This followed an agreement by the two sides in February to share power, after intense pressure from the 14-nation Southern African Development Community (SADC) regional bloc, and the African Union (AU).
Political instability, characterised by inter-party fighting by supporters of the two sides, intensified in 2008 and early this year, after an inconclusive general election.
In the election in March 2008, Mugabe was for the first time in 28 years defeated in a presidential poll, but opposition leader Morgan Tsvangirai – now Prime Minister – also failed to cross the 50 percent vote thres hold to win outright.
In the first round, Mugabe, who has ruled Zimbabwe since independence from Brita in in 1980, won 43 percent of the vote to Tsvangirai’s 47 percent.
Under the constitution, the two had to square off in a run-off, but Tsvangirai pulled out, citing violence against supporters of his Movement for Democratic Change (MDC) party in the run-up to the poll.
Mugabe went ahead with the election uncontested, and won, but the outcome was widely condemned and regarded a nullity.
Both sides subsequently laid competing claims to power on the strength of their electoral victories in the two polls – Tsvangirai for winning the first round which was internationally recognised, and Mugabe for his victory in the unrecognised second vote, putting the southern African nation of 11 million people on the edge of civil war and prompting the AU and SADC to inte rvene.
The two regional groups appointed former South African President Thabo Mbeki as mediator in the crisis, and after months of intense power-brokering, he got the bitter rivals to agree to share power – leading to the formation of a coalition government that was sworn in in February.
Under the coalition government, Mugabe retained the presidency and Tsvangirai be came prime minister, a development that immediately eased inflammed election-related political passions on both sides of the divide and drew the cou ntry back from the brink of civil war.
Summing up the year, Mugabe said last week the coalition government had managed to restore both political and economic stability, and expressed optimism its partners would be able to bridge lingering differences.
"It was a very eventful year, eventful in several ways. It was a year we launched the partnership that you see. It was about our trying to work together, ignore the political differences of the parties, submerge those differ ences and elevate the areas we agree on," he said.
"We belong to Zimbabwe all of us and we have a common destiny. We can’t ignore that people support all of us here because the elections of 2008 shows that. Yes, we had a responsibility which you can call onerous in a se nse, quite a responsibility because only yesterday we were boxing each other and calling each other names," he added.
Tsvangirai, in his own review of the year, similarly expressed optimism the nation will consolidate unity, and heal the wounds of the past, as it forges ahead.
"The year 2010 is upon us, the expectation is that we must build on the momentum of transformation, we must expedite the constitution-making process, national healing and move from economic stabilisation to recovery and growth," he said.
"We (the nation as a whole) are in the driving seat and we want to make sure that this process is irreversible," he noted.
Although Mugabe and Tsvangirai are still squabbling over implementation of the power-sharing deal, tensions over this are restricted to the inner circles of the ruling elite, and are not spilling over to the rank and file as in the past.
The premier accuses Mugabe of violating some provisions of the agreement, for example, refusing to share some government posts.
But by and large, Zimbabweans enjoyed a normal and quiet life this year for the first time in a decade.