KAMPALA Uganda has put its neighbor and former ally Rwanda on a list of "hostile states" which are banned from financing candidates in the imminent presidential election, President Yoweri Museveni said on Sunday.

The decision was made some time ago, but only came to light on Sunday when a letter from a senior government minister to the speaker of Parliament found its way to the ********* New Vision ******** newspaper.

Museveni said the decision to list Rwanda alongside Sudan and the Democratic Republic of the Congo -- countries with which Uganda is virtually at war -- was made after clashes last year between the two countries' armies in the Congolese city of Kisangani.

"We had some misunderstandings in Kisangani which haven't been resolved -- they were contained but not resolved," Museveni told a news conference on the eve of Monday's elections.

"If there is a state with which we have got some misunderstanding, if it can come and sponsor people within our political system, then our sovereignty would be in danger."

Rwanda and Uganda were firm allies when they invaded the Congo in 1998. They each backed a different rebel group trying to oust former president Laurent Kabila, who received help from Angola, Zimbabwe and Namibia.

But the two states soon fell out over the conduct of the war and, analysts say, in a scramble to exploit the Congo's vast natural resources.

The rivalry culminated in a pitched battle for control of the northern diamond trading center of Kisangani in June last year, which left hundreds of civilians dead.

A senior official in the Rwandan Embassy in Kampala said he was "shocked" by the news his country had been listed as a hostile state, saying the Rwandan government had not been officially informed but would be demanding an explanation.

Ben Rutasinga, charge d'affaires in the embassy, also denied Rwanda was financing Museveni's opponents in the elections.

(Reuter)