Zimbabwe parties say reach power-sharing deal

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.

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.

But it was not clear how many concessions Mugabe made to Tsvangirai, an issue that will likely determine how much financial support Mugabe's Western foes will give Zimbabwe to help it recover from economic meltdown.

The deal was a coup for South African President Thabo Mbeki, who defied pressure to take a tough line with Mugabe, pursuing soft diplomacy as the regional mediator in the talks.

Mugabe's ZANU-PF and Tsvangirai's MDC would announce a national unity government on Monday, said Mbeki.

"I am absolutely certain that the leadership of Zimbabwe is committed to implementing these agreements, Mbeki said.

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.

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.

DOUBTS

Control of security forces is one of the main concerns, along with how the new government will go about tackling Zimbabwe's economic catastrophe that has led to hyper-inflation of over 11 million percent 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.

"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."

Zimbabweans in the capital Harare reacted cautiously to the deal.

A hotel waiter could hardly believe the news. He said it was a "miracle" that ZANU-PF agreed to work with Tsvangirai.

"It is ZANU-PF which always vowed that they would never work with Tsvangirai, and so it is Tsvangirai who has won," said the waiter who asked not to be named.

Tsvangirai won an initial election in March but failed to secure an outright victory.

South Africa quickly appealed the world to help Zimbabwe.

"We call on the international community to give its unequivocal support to the people of Zimbabwe as they strike out along this new road," South Africa's Foreign Ministry said.

Analysts did not expect investment to start flowing into Zimbabwe immediately.

"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.

John Makumbe, a political analyst and Mugabe critic, said the deal can only succeed if Tsvangirai runs the country.

"Tsvangirai needs meaningful executive powers and to have his hands on the critical state machinery such as the security structures in the country," he said.

(Additional reporting by Stella Mapenzauswa in Johannesburg and Matthew Tostevin in London; Writing by Michael Georgy; Editing by Marius Bosch and Dominic Evans)