MANAGUA Cold War leader Daniel Ortega returns to power in Nicaragua on Wednesday, giving Venezuelan President Hugo Chavez a new ally as he tries to steer Latin America to the left and away from the United States.
Ortega, who first took power in a 1979 revolution and then led a Marxist government for 11 years while fighting a brutal civil war against U.S.-backed Contra rebels, completed a remarkable comeback by winning a November presidential vote.
The balding 61-year-old says he is still a socialist but has dropped many of his radical economic policies from the 1980s, saying he has learned from his mistakes.
Ortega promises to respect private property and the free market this time around even as he fights extreme poverty. He preaches reconciliation and has gained the trust of the Roman Catholic Church and some former battlefield foes.
But his election victory was still a blow to Washington in a region where its influence has waned as poor voters left behind by free-market reforms have in recent years picked leftist leaders aligned with Venezuela's anti-U.S. Chavez.
Ortega insists he wants good relations with the United States, but his inauguration ceremony brings together two of Washington's most vocal foes in the region -- Chavez and Bolivian President Evo Morales.
While Ortega will rely heavily on Venezuelan aid, a top aide said he would not blindly follow Chavez, who further worried Washington on Monday by announcing he would nationalize major utilities and seek new powers to rule by decree.
"We will totally respect private property, entrepreneurial liberty and the market economy," said Jaime Morales, a former Contra leader who later reconciled with Ortega and will be his vice president.
Nicaragua's Sandinista revolution in 1979 toppled the last in a long line of U.S.-backed dictators. Literacy and health care improved dramatically at first but mismanagement, a U.S. blockade and the civil war later crippled the economy.
Pro-U.S. governments have ruled in Nicaragua since Ortega was toppled in a 1990 election and Ortega failed in two successive attempts to win back power at the ballot box.
His November victory was partly due to a split in the Liberal Party of outgoing President Enrique Bolanos, which had become embroiled in corruption scandals.
Ortega vows to spend more on health and education programs and help lift poverty in Latin America's second poorest country with measures such as cheap credit. Chavez is expected to help finance some of those social programs.
While Nicaragua's rich elite fears another economic meltdown and new tension with Washington under Ortega, many opponents and even some die-hard Liberal Party members say they are ready to give him the benefit of the doubt.
Jairo Valle, a 37-year-old Liberal Party voter who owns a shop in Ciudad Sandino, a dusty slum on the edge of Managua, said the ex-revolutionary has undergone "transcendental change."
"God has given Ortega a chance to correct the damage he did to Nicaragua," he said.