Zimbabwe's President Robert Mugabe signed a power-sharing agreement with opposition rival Morgan Tsvangirai on Monday, giving up some of his powers for the first time in nearly three decades of iron rule.
The deal followed weeks of tense negotiations to end a deep political and economic crisis compounded by the veteran leader's unopposed re-election in a widely condemned vote in June. Under the agreement, Tsvangirai will become prime minister, the Reuters reported.
"This agreement sees the return of hope to all our lives," Tsvangirai said after the signing ceremony.
Zimbabweans hope the agreement will be a first step in helping to rescue the once prosperous nation from economic collapse. Inflation has rocketed to over 11 million percent and millions have fled to neighbouring southern African countries.
Cheers greeted the signing of the deal at a Harare hotel by Mugabe, Movement for Democratic Change (MDC) leader Tsvangirai and Arthur Mutambara, who leads a breakaway faction of the MDC, the main opposition party.
The three smiling Zimbabwean leaders exchanged copies of the agreement and shook hands in front of South African President Thabo Mbeki, who brokered the deal, and other African leaders.
Raising hopes that Western support will come quickly, the International Monetary Fund encouraged the new government to show clear policy commitments to tackle the economic crisis.
"We stand ready to discuss with the new authorities their policies to stabilise the economy, improve social conditions, and reduce poverty," IMF Managing Director Dominique Strauss-Kahn said in a statement.
Mugabe, 84, made clear he would not tone down his attacks on Western countries such as former colonial power Britain. He accuses them of backing the opposition to drive him from power.
"African problems must be solved by Africans ... The problem we have had is a problem that has been created by former colonial powers," Mugabe said after the signing ceremony, as Tsvangirai looked uncomfortable.