BOGOTA Colombian President-elect Juan Manuel Santos takes office on Saturday with a strong mandate to keep fighting left-wing guerrillas, spur economic growth and tackle a messy diplomatic dispute with neighboring Venezuela.
Santos, a former defense and finance minister welcomed by Wall Street, takes over the helm of a much safer Colombia after eight years of President Alvaro Uribe's U.S.-backed campaign against Latin America's oldest rebel insurgency.
Santos began the presidential handover with a symbolic ceremony with leaders of Colombia's Arhuaca, Kogui and Wiwa indigenous tribes in the Sierra Nevada mountains near the Caribbean coast.
A U.S. and British-trained economist, Santos has vowed to continue Uribe's crackdown on FARC rebels and maintain his pro-business approach, which has seen foreign investment grow five-fold since 2002 as Colombia's conflict waned.
Santos has a healthy majority in the Congress. But he must tackle high unemployment and push through reforms to reduce deficits which are blocking Colombia from regaining the investment grade credit status it lost in a 1990s crisis.
Once seen as a failing state mired in cocaine violence, Colombia has enjoyed a resurgence since Uribe first came to office in 2002. Oil and mine investment soared as rebels from the Revolutionary Armed Forces of Colombia or FARC were battered and troops retook parts of the country.
Among Santos' challenges will be managing relations with his Andean neighbors, particularly Venezuela, where President Hugo Chavez has broken off diplomatic and trade ties in a confrontation causing concern about Andean stability.
Brazilian President Luiz Inacio Lula da Silva has said he will seek to mediate an end to the crisis and Venezuelan Foreign Minister Nicolas Maduro traveled to Bogota for the inauguration in a signal of a thaw in relations.
"We want to extend the hand of friendship," Maduro said after arriving in Bogota. "We are willing to work on advancing, moving toward the future."
JOBS, ECONOMIC GROWTH
Chavez, a staunch U.S. foe, accuses close Washington ally Colombia of working with the White House to undermine his socialist government. Colombia says Venezuela allows FARC rebel leaders to seek refuge across its borders.
Santos, son of an elite Bogota family, and Chavez have clashed repeatedly in the past. But both men say they want to mend ties, especially because of benefits from a renewal of $7 billion a year in bilateral trade.
Colombia's economy is on the mend with growth seen at more than 3.5 percent this year. But its unemployment rate is among the highest in the region, its peso is rising on the country's commodities boom and Wall Street is demanding Santos tackle a stubborn fiscal deficit.
Uribe leaves office as the country's most popular leader. But his second term was marred by scandals over abuses by troops, illegal wiretapping of his critics, and probes into legislative allies over collaboration with paramilitary gangs.
As Uribe's defense minister, Santos was the architect of some of the strongest blows against the FARC and he acknowledges his debt to his former boss. But he has sought to distance himself, saying he will govern in his own manner.
(Reporting by Patrick Markey in Bogota; Editing by Chris Wilson)