuality Act (AHA), and an intense political dialogue at all levels, including with the president.

In February 2014, Uganda adopted the Anti-Homosexuality Act, which broadened the definition of homosexuality and introduced new offenses, such as “promotion” of homosexuality. The Act led to an international outcry; the EU condemned the Act, suspended budget support, and initiated an intensified dialogue under the Cotonou Agreement. As a result of this dialogue, the Government of Uganda issued a declaration that it would not implement the Act in its full force.

In August, the Constitutional Court annulled the Act on procedural grounds, as Parliament had been inquorate when the Act had been adopted. Following this judgment, the EU resumed payments of budget support and signed the National Indicative Programme (NIP) under the 11th European Development Fund (EDF) in December 2014. For the moment, the heat seems to have gone out of this issue, but given widespread anti-homosexual attitudes among the population at large, it cannot be ruled out that candidates in the upcoming election will try to whip up discontent on the issue again.

Secondly, corruption also has the potential to disrupt relations with the international community. In 2012, following substantial misappropriation of EU donors’ funds by officials in the Office of the Prime Minister, all donors associated in the Joint Budget Support Framework decided to withhold pending budget support disbursements.

Thirdly, disagreements persist regarding electoral reform. The government of Uganda promised to take into account the EU Electoral Observation Mission (EOM) recommendations made after the 2011 elections, particularly with regard to the Electoral Commission, political party and campaign financing, as well as with voter registration.

Work on voter registration appears to have proceeded well. Uganda has created a new national register for all citizens, which is being used as the basis for a new electoral register. On the other hand, long-awaited legislative proposals – the Constitutional (Amendment) Bill – which has just been adopted by the Ugandan parliament, do nothing to strengthen the independence of the Electoral Commission other than making a purely cosmetic change to its name, leaving it under the control of the President.

Consequently, the opposition has recently withdrawn from the negotiation table. This risk to domestic political stability seems to pose a significant threat to donor relations, as on the 15th June of this year, a delegation from the EU, led by the EU ambassador to Uganda, Kristian Schmidt, formally expressed disappointment with the government’s electoral reform efforts.

The narrowing of the political space, with the arrest and subsequent release of two potential candidates in the upcoming elections under the highly contested Public Order Management Act, also casts an increasingly large shadow over the fairness of the elections.

Such moves only aggravate the stance of the international community and the opposition towards the Ugandan government. The question, therefore, remains if Museveni’s determination to win the elections will lead him to implement levels of repression that provoke an international reaction. An uneven playing field for the elections is likely to persist and will foster Museveni’s chances to win, but the question is what the collateral damage for the incumbent president will be.

Possible budget support suspensions from donors might curb the plans of the Ugandan government to increase investment in infrastructure, significantly affecting economic growth. This would be an unwelcome turn of events, especially since the running of the general election will already trigger a rise in government expenditure, possibly diverting funds away from public investment. With investors already under more pressure due to the drop in global commodity prices, this might make oil companies rethink their plans to initiate operations in newly discovered oil fields in Uganda.

This could initiate a dangerous series of events with retreating investors, putting more pressure on the country’s budget and triggering more poverty-related resentment. Such events can cause the government to oppress potential unrest and possible protests in a harsh way, and consequently receive even more criticism from international donors. Therefore, it is in the Ugandan government’s direct interest to maintain positive relations with the international community, as it would receive the biggest share of negative consequences of a further constraint of relations.

It is clear that relations between Uganda and international donors are under serious pressure. However, the climate seems to be ripe enough that sensitive issues can still be discussed between donors and the government of Uganda.

Moreover, Uganda seems to have mastered the technique of accommodating donor interests just as much as needed to secure international financing, without having to concede too much leverage regarding domestic policies. Therefore, caution and prudence are of the essence, but a deterministic narrative should be avoided by all actors.