BOGOTA, June 21 (Reuters) - Colombian President-elect Juan Manuel Santos vowed on Monday to extend his predecessor's security and economic policies and began by naming an economist widely respected by Wall Street as his finance minister.
Santos succeeds President Alvaro Uribe as leader of Washington’s top ally in South America and says he will continue pro-business drive that saw foreign investment soar, as well as a popular tough line against FARC guerrillas.
Uribe’s former defense minister, Santos has a strong mandate to tackle a lingering war the leftist rebels, a stubborn fiscal deficit and tense ties with Venezuela after winning a landslide victory to claim the presidency on Sunday.
Santos won 69 percent of the ballot — a historic record of 9 million votes — in the run-off election against Bogota Mayor Antanas Mockus, who won 27 percent after challenging traditional parties with his call for cleaner government.
The victory by a staunch Uribe ally was applauded by Wall Street as a continuation of his pro-investment policies and helped push Colombia’s peso up 1.07 percent to 1,890 against the dollar during Monday trading.
In one of his first moves as president-elect, Santos said his new finance minister would be politically savvy technocrat Juan Carlos Echeverry, a former senior economic official who began his career at the central bank.
Echeverry is respected by market players who said he had a good understanding of the macro issues and fiscal challenges, as well as the political skills to succeed.
Uribe steps down in August, still popular after two terms during which he weakened the FARC and disarmed outlawed paramilitaries. Oil and mining investment is booming despite lingering violence from the long conflict.
Colombia remains the world’s No. 1 cocaine trafficker and Santos will take a hard-line with rebels who are still a threat — seven police died in a rebel ambush on election day. New drug-trafficking gangs are also emerging from paramilitary groups demobilized under Uribe.
Santos, who saw Colombia through a 1990s fiscal crisis, has promised to bring down double-digit unemployment, reduce the deficit by promoting growth, overhaul a costly public health system and better manage booming oil revenue.
"To create jobs we have to put policies in place," Santos told reporters in his first press conference since the election win. "One of them is making sure we have strong growth."
U.S. Democrats who oppose a free trade deal for Colombia will also be watching to see how Santos’ government will handle protection of labor union leaders and rights defenders who they say are still targeted for their work.
CHAVEZ, JOBS AND THE DEFICIT
Tense ties and a trade dispute with neighboring Venezuela’s socialist President Hugo Chavez will be a major challenge for Santos, whom Chavez has called a threat to the region.
Santos says he and Chavez are like "oil and water," but has offered to talk based on mutual respect. He welcomed a statement from Venezuela’s government congratulating him on his victory as a "positive gesture."
Venezuela has slashed Colombian imports over their dispute, trimming about one percent off Colombia’s economic growth. Chavez says Colombia’s ties to the United States are a threat to his OPEC nation, but on Monday his government offered lukewarm welcome to Santos.
"Venezuela’s revolutionary government will be monitoring not only the statements of officials in the new government but also the actions that will show what kind of relations are possible," Venezuela’s Foreign Ministry said in a statement.
Santos, chief of Uribe’s U party and scion of one of the country’s most influential families, should have the initial base to build coalitions in Congress and push labor and fiscal reforms to promote growth.
But while Santos has a record as a results-oriented technocrat and an efficient team-builder, the former navy cadet may struggle to match the political heft of Uribe, who maintained popularity of around 70 percent during two terms.
"Santos is well positioned for tackling labor market rigidities and other structural problems, including a gaping fiscal deficit," IHS Global Insight’s Christian Voelkel said.
"But there are downside risks to his ability to implement the much-needed reform agenda, as holding together the disparate political forces that make up his "unity government" could become a serious challenge," he said.
As defense minister, Santos oversaw some of the sharpest blows against the guerrillas. He also ordered a successful operation to rescue hostages held by the FARC, including a former presidential candidate and three American contractors.
But his tenure was tainted by charges troops killed civilians to artificially lift combat tolls. The scandal cost the army chief and 27 officers their posts, but Santos said he worked to halt rights abuses within the armed forces.
