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Cablegate: Uganda Supports East African Integration but Progress Slow

VZCZCXRO3243
RR RUEHROV
DE RUEHKM #0511/01 0820305
ZNR UUUUU ZZH
R 230305Z MAR 07
FM AMEMBASSY KAMPALA
TO RUEHC/SECSTATE WASHDC 8474
INFO RUCNIAD/IGAD COLLECTIVE
RUEHJB/AMEMBASSY BUJUMBURA 1160

UNCLAS SECTION 01 OF 02 KAMPALA 000511

SIPDIS

C O R R E C T E D C O P Y (ADDED ADDRESSEE)

DEPARTMENT PASS TO USTR FOR BILL JACKSON

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD KECF PGOV PREL UG
SUBJECT: UGANDA SUPPORTS EAST AFRICAN INTEGRATION BUT PROGRESS SLOW

REF: KAMPALA 00488

1. SUMMARY: The First Deputy Prime Minister and Minister for East
African Affairs, Mr. Eriya Kategaya, reiterated the importance of
East African integration for the creation of a large and viable
economic bloc to transform the economies of the region. Kategaya
reported the findings of the National Committee Fast Tracking the
Political Federation on March 14. The Fast Tracking committee was
set up to carry out public consultative meetings in the country to
educate the public about the integration process. Findings show
that Ugandans support the federation, but have some concerns about
how integration will affect them politically and economically. END
SUMMARY.

---------------------
Fast Tracking Process
---------------------

2. The Fast Tracking process was created in response to concerns by
member states that the pace of integration was too slow. The new
East Africa Community (EAC) was established following the signing of
a treaty on November 30, 1999. The treaty came into force on July
2002. In 2004, the heads of member states resolved to examine ways
of fast tracking the process to hasten the ultimate goal of
political federation. Consultative committees for the fast tracking
of the East Africa federation were launched in October 2006 in
Kenya, Tanzania, and Uganda. The process is expected to be
completed in July 2007. The key stages of integration include a
customs union, a common market, monetary federation and eventually a
political federation. After the consultations, the government
committees will report on their findings and formulate a plan for
the future. The EA committee also will hold a public referendum in
each member state. Elections for the federation president and
parliament are scheduled in 2013.

3. Kategaya's Ministry for East African Affairs oversaw the
process, and the committee carried out consultative meetings in
southwestern, eastern, and central Uganda. Consultations in
northern Uganda will be held soon. The exercise involved a wide
spectrum of the public including business representatives, farmers,
religious and district political leaders, political groups, the
youth, women, and persons with disabilities.

--------------------
Integration Concerns
--------------------

4. Overall most Ugandans support the idea of integration, according
to Kategaya. However, he said that consultations revealed that some
Ugandans were concerned about the draft land tenure policy which
would convert the current land policy to a freehold system from
customary uses. Those from the central area, primarily the Baganda
tribe, feared their land could be grabbed and given to investors
under a new land policy. The same region has been seeking autonomy
as a separate state within Uganda led by the Kingdom of Buganda.
The members of the Baganda tribe want the land issue addressed prior
to integration into the EAC.

5. The business community was concerned that Kenya would dominate
the common market because its industries are more developed,
although businessmen believed integration would help end smuggling
across the border and lead to uniformity in prices for goods.
Businesses also wanted to know how a common East African currency
would affect the Ugandan economy. There were mixed reactions on the
presidency with some people demanding that the presidential post
rotate among member states while others want current presidents to
be barred from running in East African Community presidential
elections. Other issues raised included the loss of sovereignty,
security concerns, especially in Karamoja region; payment of former
East African Community employees; and lack of a common language to
enhance communication across borders. Swahili is not spoken as
widely in Uganda as it is by its neighbors.

-----------------------------
Integration and Proposed TIFA
-----------------------------

6. Uganda is finalizing an internal review of the proposed Trade
Investment Framework Agreement (TIFA) with the United States and
other EAC member states. Originally, the proposed TIFA was to be
signed by the governments of the member states, but now the member
states are interested in signing the TIFA at the EAC level. The
Ugandan Minister of Trade, Tourism and Industry, Janat Mukwaya told
econoff that Uganda, Tanzania, and Kenya intend to proceed with the
proposed TIFA at the EAC level as a way to further legitimize the
EAC as the entity for addressing trade issues with member states.
Rwanda has already signed a TIFA with the United States.


KAMPALA 00000511 002 OF 002


-------
Comment
-------

7. The original East African Community collapsed in 1977 over
ideological differences, generating a great deal of mistrust among
members. Uganda, and the other landlocked member states, Rwanda and
Burundi, have a lot to gain from integration because there would be
no taxes levied on their goods at ports of entry. However, the
business community in Uganda needs to become more developed to
compete effectively in a larger and more developed market.

BROWNING

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