About 300 of Mr. Ortega’s supporters rallied outside the headquarters, waving their party’s black and red flags and chanting “The people united will never be defeated.” Across the city, fireworks and car horns went off in celebration.  Mr. Ortega, who is 60, maintains that both he and the country have changed since the 1980s, when he was a hard-line Marxist president accepting Soviet aid and fighting a United States-backed insurgency. The cold war is over, and Nicaragua’s economy now depends heavily on exports to the United States and free markets.  While Mr. Ortega still rails against “savage capitalism” and the failure of free trade to alleviate poverty, he has become a more pragmatic leftist over the past decade and a half. Gone is the fiery Marxist oratory, replaced with talk of reconciliation, peace and God. He has traded his anti-American campaign songs for John Lennon’s “Give Peace a Chance.”  He has also become openly religious, regularly attending church and often asking people at his rallies to pray. He even pushed through a bill to ban abortion recently, in part to attract Catholic support.  Still, no one is sure how much of the change in Mr. Ortega’s political outlook is real. Many business leaders and political analysts say the future of this impoverished country may hinge not just on whether Mr. Ortega’s style has evolved, but whether Nicaragua’s democracy is strong enough to keep a leftist president with an authoritarian past in check.  “If he hasn’t changed, he will have to change, because it’s not the same Nicaragua in 2006 as the Nicaragua in which he came to power at the head of a revolutionary movement,” said Carlos Tunnerman, a political analyst.  The United States has made it clear that it does not like the prospect of its cold war foe returning to power, especially in light of Mr. Ortega’s close relationship with President Hugo Chávez of Venezuela. Still, Secretary of State Condoleezza Rice said the United States would respect the decision of the Nicaraguan people and see what policies the next government follows before making decisions about future relations. Bush administration officials had threatened before the vote to suspend aid if Mr. Ortega won.  Former President Jimmy Carter monitored the polling here and said the election was clean and fair. He said Mr. Ortega had given him assurances Monday night that he would respect property rights, civil liberties, free enterprise and the free trade agreement with the United States.  Business leaders said they were confident Mr. Ortega would not roll back the free-market reforms in the Nicaraguan government since 1990, when he agreed to hold an election to end the civil war and lost to Violeta Chamorro.  Since then, the government has sold off more than 360 state-owned enterprises, liberalized its markets, privatized the banks and entered a free trade agreement with the United States and its neighbors.  Erwin J. Kruger, president of the Superior Council of the Private Sector, the nation’s largest business group, said Mr. Ortega and his party, the Sandinista National Liberation Front, had given assurances they would not dismantle the free-market economy.  “We don’t know how he’s going to be tomorrow, or next month, or next year, but we are going to give it a chance,” Mr. Kruger said. “We paid a high price for our freedom and neither side wants to lose that.”  Most political strategists said Mr. Ortega won because the conservative anti-Sandinista vote split in two.  After former President Arnoldo Alemán was convicted on corruption charges, Mr. Montealegre and other conservatives broke away from the governing Constitutionalist Liberal Party and formed the Nicaraguan Liberal Alliance. As a result, Mr. Montealegre and Mr. Rizo, who carried the banner for the old ruling party, divided the voters who had consistently opposed Mr. Ortega and the Sandinistas in past elections, defeating him three times.  Mr. Ortega’s ability to enact radical challenges is severely hampered by the National Assembly, which remains divided between four parties. To rule, he must reach agreements with the two conservative parties. What is more, the president’s power has been curbed by constitutional changes pushed through in recent years, giving the assembly more say over cabinet positions.  Even members of Mr. Ortega’s party said he had not won a popular mandate to make radical changes, like the expropriation of private businesses or the redistribution of land, as he did in the late 1980s.  “The important point is not what he wants to do, the important thing is what is feasible to do,” said Alejandro Martínez Cuenca, an economist and member of the Sandinista party. “Nicaragua has changed tremendously. The mandate he has received does not give him the opportunity to do his will.”  A version of this article appears in print on , on Page A10 of the New York edition with the headline: Rival’s Concession Clears Way for Ortega, Once and Future President of Nicaragua. Order Reprints| Today's Paper|Subscribe
Daniel Ortega’s main competitor for the presidency conceded defeat, fulfilling Mr. Ortega’s 16-year struggle to return to power.