President Robert Mugabe is quietly relinquishing the duties of the head of State to his deputy Emmerson Mnangagwa but retains his grip on the Zimbabwe African National Union-Patriotic Front, something he could use against his protégé should he step out of line, a London confidential newsletter says. Africa Confidential says Mnangagwa understands business and the workings of a modern economy but his drawbacks are the land reform programme and the use of the United States dollar. “Linking to the US dollar provided a short-term solution to hyperinflation but is now proving costly in its inability to adjust the exchange rate to reflect the weakness of the major trading partner, South Africa, adding to pressure on the balance of payments. As Western economies move to positive interest rates, the attractions of short-term lending to countries such as Zimbabwe will fade and the domestic liquidity crunch will get worse,” the newsletter says. It says that while Mnangagwa has the support of the securocrats and co-Vice President Phelekezela Mphoko, a separate faction could be forming around Mugabe’s relatives led by Ignatius Chombo, now number four in the party. Former Vice-President Joice Mujuru is not likely to make a formal break with ZANU-PF, it says.