HARARE (Reuters) - President Robert Mugabe and opposition leader Morgan Tsvangirai agreed to share power on Thursday in a deal to end Zimbabwe's political crisis, both sides said.
South African President Thabo Mbeki, who has mediated the talks, said Mugabe's ZANU-PF and Tsvangirai's MDC would announce a national unity government on Monday, raising hopes for easing a devastating economic crisis that has strained the region.
"I am absolutely certain that the leadership of Zimbabwe is committed to implementing these agreements, Mbeki said. "This is an outcome that comes out of decisions arrived at by the leadership of Zimbabwe," Mbeki said.
The agreement follows two months of negotiations between Mugabe, 84, who has ruled with an iron hand since independence from Britain in 1980, and former union leader Tsvangirai, 56, his fiercest opponent for the past decade.
They had been deadlocked over how to share power after Mugabe's unopposed re-election in a June ballot that was boycotted by Tsvangirai's Movement for Democratic Change (MDC) because of violence and condemned around the world.
"In the end, out of all of that process, has come an agreement that is a unanimous agreement, arrived at without any reservation by all the negotiating parties," said Mbeki, who may now be credited with a diplomatic coup.
The crisis has had a regional impact and South Africa's rand currency recouped earlier losses, which had taken it to five-year lows against the dollar, after news of the deal.
Donor countries and foreign investors, whose financing is vital to Zimbabwe's recovery, are still likely to take a cautious view of the deal.
Western powers hope executive power will rest in Tsvangirai's hands and want to see how the unity government will actually operate before making a commitment, analysts say.
Control of security forces is one of the main concerns, along with how the new government will go about tackling the economic catastrophe that has led to 11 million percent inflation and shortages of food, fuel and basic goods.
"I don't think we are out of the woods yet," said Martin Rupiyah, Director of Africa Research at Cranfield University.
"There are a number of pieces that still have to fall into place. One is the role of the military. That still has to be addressed directly.
"Also in the recent weeks or days there has been an upsurge in violence. The infrastructure for state-sponsored violence is still in place. I still have my doubts as to how this deal will impact the structures on the ground."
Tsvangirai won an initial election in March but failed to secure an outright victory. He boycotted the run-off because of attacks on his supporters.
Zimbabweans hope a deal can allow the revival of an economy in meltdown that has driven millions of people to flee to neighboring countries in search of work. That has strained even South Africa, the continent's biggest economy.
"In terms of investment, the very short term will not have much of an impact on Zimbabwe right now," said Alvise Marino, Emerging Markets Economist at Ideaglobal.
"In terms of immediate market reaction we'll see it I think in South Africa on the rand most probably."
Mugabe's critics blame him for Zimbabwe's economic collapse, saying policies such as seizing white-owned farms to give to landless blacks have been ruinous. He blames Western sanctions designed to push him from office.
Mbeki said a formal signing ceremony of the power-sharing deal, to be attended by regional leaders, was expected in Harare on Monday. A breakaway opposition faction has also been part of negotiations.
"It's (the deal) made in Zimbabwe, it's made by Zimbabweans, the rest of the world needs to respect that the people of Zimbabwe have taken a decision about their own country," Mbeki said.
Mbeki, his power waning at home as he prepares to leave office next year, had faced criticism for being too soft on Mugabe.