UPDATE 9-Fidel Castro passes Cuba reins to his brother
(Adds details, reaction from former Cuban official)
HAVANA Feb 24 (Reuters) - Raul Castro took over from his brother Fidel Castro as Cuban president on Sunday, ending the rule of the bearded rebel who defied the United States for five decades but vowing to continue his communist revolution.
A former hardliner feared for his ruthlessness but who has adopted a more moderate tone in recent years, Raul Castro, 76, nodded and smiled as legislators applauded his selection by the rubber-stamp National Assembly.
He is expected to pursue limited economic reforms to tackle food shortages and poor living standards but in a sign that abrupt or major change is unlikely, Communist Party ideologue Jose Ramon Machado Ventura was named to the No. 2 job of first vice president.
In his first speech as president, Raul Castro said he would continue to consult his older brother on important issues.
"The mandate of this legislature is clear ... to continue strengthening the revolution at a historic moment," he said.
Fidel Castro, 81, stepped down Tuesday due to ill health, ending his long rule of the West's last communist state.
He overthrew U.S.-backed dictator Fulgencio Batista in a 1959 revolution at the height of the Cold War and then survived assassination attempts, a CIA-backed invasion, the Soviet Union's collapse and a U.S. economic embargo to rule for almost half a century.
He won support at home by providing health and education services for all Cubans but he also jailed his opponents and critics accuse him of imposing a dictatorship.
Raul Castro said he was accepting the presidency on the condition that his brother continued to be the "commander in chief of the revolution" -- a title created for him during his guerrilla uprising. "Fidel is Fidel. Fidel is irreplaceable."
Raul Castro lacks the oratorical flair of his brother, but he has encouraged ordinary Cubans in the last 19 months to air concerns over the economy, raising hopes of modest reforms.
The U.S. government has dubbed Raul Castro "Fidel Lite" and dismisses the leadership change as the handing of power from one dictator to another.
"If you look at the nature of the people in charge, this is the Old Guard, it's the hard line and there is no reason for us to feel a sense of optimism for the Cuban people," U.S. Commerce Secretary Carlos Gutierrez told Reuters on Sunday.
CHANGE FOR SURVIVAL
The appointment of Machado, a member of Raul Castro's inner circle, suggested that change would be subtle.
"This is about signaling continuity externally and internally," said Julia Sweig, an expert on Cuba at the Council on Foreign Relations think tank in Washington, although she said Cuba's leaders are well aware they need to address food shortages and other problems.
Jose Oro, a former director of Cuba's Mining and Geology Department who fled to the United States in 1991, said Raul Castro might seek "a kind of arrangement" with Washington to open the door to more trade and tourism now that Cold War rivalries have eased.
"He knows that Cuba is a fifth rate issue (in the United States)," Oro said. "Today the Oscar awards are more important than his election as president in Cuba."
In the ramshackle streets of old Havana, some residents huddled around radios on Sunday but others, more concerned with coping with day-to-day economic challenges than with politics, went about their daily business, shopping for fruit and vegetables or playing dominoes on the sidewalk.
"With Raul, people hope the economy will improve. It won't happen quickly but maybe within 10 years the economy could stabilize," said Jorge, 42, an electrician who asked not to be fully identified.
Cuban exiles in Miami, the heartland of opposition to the Castro brothers, were not surprised at the appointments.
"It's once more depriving the Cuban people of choosing their destiny," said Ninoska Perez of the Cuban Liberty Council, a hardline anti-Castro group.
Raul Castro has led Cuba since July 2006 when his brother provisionally handed over power after intestinal surgery.
A leftist icon in his army fatigues, cap and beard but oppressor of his people to his enemies, Fidel Castro has been reduced by illness to a shuffling old man.
He has not been seen in public since his surgery, but will continue to wield influence as head of the Communist Party and by writing articles in "the battle of ideas".
Cuba's main benefactor, President Hugo Chavez of oil exporter Venezuela, pledged to continue supporting Cuba, dismissing speculation he does not get on with Raul Castro.
"The international campaign has already begun to make people believe that Raul and I are not close, that things will now change. Nothing will change," said Chavez, who has pursued his own socialist revolution and become an outspoken U.S. foe. (Additional reporting by Marc Frank and Nelson Acosta in Havana, Jeff Franks and Tom Brown in Miami, and Adriana Garcia in Washington; Editing by Michael Christie and Kieran Murray) (For special coverage from Reuters on Castro's retirement, see: here)
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