ANGUS SHAW, HARARE

It was greeted with some violent clashes and warning shots were fired. But as Zimbabwe's President Robert Mugabe relaxed his iron hold on the country yesterday, for the first time in nearly three decades, the mood in the capital Harare turned to jubilation.

Escalating economic chaos has all but forced Mr Mugabe into signing a power-sharing deal with his bitter political rivals. It has been negotiated through two months of difficult talks, mediated by South African President Thabo Mbeki.

Yesterday, Mr Mugabe, main opposition leader Morgan Tsvangirai and Arthur Mutambara, the leader of a faction that broke away from Mr Tsvangirai's opposition MDC, all pledged to make the deal work.

However, long-simmering and bitter differences between the sides and the nation's worsening economic situation are expected to put the power-sharing deal under intense pressure.

Thousands of supporters of the rival parties threw stones at each other outside the convention centre in Harare where yesterday's signing ceremony took place, leading police to fire warning shots.

But the crowd calmed after the initial clashes and cheered as the leaders left.

Western nations, whose aid and investment could mean the difference between the success or failure of the unity experiment, reacted cautiously to the move. Millions of pounds of aid is expected to be poured into the country if Mr Mugabe proves genuine about sharing power and working to end Zimbabwe's economic and political crisis.

The UK welcomed the deal but officials said they would have to wait and see what happened before promising aid. The US expressed cautious optimism.

Mr Mbeki said that Mr Mugabe would remain President, with Mr Tsvangirai Prime Minister and Mr Mutambara his deputy.

The deal lays out a complicated arrangement, with Mr Mugabe chairing the cabinet and Mr Tsvangirai heading a new council of ministers, responsible for forming government policies.

Mr Mugabe, 84, has been in power since independence in 1980 and went from being praised as a liberator to being condemned as an autocrat. He and Mr Tsvangirai, 56, have been enemies for a decade.

The agreement sets out a timetable for drafting a new constitution. Consultation is to begin within a month and a referendum on the constitution is slated to take place within two years.

The deal also promises the start of a process of re- registering and licensing media organisations. Zimbabwe's draconian laws have prohibited any journalist or media organisation not approved by the government from operating.

In a televised speech after signing the agreement, Mr Tsvangirai said the government's first priority should be addressing hunger.

The world's highest rate of inflation - and a meagre harvest - have made it difficult for many Zimbabweans to feed themselves.

Britain, one of the strongest Mugabe critics, is expected to offer some aid.

"We hope that the new government will now reverse the tragic policies and decline of recent years," Foreign Secretary David Miliband said yesterday. "The new government needs to start to rebuild the country. If it does so, Britain and the rest of the international community will be quick to support them."

US State Department spokesman Sean McCormack said that, from what officials had been told, "we would welcome this agreement".

In March's presidential poll, Mr Tsvangirai won the most votes, but not enough to avoid a run-off against Mr Mugabe.

An onslaught of violence against Tsvangirai supporters led him to drop out of the presidential run-off, with Mr Mugabe declared the overwhelming winner of the second vote.