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Kampala - Uganda risks falling victim to a "resource curse" when it launches commercial oil production because its government lacks the political will to fight corruption, Human Rights Watch said on Monday.
A growing abundance of mineral wealth has often led to more unstable government and falling living standards in countries that lacked the strong state institutions and rule of law to stop a small elite grabbing that wealth for themselves.
With Uganda aiming to sell its oil by 2016 at the earliest, critics of President Yoweri Museveni say he has created a culture of impunity for cronies who steal public money.
Human Rights Watch said prosecution of high-ranking Ugandan officials was rare. In several instances, it said, Museveni had expressed support for those implicated in the embezzlement of public funds.
"Uganda is likely to become yet another model example of the so-called 'resource curse' in Africa," the New York-based group said a report released on Monday.
Uganda's biggest source of aid, Britain, and all other major western donors cut off direct budget support at the end of last year after reports showed about $13 million had been stolen.
HRW said donors seeking to resume aid should "ensure that (corruption) kingpins are held responsible but also to make clear that theft and diversion of public resources will not be tolerated, irrespective of the perpetrator".
Museveni's spokesman said the president could not be blamed for corruption.
"If courts release people charged with corruption what do you want him to do? No single judge has complained that Museveni has ever called him to influence him," the spokesman, Tamale Mirundi, told Reuters by phone.
As the east African country's significance as an investment destination grows, HRW pointed to signs that some foreign governments were toning down criticism of the government for fear of missing lucrative commercial opportunities.
It cited an unnamed donor advisor who described how one ambassador had pressured his colleagues to water down an analysis of corruption in Uganda because hard criticism would harm the chances of securing an investment opportunity for the ambassador's country.
"According to one European donor official there is an "unstated nervousness" among European donors that being too outspoken in demanding conditions and anti-corruption protections could damage their own commercial interests," HRW said.
Commercial crude oil deposits were discovered in Uganda's Albertine rift basin along the border with the Democratic Republic of Congo in 2006 and the government estimates the reserves total at 3.5 billion barrels.
London-listed Tullow Oil has estimated that Uganda's government can expect to earn $50bn on behalf of its 35 million strong population from reserves already discovered over the lifetime of the fields - almost three years' worth of its $17bn gross domestic product (GDP).
