Madagascar rivals agree power-sharing deal

* Rajoelina remains president, with two co-presidents

* Parties working on sharing of cabinet posts

* Deal will allow donors to re-engage



By Alain Iloniaina

ADDIS ABABA, Nov 7 (Reuters) - Madagascar's political rivals struck a deal late Friday on the make-up of a unity government, paving the way for an end to a 10-month political crisis that has rocked the Indian Ocean island.

The agreement sees coup-instigator Andry Rajoelina remain president, accompanied by two new co-presidents after former leader Marc Ravalomanana refused any accord which saw his successor retain sole leadership of the oil and mineral-endowed country.

"There will be two co-presidents as well as the president. That has been decided and accepted by leaders of the four movements, and by the president of the transition too," Rajoelina told reporters shortly before midnight in Ethiopia's capital Addis Ababa.

Tiebile Drame, the U.N. special envoy to Madagascar, confirmed the agreement and said the parties were now working on dividing up ministerial portfolios.

The deal will allow both Rajoelina, who seized power with military backing in March to become Africa's youngest leader, and Ravalomanana to claim victory.

Rajoelina, 35, has struggled to win backing from the international community after regional blocs suspended Madagascar and major donors blocked aid.

Ravalomanana, who is exiled in South Africa and had become increasingly isolated from Madagascar's political arena, will now install a close ally at the highest political level.

While Rajoelina remains head of state, it was not immediately clear how executive power would be divided between the president and the twin-headed, so-called presidential council.

But a source close to the negotiations said all future decisions would have to be signed three-ways ahead of new elections to be held by late 2010.

Self-made millionaire Ravalomanana has agreed to play no direct role in the interim government under the terms of an initial power-sharing deal signed in Mozambique's capital in August.

That accord called for charges of abuse of office levelled against the business tycoon to be cancelled, making way for his possible return to the world's fourth largest island.

Analysts say a final deal will allow donors who froze non-emergency assistance worth hundreds of millions of dollars to re-engage with Madagascar.

However some diplomatic sources have said their governments will await the holding of free and fair elections before fully turning on the aid taps.

Months of political turmoil have sent economic growth spiralling into negative territory and forced some major foreign investors to review their business plans at a time of volatile commodity prices. (Writing by Richard Lough; Editing by Alison Williams)