Their cooperation is vital if Zimbabwe is to rebuild an economy that has been ravaged by hyperinflation and unemployment at around 90 percent. Millions need food aid and the country’s infrastructure and institutions are a shambles.
The image of Mugabe and Tsvangirai standing together to celebrate the 29th anniversary of the end to colonial rule would have been unthinkable during years of hostilities between them.
But Tsvangirai’s MDC says some hardliners in Mugabe’s ZANU-PF are still trying to scuttle the coalition government which the two men formed in February.
U.S. Secretary of State Hillary Clinton commended Zimbabwe’s unity government on Saturday for progress in implementing reforms, but said more must be done.
In a message to the Zimbabwean people, timed to coincide with the anniversary, Clinton made no mention of when or whether the United States would lift sanctions or offer substantial aid to help rebuild the shattered nation.
"We commend the efforts the transitional government has undertaken and the progress it has achieved towards reforms that will benefit the Zimbabwean people," Clinton said.
Tsvangirai, a former trade unionist, rose to become the biggest threat to Mugabe’s tight grip on power as leader of the opposition Movement for Democratic Change (MDC).
At the national stadium in the capital Harare on Saturday, Mugabe told thousands of supporters: "We need to create an environment of tolerance, and treat one another with dignity and decency, irrespective of … political affiliation."
"There is need for national healing to put behind the atmosphere of hostility and polarisation which had regrettably become a feature of our national politics."
Unusually, Mugabe refrained from attacking Britain, one of his favourite targets, but he repeated a call for Western countries to lift sanctions.
After just two months, the unity government looks shaky with most outstanding issues unresolved. These include the review of the appointment of central bank governor Gideon Gono, a Mugabe ally, and that of the attorney general, who has publicly stated his support for Mugabe’s ZANU-PF party.
Mugabe and Tsvangirai are yet to agree on how to share out 10 influential provincial governorships and other senior posts.
Mugabe stoked tensions last week when he unilaterally transferred the supervision of the telecommunication industry from an MDC cabinet minister to a ZANU-PF official, a move Tsvangirai said was null and void.
"It’s a delicate situation, particularly for Robert Mugabe, who is engaged in a delicate balancing act of placating the hardliners in his party and sticking to his agreement with Tsvangirai," Eldred Masunungure, a political science lecturer at the University of Zimbabwe, told Reuters.
"But what they have definitely delivered, in terms of empirical evidence we got from a grassroots survey, is hope and optimism," he added.
The government is broke and is seeking at least $2 billion in emergency funding to restore basic services and pay salaries. Analysts say the administration needs to speed up changes such as reversing nationalisation laws and opening up political and media space to attract donor aid.