Zimbabwe parliament to be sworn in next week

HARARE (Reuters) - Zimbabwe's government plans to convene parliament next week despite deadlock in talks to end a post-election political crisis that has worsened the country's economic decline and seen inflation hit 11 million percent.

The main opposition Movement for Democratic Change said it was not opposed to the opening of parliament but would reject any moves by President Robert Mugabe to appoint a cabinet before a power-sharing agreement is sealed.

"If he (Mugabe) goes further and appoints a cabinet, it will be against the letter and spirit of the MOU," party spokesman Tapiwa Mashakada said, in reference to a Memorandum of Understanding between the ruling ZANU-PF and the opposition on the negotiations.

In March elections, ZANU-PF lost its parliamentary majority for the first time since independence from Britain in 1980, but Morgan Tsvanigrai's MDC did not win an overall majority either. The balance of power rests in the hands of a breakaway opposition faction led by Arthur Mutambara.

He has moved closer to Mugabe in recent weeks and any deal between them could weaken Tsvangirai, Zimbabwe's most powerful opposition leader, and add to political uncertainty.

Negotiations began last month after Mugabe was re-elected unopposed in June, in a vote condemned around the world and boycotted by Tsvangirai because of attacks on his supporters.

STAGGERING INFLATION

The political deadlock over who will control the government has hindered efforts to ease Zimbabwe's economic crisis.

Inflation rocketed to a staggering 11 million percent in June, the highest in the world, from 2.2 million in May, and chronic food, fuel and foreign currency shortages are worsening.

But many economists believe the figure is higher still and it has little meaning for Zimbabweans, who find that a loaf of bread costs almost five times more than it did a month ago -- if it can be found for sale.

"Do they say in that figure that we can no longer afford bus fares, rent, hospital fees, and that we can't buy groceries? If the numbers don't say that, then it is meaningless," said Sarah Machakairie, 48, a Harare vegetable seller.

Zimbabweans hope for a new leadership that can find a quick way to tame inflation and ease hardships that have driven millions out of the country and strained regional economies.

"When you're going into a hyper-inflation cycle, until such a time as the authorities take appropriate steps to counter it, it seems to continue to spiral out of control," said Leon Myburgh, analyst at Citigroup in Johannesburg.

Tsvangirai's MDC challenges Mugabe's legitimacy, but under Zimbabwean law, parliament is convened and officially opened by the state president.

Still, the MDC's decision not to oppose the opening of parliament may have been a concession, given the fierce power struggle gripping Zimbabwe.

But the issue of who will run the government is a major obstacle to an agreement, and there are no guarantees that a deal will bring reconciliation and long-term stability.

MDC officials fear Mugabe is maneuvering to give Tsvangirai only a few ministries.

Southern African heads of state at a regional summit in Johannesburg over the weekend failed to push ZANU-PF and the MDC into an agreement.

(Writing by Michael Georgy; editing by Robert Hart)