He is also a product of the People's Rally for Progress (PRP), which has ruled Djibouti under President Hassan Gouled Aptidon since independence from France in 1977.

The PRP named Ismail Omar its candidate in February when Hassan Gouled said he was stepping down from power aged 83. Some 74 percent of the electorate on Friday voted their approval in the country's second multi-party elections.

``I was an adviser to the President. I couldn't project my personality outside because it was not decent to do so,'' Ismail Omar told reporters during election week.

The candidate appeared at ease with his new role, flying around the country in a rented military helicopter for the campaign and delivering speeches without notes.

His bearded face smiled down from hundreds of election posters above the slogan: Inject a new breath of life.

It was a smart message. At 52, Ismail Omar is 13 years younger than his opponent, Moussa Ahmed Idriss, and he managed to appeal to a youthful population and repackage a party seen by many as jaded.

Ismail Omar worked for two decades as cabinet director in Hassan Gouled's office and headed state security. He is also closely related to the founding president through the Mamassan branch of the Somali Issa clan.

In a disarming gesture, he acknowledged this week that the state machine gave him a big advantage in the campaign.

Reviving the economy of the Horn of Africa state, which has a population of just 600,000, could prove a hard task.

Djibouti has long been seen as an oasis of stability -- its neighbours are Ethiopia, Eritrea and Somalia -- yet it relies greatly in economic terms on France, with which it has a defence agreement.

As France slowly scales back its military presence, Djibouti could be forced closer to its larger neighbour Ethiopia, already a main source of trade through its port.

Ismail Omar, himself born in Dire Dawa, eastern Ethiopia, has described the two as ``complementary states'' and said he would not oppose confederation if that was what Djiboutians wanted.

He will also have to tackle his country's rampant poverty and what one senior civil servant described as ``stagnation.''

``The main thing Ismail Omar will bring is dynamism,'' said a senior Western diplomat with extensive knowledge of Djibouti.

The candidate of the ruling alliance, Ismail Omar Guelleh, won Friday's election comfortably with 74 percent of the votes, defeating independent candidate Moussa Ahmed Idriss, who was backed by the opposition.

Ismail Omar will become only Djibouti's second president when he takes over in May from Hassan Gouled Aptidon, 83, who has ruled since independence from France in 1977.

``The presidential election... passed off in a transparent and sincere manner and conditions of equality prevailed,'' a joint mission of observers said in a statement at a news conference.

The Organisation of African Unity, the Arab League and International Francophone Organisation sent a total of 20 observers for the poll.

The mission noted some isolated problems across the 211 polling stations -- such as late opening or early closing of voting booths or the late arrival of election material.

Moussa Ahmed rejected the result on Saturday and complained that his delegates were prevented from observing the polling in some 86 polling stations.

But, in apparent confirmation of what diplomats said was the opposition's lacklustre performance, the observers said they had received no formal complaints about the poll.

The elders said the Ethiopians forces have completedly sealed off Bulo Hawo, 375 kilometers (235 miles) northeast of Mogadishu, including its border with Kenya.

Located at the junction of the borders of Ethiopia, Somalia and Kenya, Bulo Hawo is a stronghold of Al-Itihad Al-Islam, or Islamic Unity, a Somali group that has been staging attacks in Ethiopia's Region 5, the former Ogaden inhabited largely by ethnic Somalis.

The reason for the Ethiopian occupation has not been disclosed, but in the past the Ethiopians crossed into Somalia in pursuit of Al-Itihad which has been active since 1992.

The elders said at least one person, Ali Nur, a former member of the Somalia National Front, the faction that controls the region, was killed when the Ethiopians attacked Thursday.

There was no independent confirmation of the report.

The elders said at least 20 of their colleagues were rounded up by the Ethiopians and taken into Ethiopia.

The Ethiopian forces nominated their own town leaders on Friday, the elders said.

The elders said Yussuf Muse Ali, the SNF district commissioner, escaped across the border to Mandera, Kenya. Unconfirmed reports said his son, Abdirizak Hajji Yussuf, was shot dead Friday by the Ethiopians while trying to flee to Kenya.

The elders said the Ethiopians also arrested more than a dozen gunmen and confiscated their guns, the elders said.

General Omar Hajji Masalleh, SNF chairman in region, told reporters in Mogadishu Friday that Ethiopia has been destabilizing Gedo region by creating confusion among SNF followers and Somalia as a whole.

"The war's impact on our economy had been very limited," Neway Gebre-ab, chief economic advisor to Prime Minister Meles Zenawi said.

Speaking at a news conference organized by the Foreign Correspondents Association in Addis Ababa, he said the country had averaged an annual GDP growth of 6 percent during the last six years (1993-98).

"We hope to maintain the same level of growth this current Ethiopian fiscal year (1998-99 ending in June)," he said.

The border dispute between Ethiopia and Eritrea surfaced in early May last year. It had so far led to one fierce fighting in 1998 and several others during the last two months.

The conflict has yet to be resolved, although both parties have accepted an OAU framework agreement to end the war.

Eritrea announced its acceptance of the agreement in late February after war broke out and its forces were forcibly evicted from the disputed Badme area in north-western Ethiopia after nine months occupation.

Neway said, however, the direct impact of the border conflict with Eritrea had been "horrendous" in two regional states -- Tigray in the north and Afar in the north-east -- bordering the conflict areas.

"At least 300,000 internally displaced people in the two regions have been affected," he added.

He stated that the government had been able so far to spread defense expenditures over two fiscal years, entailing reduction in capital expenditures. The border conflict surfaced near the end of the 1997-98 fiscal year that was followed by the 1998-99 fiscal budget ending in June.

Asked to comment on reports on estimates that both Ethiopia and Eritrea have been spending an average of one million US dollars a day on war efforts, Neway said: "This is on a high side for us."

He pointed out that in any war situation, road transport is usually the first to be affected.

"Fortunately, this did not happen in our case. There had been no rise in road transport tariffs rate, even in the two regional states close to the conflict area," he said.

Neway, who has the rank of minister, maintained that despite "limited" impact of the border conflict on the country's economy, "we did not deviate from Ethiopia's tranditional stringent fiscal policy dating back to the era of the late Emperor Haile Selassie."

He stated that inflation has been kept at bay -- below 5 percent for the sixth consecutive year. But the Ethiopian currency, the birr, had depreciated against the dollar from 7.087 in May 1998, when the border conflict with Eritrea surfaced, to 7.910 at present.

He attributed this to 30 percent fall in the world market of the price of coffee, the principal foreign exchange earner.

"This has been offset by the fall of petroleum price on the world market and bumper crop at home during the 1998-99 harvest season," he said.

"The depreciation of the birr against the dollar has nothing to do with the border conflict," he stated.

Ethiopia's annual export earnings, which wase in the range of 250 million dollars to 300 million dollars in the early 1990s, has doubled to 600 million dollars in 1997-98.

"It appears the 1998-99 figures will not be very encouraging due to the fall in coffee price," he said. He expressed hope that the price of coffee on the world market would rebound in a year or two.

Neway said some donor countries had tried to use aid as a means "to change" Ethiopia's "attitude" regarding the stand it had taken on the border conflict with Eritrea.

Consequently, some donor countries he did not name, "promised and withheld bilateral assistance", he said, describing the this as "a very unfortunate signal".

By Ghion Hagos, PANA Staff Correspondent