Zimbabwe's opposition leader Morgan Tsvangirai was sworn in as Prime Minister yesterday by old enemy President Robert Mugabe and vowed to salvage the ruined economy.

Their power-sharing deal has raised hopes among Zimbabweans of an end to widespread hardship, but wrangling since they signed their agreement in September has stirred doubts over whether they can work together to bring in aid and investment.

Mr Tsvangirai, 56, was sworn in by Mr Mugabe, 84, who has ruled with his Zanu-PF party since independence from Britain in 1980. Mr Tsvangirai gave a little smile as he finished taking the oath in front of Mr Mugabe, who displayed his usual confidence.

"I want to assure you that this is the only workable arrangement and I can assure you that I and my party will give it our utmost," said Mr Tsvangirai, who cut his political teeth in the labour movement as a mine foreman.

Mr Mugabe said the parties should build on the deal "by turning our swords into ploughshares".

Mr Tsvangirai won a first round presidential poll against Mr Mugabe last year but boycotted a subsequent run-off over violence. He said rescuing the economy would be a top priority.

"We must get the country working again," said Mr Tsvangirai in his inauguration address.

He called on the world to help Zimbabwe recover. It is suffering unemployment above 90 per cent, prices double every day, half the 12 million population need food aid and a cholera epidemic has killed nearly 3,500 people.

But foreign investors and Western donors have made it clear money will come only when a new democratic government is formed and bold economic reforms are taken - such as reversing nationalisation policies.

"Mr Tsvangirai and his team have a formidable challenge in bringing legitimacy and reform to Zimbabwe's government, in improving the economy and in delivering basic services," British Foreign Secretary David Miliband said in a statement.

Washington was also cautious. The State Department said it wanted evidence of "real power-sharing" and "good governance" before providing development aid or easing sanctions.

To cheers from his supporters, Mr Tsvangirai said civil servants would be paid in foreign currency from this month instead of in the increasingly worthless local currency. He did not say where the money would come from.

"The body language from Tsvangirai and Mugabe at the ceremony points to uneasy times ahead, but I hope it all works out and the decline of the country is halted," said Harare office worker Alice Mabhena.

Power-sharing is unlikely to be easy. Implementation of the coalition deal only came after intense pressure from regional countries, fearing a total meltdown in once-prosperous Zimbabwe.

The pact left Mr Tsvangirai with the ministries most responsible for addressing 10 years of economic decline, including the finance ministry, and Zimbabweans and donors will be seeking decisive action.

"This is an imperfect settlement, and the balance of power favours Mugabe and Zanu-PF. Mr Tsvangirai will probably have very little room to manoeuvre, but over time he will become as liable for the failures of the Zanu-PF government," said Aubrey Matshiqi of South Africa's Centre for Policy Studies.

"Another way of looking at it is that from an imperfect settlement may arise a lasting solution. That cannot be precluded."

Mr Tsvangirai, a former union leader, gained respect at home and abroad for his fight against graft and rights abuses despite spending time in Mr Mugabe's jails. But his leadership skills in government are untested and analysts believe Mugabe, a master political operator, may try to undermine him.

Many Zimbabweans remain sceptical of success.

"You can't talk about a unity government today and see it work tomorrow," said Peter Dzingayi, among millions of Zimbabweans who have fled abroad in search of jobs.

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