By Cris Chinaka
HARARE (Reuters) - Zimbabwe's president and oppositionleader said on Tuesday there had been progress in power-sharingtalks and outstanding issues should be dealt with on Wednesday.
A new round of talks began in Harare on Monday betweenPresident Robert Mugabe's ZANU-PF and opposition leader MorganTsvangirai's MDC party, seeking a deal to end a post-electioncrisis that is worsening Zimbabwe's economic decline.
Prospects for a power-sharing deal had looked remote, witha senior ZANU-PF official accusing the MDC on Tuesday of"trying to put spanners in the works".
Tsvangirai said on Sunday he would rather quit talks thansign a bad deal and challenged Mugabe to hold a new election.
But late on Tuesday, both sides made more positive noises.
"As you are aware these talks have been dragging on forsome time now, but I must say that there is a positivedevelopment," Tsvangirai told reporters as he left the Hararehotel after hours of negotiation, without giving more details.
"Nothing has been concluded yet but we are hoping thattomorrow (Wednesday) we will be able to look at the outstandingissues."
Mugabe also told reporters the talks would continue.
"We are still going to talk. We are finishing tomorrow(Wednesday)," he said.
"There is progress, and lack of it, in some areas," hesaid, adding that "one or two areas" were still outstanding.
South African President Thabo Mbeki, who arrived in Harareon Monday for his latest attempt to mediate a deal, haspresented a proposal sharing executive powers, the mainsticking point in the negotiations, the state-run Heraldnewspaper said.
It also looks at structuring an all-inclusive government.
But two months of meetings in South Africa and Harare haveso far failed to ease divisions over how to share power andMugabe has threatened to form a cabinet without Tsvangirai.
The defence committee of regional grouping the SADC is dueto meet in Swaziland on Wednesday to discuss the crisis.Swaziland's government said Mugabe and Mbeki would be there,alongside heads of state from Mozambique, Swaziland and Angola.
"The meeting will mainly review the status ofimplementation of the African Union summit resolution onZimbabwe," SADC said.
The African Union called for a national unity government ata July 1 summit and adopted a resolution calling for Mugabe toenter talks with Tsvangirai.
ELECTION CHALLENGE
The MDC leader beat Mugabe in a March 29 election but fellshort of enough votes to avoid a June run-off, which was won byMugabe unopposed after Tsvangirai pulled out, citing violenceand intimidation against his supporters.
Mugabe's victory in the run-off was condemned around theworld and drew toughened sanctions from Western countries whosesupport is vital for reviving Zimbabwe's ruined economy.
Mbeki has come under repeated fire for not being toughenough with Mugabe, in power since 1980.
Other southern African leaders have taken a harder line,but Mugabe has resisted pressure, and Tsvangirai's MDC has madeit clear it has little faith in Mbeki as a mediator.
Further complicating the negotiations is a third faction --a breakaway group from the opposition MDC.
It had been seen as moving closer to Mugabe, but thefaction, led by Arthur Mutambara, said on Monday it would notsign a unilateral deal with Mugabe if there was no agreementwith Tsvangirai's faction too.
On Tuesday evening, Mutambara told reporters there had been"tremendous progress" and said he hoped for a deal onWednesday.
"There are a few remaining issues to be resolved, importantissues to be resolved and we hope tomorrow (Wednesday), we willbe able to bring finality and closure to the dialogue process."
Zimbabweans were hoping the election could produce aleadership able to tackle hyper-inflation and severe food andfuel shortages that have driven millions across the country'sborders, straining regional economies.
(Writing by Michael Georgy; Editing by Alison Williams)
