Zimbabwe talks hit stalemate, EU to widen sanctions

HARARE (Reuters) - Talks to resolve Zimbabwe's political crisis have stalled after opposition leader Morgan Tsvangirai refused to sign a framework for negotiations, his party said on Thursday.

Both Tsvangirai's Movement for Democratic Change and the ruling ZANU-PF party of President Robert Mugabe are under strong African and world pressure to negotiate after the widely condemned re-election of Mugabe last month.

While the talks foundered, diplomats in Brussels said European Union members would agree on Tuesday to widen sanctions on Zimbabwe, including more travel bans and asset freezes on Mugabe's inner circle and measures against firms linked to him.

The MDC and ZANU-PF began preliminary talks under South African mediation last week.

MDC spokesman Nqobizita Mlilo said Tsvangirai had refused to sign an initial memorandum of understanding. "We won't have people putting it on our heads that we have to sign an agreement when our demands have not been met," he said.

The MDC has set several conditions for talks, including the end of government-backed violence it says has killed 120 of its supporters and the acceptance of Tsvangirai's victory in the first round of the presidential vote on March 29.

Tsvangirai, who fell short of an absolute majority, pulled out of the run-off citing violence against his party.

Mlilo said the MDC now awaited the result of a meeting between South African President Thabo Mbeki and the African Union's top permanent official, Jean Ping, on Friday.

"We want to see the outcome of the meeting between Mr. Ping and President Mbeki tomorrow and then we will take it from there," Mlilo said.

RUINED ECONOMY

Mbeki was appointed by regional grouping SADC last year to mediate in Zimbabwe's political and economic crisis, which has ruined a once prosperous economy and flooded neighboring nations with millions of refugees.

Critics say Mbeki's discreet diplomatic approach favors Mugabe and has been ineffective. The MDC wants an AU envoy appointed.

The tougher EU sanctions will for the first time include freezing the assets and banning the activities of companies with links to Mugabe's leadership, an EU diplomat said.

The EU has refused to recognize Mugabe's re-election and has called for a new vote as soon as possible after a short transition from his rule.

Existing EU sanctions include an arms embargo, visa bans and the freezing of the assets of more than 100 officials, including Mugabe.

Mugabe, 84, and in power since independence from Britain in 1980, has blamed the opposition for the bloodshed.

The AU has urged both sides to negotiate a power-sharing deal that would pave the way for a unity government, seen by many African leaders as the only way to avert further violence and total economic collapse.

Zimbabwe has the world's highest inflation rate, officially 2.2 million percent but said by analysts to be much higher.

Unemployment is around 80 percent.

A group of world statesmen, including former U.N. Secretary General Kofi Annan and ex-U.S. President Jimmy Carter, on Thursday called for robust and speedy mediation of the crisis and for Mugabe and Tsvangirai to negotiate as equals.

The group, known as the Elders, also said Zimbabwe's elected parliament should be convened. Tsvangirai's MDC won control of the parliament in the March 29 election.

Tsvangirai has come under African pressure to enter full-blown negotiations with Mugabe, who has branded the MDC puppets of the West and vowed never to let them take power.

The talks face a huge obstacle in the insistence of both sides that they should lead a unity government.

U.S. President George W. Bush said on Wednesday he was examining more American sanctions after Russia and China blocked a United Nations sanctions resolution.

(Additional reporting by Paul Simao in Johannesburg; Writing by Marius Bosch; Editing by Barry Moody and Janet Lawrence)