After year at helm, Ugandan ruler faces war, economic woes. Quelling rebel activity in the north seen as key to rebuilding economy

For the first time in five years, the people in Uganda's capital city of Kampala are not afraid to go out at night. But in Gulu, capital of the Northern Province, 170 miles to the north, war still rages between President Yoweri Museveni's Army and troops loyal to the previous government.

Tribal fighting, which has plagued Uganda for 15 years, remains one of President Museveni's major challenges a year after taking power. At this stage, Museveni seems dedicated to achieving a military solution to the fighting.

Museveni's other major challenge is rebuilding the economy. While some African affairs analysts are optimistic about the chances for economic improvements, much will depend on quelling the fighting in the north, these analysts say.

Uganda is still a nation with deep tribal divisions. Northern Acholi tribesmen are afraid of the government troops. Although Museveni insists his Army represents all of Uganda's major ethnic groups, its troops are believed to be dominated by southern Baganda tribe members. Some observers say that, in northern Uganda, the troops have behaved as an army of occupation instead of one of liberation. Although the Army has a reputation of being well disciplined, reports of Army atrocities are up.

Last August, battles between forces of the former government and the Army broke out. Since December, there have been at least three major clashes - the fiercest on Jan. 18, when, according to reports, more than 6,000 soldiers fought for six hours.

A Roman Catholic priest from northern Uganda recently told reporters in Nairobi that government soldiers have killed civilians, tortured schoolboys, and burned farms and villages. Reporters from several organizations who have visited that region said they heard similar accounts.

But in Kampala, Museveni and the Army appear to have restored people's faith in the principal institution of government - the Army. In most cities, the Army remains the authority.

While the new government has focused much effort on quelling rebel activity in the north, Uganda's economy needs immediate attention, economic analysts say.

``The economy is in extreme difficulty,'' says a source in Uganda close to the World Bank. ``Inflation is out of control [more than 200 percent annually]. Time is of the essence. They have to do something, and they recognize this.''

For the first seven months, a tussle between key factions of Museveni's fragile coalition government over economic policy delayed the budget process. Foreign governments and lenders were ready to help Uganda rebuild. But Uganda rejected the condition that donors be informed of all spending.

Although Museveni professes a belief in a ``mixed economy'' with a strong agricultural sector, when the budget was finally announced, it appeared he was headed down a different path. In its most dramatic move, the government revalued Uganda's shilling up from 5,000 shillings to the dollar to 1,400.

This cut the value of aid money by almost two-thirds overnight. Imports became prohibitively expensive. As a reaction to resulting shortages of gasoline, salt, and sugar, the government fixed the prices of 21 items. Donors, including the World Bank and the International Monetary Fund, were dismayed. Key conditions of loan packages from these organizations are currency devaluation and removal of price subsidies.

But, says an economist in Uganda, ``Uganda has advantages over almost every country on the continent.'' Unlike many African nations, Uganda is not dependent on a single export commodity. Agriculture, forestry, and fishing contribute about three-fourths of Uganda's gross domestic product. Except during years of extreme drought, Uganda has fed itself.

Still, the roads and railways are broken and rusting. There are not enough trucks to move essential goods. The new rulers are still learning how to govern.

But some say there is room for economic optimism. Edmond Jaycox, vice-president of the World Bank responsible for the countries in southern, eastern, and central Africa, recently held talks with Museveni and other Ugandan officials. One diplomat close to the negotiations spoke of ``a willingness on the part of the government to get things turned around.'' According to one source, price subsidies on sugar unofficially have been removed.