HARARE, Sep 25 (Reuters) Zimbabwe's parliament began debating an empowerment bill today that would give local owners majority control of foreign companies, including mines and banks.
Analysts fear the move could sound the death knell for an economy that has also suffered from foreign investor flight.
Mugabe's government -- which critics accuse of plunging Zimbabwe into turmoil by seizing white-owned farms and handing them to inexperienced black farmers -- says the bill is part of its drive to empower the country's poor majority.
Legislators from the opposition Movement for Democratic Change (MDC) kicked off debate on the bill, saying it was designed to enrich a few powerful individuals and win votes for Mugabe's ruling ZANU-PF party in parliamentary and presidential elections due next March.
''What we are seeing is an attempt obviously to use this as a campaign tool to woo voters for the elections and to give money to a few people,'' the MDC's Edwin Mushoriwa said at the start of the debate.
Indigenisation and Economic Empowerment Minister Paul Mangwana and ruling ZANU-PF legislators defended the bill and branded those opposed to it as seeking to perpetuate economic imbalances brought about by colonialism.
Mugabe, 83 and in power since independence from Britain in 1980, denies mismanaging the economy.
He has accused some foreign-owned companies of working with his Western opponents to topple his government by raising prices without justification and stashing foreign currency proceeds abroad.
Mugabe has threatened to seize some foreign businesses and has argued Zimbabweans should be in charge of their resources.
''If we do not dismantle the structure of colonialism that we inherited then we have not given back all the country's resources to its rightful owners, who are our people,'' Mangwana said.
At the UN General Assembly in New York, US President George W Bush today criticised the government under Mugabe as ''tyrannical''.
Mining and business industry officials warned that the law, if passed in its current form, could quicken the decline of the economy, which has shrunk by at least 30 per cent since 1999.
Mangwana sought to allay business fears of a blanket seizure by saying the government would work with different industries to set timetables for foreign-owned firms to transfer shares to locals.
''The minister in consultation with the different sectors will issue statutory instruments to say by such and such a time you should have indigenised until you meet the 51 per cent threshold. We are not going to indigenise in a day,'' said Mangwana.
Inflation is above 6,600 percent -- the highest in the world -- four in five adult Zimbabweans are out of work, and there are persistent shortages of foreign currency, fuel and food.
''Zimbabwe is now seen as a high-risk destination because of uncertainty over security of tenure and lack of confidence in the rule of law,'' Jack Murewa, the head of the country's Chamber of Mines said.
REUTERS AE RAI2351