HARARE (Reuters) - Zimbabwean President Robert Mugabe celebrates his 85th birthday on Saturday facing a tough year even by the standards of such a veteran political survivor.

He has held on to power since independence from Britain in 1980 despite economic and political turmoils but now, for the first time, his party is sharing power with the opposition.

And within the ruling party's ranks, his advancing age has intensified a battle over who should succeed him.

It's a landmark year, said Eldred Masunungure, a political science professor at the University of Zimbabwe. The way he will handle things will define Zimbabwe's direction in the coming months and his party's future in the coming years.

It's going to be tough, even for a person of his skills.

The official birthday party of one of Africa's oldest and longest-ruling leaders will be a huge rally on February 28, but political analysts say he may struggle in the months thereafter.

Critics say he has held power this far with patience, cunning and ruthlessness, surviving international isolation and sanctions imposed by Western foes.

Mugabe will pretend that he is in control. But he has a big challenge on his hands, staying in power when the stakes are against him, said John Makumbe, a veteran political analyst and outspoken Mugabe critic.

Mugabe lost a first presidential poll to his rival Morgan Tsvangirai a year ago before winning a subsequent runoff which the opposition boycotted over political violence.

His ZANU-PF party formed a fragile unity government with Tsvangirai's Movement for Democratic Change (MDC) a few weeks ago.

Analysts say the partners have no choice but to make it work despite their policy and personality differences.

The economy is in such bad shape that the public is demanding that they work together, and so I think it will survive for a while, Masunungure said.

John Robertson, a leading economic consultant in Harare, said rebuilding Zimbabwe's economy without massive foreign assistance is going to be difficult and credit for any effort is likely to go the MDC.

For ZANU-PF, the challenge is how do you claim any credit for an economy that you destroyed, Robertson said. But if things go wrong too now, the MDC has also become culpable.

The goodwill currently belongs to the MDC, and Mugabe and ZANU-PF have to find ways of managing power and politics in this new arrangement, Masunungure added.

ECONOMY RAVAGED

Mugabe is expected to retire at the next elections -- but has traditionally always kept his options open.

Analysts say he is likely to watch Tsvangirai's political moves for months before showing his own hand.

ZANU-PF is running next week's party -- as it has done for years -- but leaders, including vice-president Joyce Mujuru and Defense Minister Emmerson Mnangagwa, have been jostling eventually to succeed him when he steps down.

Mugabe's Western critics, including the United States and Britain, are taking a cautious approach to the unity government and want guarantees of democracy and economic reforms before committing billions of dollars to get Zimbabwe up on its feet.

Once feted as a champion of democracy and a liberation hero, he has come under increasing criticism from African leaders for violence against opposition supporters.

South Africa's elder statesman Nelson Mandela said in a rare political comment last year he was saddened by the tragic failure of leadership in our neighboring Zimbabwe.

But Mugabe says he will stick to what critics say are reckless policies that have ruined the once promising economy, such as seizures of white-owned farms for blacks that decimated the agriculture sector.

Inflation reached 231 million percent a year last July.

Besides massive food shortages and a worthless currency, Zimbabweans are also struggling with collapsing social services. Many schools and hospitals have been closed for months over pay disputes and lack of essentials, including books and drugs.

International aid organizations have been forced to step in to help fight a cholera outbreak that has so far killed more than 3,700 people since August.

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