Mugabe refusal to quit is said to stall Zimbabwe transition

[HARARE] Zimbabwe President Robert Mugabe's refusal to publicly resign is stalling plans by the military to swiftly install a transitional government after seizing power on Wednesday, two people familiar with the situation said.

The military wants Mr Mugabe, who's under house arrest, to agree to step aside so it can claim its action isn't a coup and head off tension with the Southern African Development Community, which includes Zimbabwe and South Africa, the people said. The group previously intervened when the army took over in Lesotho.

Father Fidelis Mukonori, a prominent catholic priest, is mediating talks with Mr Mugabe, according to the people, who spoke on the condition of anonymity. Mr Mugabe, 93, is a catholic and went to a Jesuit school.

The new rulers, headed by armed forces commander Constantino Chiwenga, plan to try and negotiate the establishment of a transitional government with the opposition until elections can be held to restore stability, the people said. But first they want a deal with Mr Mugabe, whose 37-year rule left an economy that has halved in size since 2000, a severe cash shortage that's choking businesses and a collapse in government services. The military has declined to comment on its plans.

"The military, or the people who are now in charge, obviously they have some respect for Mugabe - he is someone who has led them for so many years," Alex Magaisa, a Zimbabwean law lecturer who helped design the southern African nation's 2013 constitution, said in a interview with Bloomberg Television in London. "I think there is still some residual sympathy for him. They wouldn't want to be seen to be mistreating him." The operation to take power had been planned for weeks but was accelerated after Mr Mugabe fired his deputy Emmerson Mnangagwa, according to the people. Mugabe's wife Grace, 52, said days later that she was prepared to succeed her husband.

Mr Mnangagwa, who fled the country, is allied with the military, while Grace heads the so-called Generation-40 faction of mainly younger politicians who didn't fight in the liberation war against the white-minority regime of Rhodesia. Mrs Grace Mugabe on occasion publicly criticized war veterans.

The military decided to intervene after the ruling party on Tuesday called Gen Chiwenga's public criticism of Mr Mnangagwa's dismissal "treasonous." Opposition leaders and political allies Angola and China were given some warning, the people said.

Mr Mnangagwa is the leading contender to head a transitional government, which may include members of the opposition. It may also include former Finance Minister Patrick Chinamasa, who was fired last month, and Joice Mujuru, who established her own party after Mr Mugabe dismissed her as vice president in 2014, according to Theophilus Acheampong, a risk analyst at IHS Markit.

Mrs Grace Mugabe's whereabouts remain unknown. South Africa's President Jacob Zuma said Mr Mugabe told him by phone on Wednesday that he was being confined to his home but was otherwise fine.

The police and secret service, where Mr Mugabe has allies, were excluded from the plans of leaders of the 35,000-member military, the people said. A number of senior ruling party officials, including the head of the police and the deputy director of the Central Intelligence Organisation, have been either arrested or are evading the military, the Harare-based Newsday newspaper said Thursday morning, citing unidentified people.

Colonel Oversin Mugwisi, a military spokesman, refused to comment on the names of those arrested.

The military is hoping to revive the economic decline that was mainly caused by a program initiated by Mr Mugabe in 2000 that saw the violent seizure of white-owned farms by subsistence farmers. That slashed exports of key crops such as tobacco and roses and led to a famine as corn production crashed.

Many ordinary people simply hope that the authorities can improve daily life in Zimbabwe, where an estimated 95 per cent of the workforce is jobless.The country doesn't even have its own currency and relies mainly on the dollar.

"I hope and pray this takeover will bring lasting solutions for us," said James Saunyama, as he collected his weekly allocation of $50 in coins from a bank in Harare. "We've endured enough so this takeover must give us better and improved lifestyles going forward." The new rulers also want to repair relations with Western countries, who used to be among the biggest investors in the country, and international lenders, the people said. They will seek investment from the more than 3 million people who left Zimbabwe because of the economic collapse including the white farmers driven off their land, the people said.

Zimbabwe was once the world's second-biggest source of top grade tobacco and the second-largest corn exporter in Africa. Investment in education in Mugabe's early years has resulted in a substantial portion of South Africa's professional class in industries ranging from banking to media coming from Zimbabwe. Remittances are now one of the country's biggest sources of foreign exchange.

Mark Bohlund, Africa economist with Bloomberg Intelligence in London, expects Zimbabwe's economic challenges to persist even if there is a power shift and the country adopts more orthodox economic policies.

"Expectations for quick progress toward receiving financial support and potential debt relief should be tempered," Mr Bohlund said. "The huge challenges ahead and continued political uncertainty is likely to deter inward investment for many years to come."

BLOOMBERG