INTERVIEW - Pushing Mugabe out risks chaos - Tsvangirai

Zimbabwe's Prime Minister Morgan Tsvangirai listens during a news conference with his British counterpart Gordon Brown at 10 Downing Street in London, June 22, 2009.

JOHANNESBURG (Reuters) - Western pressure for Robert Mugabe's removal could lead to chaos in Zimbabwe, Prime Minister Morgan Tsvangirai said on Saturday, in comments that could discourage donors distrustful of the veteran president.

"This man is part of the solution, whether you like him or not," Tsvangirai said in an interview, adding it was up to Mugabe, in power since 1980, to decide when to step down.

"If you push somebody out and you are not even sure what will happen when you push somebody out, then the result is unpredictable. Who is going to manage that situation? It could be chaotic."

Western powers have welcomed Zimbabwe's new unity government led by old foes Mugabe and Tsvangirai, but have made it clear they would prefer it if Mugabe was not in power.

Western donors, crucial for Zimbabwe's recovery from a 10-year economic crisis, have said their aid will only flow to the southern African country when political and economic reforms are implemented.

That could mean months, if not years, of pressure on Mugabe and Tsvangirai to provide relief to millions of Zimbabweans. Their credibility hinges on their ability to repair the economy, and that is unlikely unless the old foes work together.

Tsvangirai's Movement for Democratic Change blames central bank governor Gideon Gono for Zimbabwe's economic woes and wants him removed from the position, a demand that is one of the remaining sticking points between Mugabe and Tsvangirai.

Tsvangirai noted Western countries were concerned over such obstacles. "There is no indication on the ground that we are making progress," said the man who was once Mugabe's most determined opponent and spent time in his jails.

ATTRACTING INVESTORS

The former union leader has just finished a tour of European countries and the United States which secured limited aid.

Tsvangirai said he was prepared to take measures to lure international investors, such as allowing majority foreign ownership in the mining and agriculture sectors.

"I'm very flexible. I'm prepared to allow majority ownership," said Tsvangirai.

He said Zimbabwe intended to secure the $10 billion needed for economic recovery in increments, playing down concerns that his trip yielded scant funds.

Mugabe, who launched a nationalisation drive to give majority ownership to locals before Zimbabwe's disputed elections last year, may resist opening up an economy critics say he destroyed by seizing white-owned farms and handing them over to blacks with little or no experience in agriculture.

In another attempt to get badly needed foreign investment in Zimbabwe's ruined economy, Tsvangirai said some state companies would be privatised. "It's not a policy that has been finalised," he said.

Industrial plants, now producing at only 10 percent of capacity, would reach 50-60 percent within a year, a level that would enable sustained economic growth within three years.

The prime minister said he did not expect to revive the use of the Zimbabwe dollar in the near future, keeping the country dependent on foreign currencies in an attempt to rebuild the economy.

"For economic reasons, you cannot go back to the Zimbabwe dollar unless you have increased your productivity to levels that will back it. That makes economic sense," he said.

"So I don't anticipate the minister of finance even recommending such type of a proposal in the shortest period of time."

On Friday, Mugabe said Zimbabwe may revive the use of its own currency because the U.S. dollar introduced to tame hyperinflation was unavailable to a majority of people in the countryside.

Tsvangirai has had to manage the troubled country while grieving after the death of his wife in a car accident. His grandson also drowned. He said he had no choice but to press on.

"I cannot go back. My family won't accept it, my party won't accept it and my nation won't accept it," he said.