Mozambique is being torn apart by its colonial legacy, external aggression, natural disasters and ill-considered economic policies. The two most crucial issues are the political and economic future of the country. With independence, Frelimo adopted a Marxist-Leninist ideology. However, it had to cope with a damaged economy and divisive ethnicism and regionalism, resulting in reorganization of the party and democratization of the political system. However, guarantees of a multi-party system are not written into the proposed draft constitution. Attempts at negotiation continue and should establish mechanisms for a ceasefire and of reincorporating Renamo into the country’s socio-economic structure. Mozambique’s economy has declined due to the war, natural disasters, and unworkable economic projects. The government launched a national recovery programme, putting the economy on a modest growth footing, and leading to improved financial discipline and management practices, but at a huge social cost. Transition from socialism to an open market economy is traumatic, and Frelimo is losing popular support. The end of the war is not certain, and it may be impossible for both sides to come to an agreement. The war will only end with discontinued external support for Renamo, especially from South Africa.